Board of Trustees of the Carpenters Health and Welfare Trust Fund for California et al v. Acoustictec

Filing 36

ORDER Re Supplemental Briefing and Evidence. Signed by Judge Edward M. Chen on 5/12/2009. (emcsec, COURT STAFF) (Filed on 5/12/2009)

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1 2 3 4 5 6 7 8 9 10 BOARD OF TRUSTEES OF THE CARPENTERS HEALTH AND WELFARE TRUST FUND FOR CALIFORNIA, et al., Plaintiffs, v. ACOUSTICTEC, Defendant. ___________________________________/ Plaintiffs are the Board of Trustees for various employee trust funds and Carpenters 46 Northern California Counties, a union. They have filed suit against Defendant Acoustictec, asserting the following claims: (1) a petition to confirm an arbitration award, (2) an audit, (3) breach of contract, (4) breach of fiduciary duty, and (5) an injunction. After Acoustictec failed to respond to the complaint, the Clerk of the Court entered its default, see Docket No. 28 (notice of entry of default), and thereafter Plaintiffs filed the currently pending motion for default judgment. Having considered Plaintiffs' motion and accompanying submissions, the Court hereby orders that they provide supplemental briefing and/or evidence as described below. The supplemental papers shall be filed and served on Acoustictec within two weeks of the date of this order. In addition, Plaintiffs are ordered to serve a copy of this order on Acoustictec within three days of the date of this order. /// /// /// No. C-08-1137 EMC UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA United States District Court 11 For the Northern District of California ORDER RE SUPPLEMENTAL BRIEFING AND EVIDENCE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 2 3 4 5 6 7 8 9 10 A. Service of Process As a preliminary matter, the Court has concerns about the adequacy of service of process. Acoustictec appears to be a corporation. Federal Rule of Civil Procedure 4(h) governs service of process on corporations. It provides that a corporation may be served, inter alia, pursuant to the law of the state where the district court is located or where service is made. See Fed. R. Civ. P. 4(h)(1)(A) (referring to service under Rule 4(e)(1), which provides for service pursuant to state law). In this case, the state where this Court is located and where service was made is the same -- i.e., California. Under California law, service of process on corporations is governed by the California Code of Civil Procedure. Under 416.10 of the Code, a corporation may be served by delivering a copy of the summons and complaint to, e.g., "the president, chief executive officer, or other head of the corporation, a vice president, a secretary or assistant secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general manager, or a person authorized by the corporation to receive service of process." Cal. Code Civ. Proc. 416.10(b). Under 415.20(a) of the Code, a corporation may also be served by substituted service instead of by personal delivery. Section 415.20(a) provides: In lieu of personal delivery of a copy of the summons and complaint to the person to be served as specified in Section 416.10 . . . , a summons may be served by leaving a copy of the summons and complaint during usual office hours in his or her office or, if no physical address is known, at his or her usual mailing address, other than a United States Postal Service post office box, with the person who is apparently in charge thereof, and by thereafter mailing a copy of the summons and complaint by first-class mail, postage prepaid to the person to be served at the place where a copy of the summons and complaint were left. Cal. Code Civ. Proc. 415.20(a) (emphasis added). While substituted service is, as a general matter, an easier form of service compared to personal delivery, it is not free of limitations. For example, substituted service on a corporation must still be made on a "person to be served as specified in Section 416.10" -- e.g., the president, general manager, or other person authorized to accept service of process. This requirement is not to be undertaken lightly as indicated by the state appellate court in Dill v. Berquist Construction Co., United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 1 2 3 4 5 6 7 8 9 10 Inc., 24 Cal. App. 4th 1426 (1994). There, the court was addressing a different service-of-process statute -- i.e., California Code of Civil Procedure 415.40, and not 415.20(b) -- but there is no principled reason why the analysis in Dill is not applicable when service is conducted pursuant to the latter statute instead of the former. Section 415.40 is the statute governing service of process outside the state. Under the statute, "[a] summons may be served on a person outside this state in any manner provided by this article or by sending a copy of the summons and of the complaint to the person to be served by first-class mail, postage prepaid, requiring a return receipt." Cal. Code Civ. Proc. 415.40. The court in Dill noted that, under 415.40, the summons and complaint had to be mailed "to a person to be served on behalf of the corporation, i.e., to one of the individuals specified in section 416.10." Dill, 24 Cal. App. 4th at 1436 (emphasis added). The court found that the plaintiff did not strictly comply with 415.40 because he "did not mail the summons to any individual at all, but rather to the corporate defendants themselves." Id. While the plaintiff could have substantially complied with the statute "if, despite his failure to address the mail to one of the persons to be served on behalf of the defendants, the summons was actually received by one of the persons to be served," id. at 1437, there was insufficient evidence that the person who received the summons was one of the individuals specified in 416.10. See id. at 1437-39 ("[T]he mere fact that some employee of the corporation received the summons does not establish substantive compliance. Rather, there must be evidence `establishing actual delivery to the person to be served . . . .'"). In the instant case, the Court has concerns about the adequacy of service of process because it is not clear that there was ever service on a person qualified to accept service on behalf of Acoustictec. See Cal. Code Civ. Proc. 416.10. The proof of service submitted by Plaintiffs indicates that the summons and complaint were left with a person apparently in charge of (presumably) the Acoustictec office and thereafter mailed to Acoustictec at the same office. See Docket No. 4 (proof of service). There is no indication that the summons and complaint were directed to a specific person at Acoustictec authorized to accept service (i.e., an individual listed in Cal. Code of Civ. Proc. 416.10) rather than Acoustictec generally as an entity. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 1 2 3 4 5 6 7 8 9 10 The Court therefore orders Plaintiffs to provide supplemental briefing and/or evidence as to whether service of process was proper in the instant case. B. Dispute Subject to Arbitration In addition, the Court has concerns as to whether or not Acoustictec agreed to arbitrate any dispute with the union. An arbitration provision is contained in the Carpenters Master Agreement. See Compl., Ex. A (Master Agreement 51). However, Acoustictec did not sign the Carpenters Master Agreement. Rather, it signed the Memorandum Agreement. See Compl., Ex. B (Memorandum Agreement). Plaintiffs' position seems to be that Acoustictec "became subject to all the terms and conditions of the [Carpenters] Master Agreement by virtue of signing [the Memorandum Agreement] . . . which incorporated by reference the [Carpenters] Master Agreement." Compl. V. However, it is not clear that the Memorandum Agreement incorporated all of the terms and conditions of the Carpenters Master Agreement. The Memorandum Agreement states only that "the individual employer or association agrees to comply with all wages, hours, and working conditions set forth in the [Carpenters Master Agreement]." Compl., Ex. B (Memorandum Agreement) (emphasis added). This is not necessarily the same thing as an agreement to comply with all the terms and conditions of the Carpenters Master Agreement. An Agreement to arbitrate is not necessarily a "working condition." Notably, the provision quoted above contrasts with another provision in the Memorandum Agreement which states that, under certain circumstances, the individual employer or association agrees to "comply with all wages, hours, terms and conditions of the . . . Millmen's Master Agreement." Compl., Ex. B (Memorandum Agreement) (emphasis added). The Millmen's Master Agreement reference is not limited to "working conditions," but that Agreement does not appear to be at issue in this case, at least not based on the allegations in the complaint. Accordingly, the Court orders that Plaintiffs provide supplemental briefing and/or evidence to establish that Acoustictec agreed to arbitration of a dispute concerning trust fund contributions for the trust funds at issue. If Plaintiffs are not able to establish arbitrability, then they will still have a judicial forum available but then the Court will likely require Plaintiffs to provide supplemental United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 1 2 3 4 5 6 7 8 9 10 briefing and/or evidence to establish entitlement to judgment on the merits as well as the damages they sustained, and any other relief requested. C. Right to Conduct an Audit In their complaint and motion for default judgment, Plaintiffs ask for not only confirmation of the arbitrator's decision but also the right to conduct an audit and obtain additional relief once the audit is concluded (e.g., unpaid contributions). It is not clear to the Court whether Plaintiffs are simply asking for confirmation of the arbitrator's award -- which includes the right to conduct an audit and obtain additional relief -- or whether Plaintiffs are seeking relief beyond what the arbitrator ordered. If the latter, then it is not clear how the Court would have jurisdiction if any dispute between the parties is subject to the arbitration provision. The Court thus orders Plaintiffs to address these issues of jurisdiction and/or duplicative relief. United States District Court 11 For the Northern District of California 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IT IS SO ORDERED. Dated: May 12, 2009 _________________________ EDWARD M. CHEN United States Magistrate Judge 5

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