Zoom Electric, Inc. v. International Brotherhood of Electrical Workers, Local 595

Filing 102

ORDER DENYING 91 MOTION TO DISMISS AND SETTING CASE MANAGEMENT SCHEDULE. Motions due by 9/13/2012. Cross Motions/Responses due by 9/27/2012. Replies due by 10/4/2012. Replies due by 10/11/2012. Motion Hearing set for 10/25/2012 02:00 PM before Hon. Claudia Wilken. Case Management Statement due by 10/18/2012. Further Case Management Conference set for 10/25/2012 02:00 PM. Pretrial Conference set for 1/23/2013 02:00 PM before Hon. Claudia Wilken. Bench Trial (1 day) set for 2/4/2013 08:30 AM before Hon. Claudia Wilken. Signed by Judge Claudia Wilken on 6/27/2012. (ndr, COURT STAFF) (Filed on 6/27/2012)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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ZOOM ELECTRIC, INC.,

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Petitioner,
v.
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, LOCAL 595,
and DOES 1-20,

________________________________/

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ORDER DENYING
MOTION TO DISMISS
(Docket No. 91)
AND SETTING CASE
MANAGEMENT
SCHEDULE

Respondents.

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United States District Court
For the Northern District of California

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No. C 11-1699 CW

INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS, LOCAL 595;
ALAMEDA COUNTY ELECTRICAL
INDUSTRY SERVICE CORPORATION;
IBEW LOCAL 595 HEALTH & WELFARE
TRUST FUND; IBEW LOCAL 595
PENSION TRUST FUND; IBEW LOCAL
595 MONEY PURCHASE PENSION TRUST
FUND; IBEW LOCAL 595 VACATION
FUND; IBEW LOCAL 595 APPRENTICE &
TRAINING FUND; ELECTRICAL
CONTRACTORS TRUST; CONTRACT
ADMINISTRATION FUND; LABOR
MANAGEMENT COOPERATION FUND;
VICTOR UNO; and DON CAMPBELL,

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Counter-Plaintiffs,
v.
ZOOM ELECTRIC, INC.; VEIKO HORAK;
B-SIDE, INC.; and DOES ONE
through TEN, inclusive,
Counter-Defendants.
________________________________/
Counter-Defendant B-Side, Inc. moves to dismiss the second

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amended counter-complaint filed against it by Counter-claimant

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International Brotherhood of Electrical Workers, Local 595 (the

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Union), the employee benefit trust funds, Alameda County

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Electrical Industry Service Corporation (EISC), the collection

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agent for the trust funds, and Victor Uno and Don Campbell,

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trustees for the trust funds and officers of EISC.

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opposes the motion.

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submission on the papers.

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B-Side and the Union, the Court DENIES B-Side’s motion.

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United States District Court
For the Northern District of California

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The Union

The Court took B-Side’s motion under
Having considered the papers filed by

BACKGROUND
The background of this matter is set forth in greater detail
in the Court’s Order of March 20, 2012.

See Docket No. 82.

Petitioner Zoom Electric, Inc. (ZEI) initiated this action on

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April 6, 2011, seeking to vacate an arbitration award in which it

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was found liable for failing to hire workers on a fire alarm

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replacement project at Roosevelt Middle School in the Oakland

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Unified School District in compliance with the governing Project

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Labor Agreement (PLA) and for failing to make required

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contributions to the employee benefit trust funds.

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On May 6, 2011, the Union brought a counter-complaint with a

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single cause of action, seeking to confirm and enforce the

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arbitration award against ZEI and its sole owner, Vieko Horak.

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On October 20, 2011, the Court granted the Union’s motion for

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leave to file a first amended counter-complaint, adding a second

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cause of action under the Employee Retirement Income Security Act

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(ERISA), 29 U.S.C. §§ 1132, 1145.

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alleged that ZEI and Horak failed to make benefit contributions

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for work performed under the PLA between January and March 2011.

In that claim, the Union

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On March 20, 2012, the Court granted the Union’s motion to

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confirm and enforce the arbitration award against ZEI and Horak

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and denied ZEI’s cross-motion to vacate the award.
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The Court also

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denied ZEI and Horak’s motion to dismiss the Union’s ERISA cause

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of action and granted the Union’s motion for summary judgment on

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that claim against ZEI and Horak.

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Union’s motion for leave to file a second amended complaint,

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adding Counter-Defendant B-Side, Inc., which served as ZEI’s

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general contractor on the Roosevelt Middle School project, and

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various Counter-Plaintiffs.

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Counter-Plaintiffs to file a verified calculation of the damages

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requested in the ERISA cause of action, specifically a calculation

Finally, the Court granted the

The Court also directed

United States District Court
For the Northern District of California

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of the contributions that ZEI failed to make, liquidated damages

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and interest.

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On March 27, 2012, the Union filed a verified calculation of

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damages on the second cause of action, showing ZEI’s balance due

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on that date, including accrued interest, as $3,581.41.

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On May 2, 2012, Horak sent the Union a check for $3,581.41.

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On the check, he specified that the payment was directed to his

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liability on the second cause of action.

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On May 4, 2012, the Union returned the check, because the

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Trust Funds’ policy is “that partial payment from delinquent

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contractors are applied to that contractor’s oldest month

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delinquency first, and within that month to interest and

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liquidated damages before contributions.”

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2.

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to the balances due for October 2010 work, Horak’s oldest

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delinquency.

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Thomas Decl. ¶ 6, Ex.

Thus, the Union would only accept the check if it were applied

DISCUSSION

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B-Side moves to dismiss the first cause of action, arguing

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that the Court lacks subject matter jurisdiction over the claim
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against it.

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grounds that there is no live controversy because, on May 2, 2012,

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Horak sent the Union a check for $3,581.41.

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I.

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It moves to dismiss the second cause of action on the

First Cause of Action
B-Side argues that the federal claims have been adjudicated

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in this case and that the Court lacks supplemental jurisdiction to

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consider whether to hold it liable.

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B-Side bases its arguments on the Court’s statement in the
March 20, 2012 Order, in which the Court addressed ZEI’s

United States District Court
For the Northern District of California

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contention that allowing the Union to amend its complaint to add

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B-Side would substantially increase litigation costs for ZEI.

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Court rejected ZEI’s argument, stating that “with this Order, the

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Court resolves all claims against ZEI, and only the liability of

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B-side remains to be adjudicated,” and “[e]ven if additional

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discovery were required from ZEI, it would be very limited, and

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would only go to whether ZEI was the sub-contractor of B-side for

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the relevant jobs and whether ZEI was licensed during the relevant

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time period.”

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addressing the potential burden of continued litigation on ZEI,

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does not support B-Side’s characterization of the claim against it

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as arising only under state law.

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Order of March 20, 2012, 30.

The

This statement,

The first counter-claim in this action is brought against all

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three Counter-Defendants, seeking to confirm and enforce the

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arbitration award under section 301 of the Labor-Management

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Relations Act, 29 U.S.C. § 185 and holding B-Side liable for that

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violation through California Labor Code section 2750.5.

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counter-claim has been fully adjudicated against ZEI and Horak,

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the latter by piercing the corporate veil, it has not been
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While the

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adjudicated as to B-Side.

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B-Side is that the arbitration award should be confirmed and

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enforced pursuant to federal law against ZEI and that B-Side

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should be held liable for the award pursuant to state law.

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is not two distinct claims, as B-Side characterizes it.

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Side to be found liable for anything, the underlying liability

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based on federal law must be found as well as the obligation

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imputing that liability to B-Side directly.

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Side thus arises under both state and federal law.

United States District Court
For the Northern District of California

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The theory of the counter-claim against

This

For B-

The claim against B-

Even if the claim against B-Side was distinct from those

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against ZEI and Horak and arose under state law, the Court has

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supplemental jurisdiction over it and does not exercise its

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discretion to decline that jurisdiction.

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In its reply, B-Side argues for the first time that the Court

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cannot exercise supplemental jurisdiction over a state-law claim

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when that claim brings a new party in the action.

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B-Side relies heavily on the Ninth Circuit’s decision in Ayala v.

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United States, 550 F.2d 1196 (9th Cir. 1979), and does not

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recognize the importance of Congress’s enactment of 28 U.S.C.

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§ 1367 in 1990.

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In doing so,

“Prior to the passage of § 1367, supplemental jurisdiction

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was more circumscribed and the addition of a party was one factor

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that barred jurisdiction over additional claims brought by

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plaintiffs.”

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(9th Cir. 2002).

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federal courts were without power to exercise pendent party

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jurisdiction under the Federal Tort Claims Act.”

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F.3d at 1173 (discussing Ayala, 550 F.2d at 1199-1200).

Mendoza v. Zirkle Fruit Co., 301 F.3d 1163, 1172
In 1979, the Ninth Circuit in Ayala “held that

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Mendoza, 301
A decade

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later, in Finley v. United States, 490 U.S. 545, 549 (1989), the

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Supreme Court “‘assumed, without deciding,’ that pendent party

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jurisdiction was constitutional, but cautioned that it requires an

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express statutory jurisdictional grant.”

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1173.

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express grant.”

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28 U.S.C. § 1367(a) (“Such supplemental jurisdiction shall include

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claims that involve the joinder or intervention of additional

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parties.”).

Mendoza, 301 F.3d at

“In 1990, Congress enacted § 1367 to provide such an
Id. (citing Pub. L. No. 101-650 § 310).

See also

Subsequently, in Mendoza, the Ninth Circuit

United States District Court
For the Northern District of California

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recognized that “Ayala’s restrictive interpretation does not

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survive the 1990 passage of § 1367.”

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that “any suggestion in Ayala that the Constitution imposes a bar

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on supplemental jurisdiction over additional parties independent

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of statutory authorization has been undermined by intervening

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Supreme Court authority,” and thus that the prior panel decision

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in Ayala is no longer binding).

Id. at 1173-74 (observing

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Given the clear text of § 1367 and the Ninth Circuit’s

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decision in Mendoza, the Court rejects B-Side’s argument that it

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cannot exercise supplemental jurisdiction over additional parties

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unless “an independent ground for federal jurisdiction” is shown.

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Reply, at 7-8.

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Title 28 U.S.C § 1367 grants federal courts “supplemental

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jurisdiction over all other claims that are so related to claims

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in the action within such original jurisdiction that they form

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part of the same case or controversy under Article III of the

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United States Constitution.”

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same case or controversy when it shares a ‘common nucleus of

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operative fact’ with the federal claims and the state and federal

“A state law claim is part of the

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claims would normally be tried together.”

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356 F.3d 969, 978 (9th Cir. 2004) (quoting Trs. of the Constr.

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Indus. & Laborers Health & Welfare Trust v. Desert Valley

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Landscape Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003)).

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the claims against ZEI and Horak share a common nucleus of

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operative fact with the claims against B-Side; both arise out of

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the enforceability of the arbitration award.

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against Horak and B-side each involve the status of ZEI’s license

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at the time of the construction project.

Bahrampour v. Lampert,

Here,

Further, the claims

United States District Court
For the Northern District of California

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Although this Court has supplemental jurisdiction, it

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may decline to exercise supplemental jurisdiction over a
claim under subsection (a) if--

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(1) the claim raises a novel or complex issue of
State law,

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(2) the claim substantially predominates over the
claim or claims over which the district court has
original jurisdiction,

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(3) the district court has dismissed all claims over
which it has original jurisdiction, or
(4) in exceptional circumstances, there are other
compelling reasons for declining jurisdiction.

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28 U.S.C. § 1367(c).

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supplemental jurisdiction over state law claims is triggered by

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the presence of one of the conditions in § 1367, it is informed by

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the [United Mine Workers v. Gibbs, 383 U.S. 715 (1966),] values of

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‘economy, convenience, fairness, and comity.’”

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Assocs., Inc., 114 F.3d 999, 1001 (9th Cir. 1997).

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“[W]hile discretion to decline to exercise

Acri v. Varian

In its motion, B-Side argues that the Court should decline

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jurisdiction under § 1367(c)(3), because all federal claims have

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been dismissed.

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federal claims have been resolved, the state claim predominates

In its reply, it also contends that, since the

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because it is the only claim remaining to be adjudicated.

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does not argue that the state law issues here are novel or complex

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or that there are other exceptional circumstances warranting

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dismissal.

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B-Side

The Ninth Circuit has upheld a district court’s exercise of
its discretion to decline supplemental jurisdiction over remaining

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state claims after it resolved the federal claims on summary

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judgment.

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(9th Cir. 2011) (citing Sanford v. Member Works, Inc., 625 F.3d

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United States District Court
For the Northern District of California

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550, 561 (9th Cir. 2010); Carnegie-Mellon Univ. v. Cohill, 484

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U.S. 343, 350 n.7 (1988)); Bryant v. Adventist Health System/West,

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289 F.3d 1162, 1169 (9th Cir. 2002) (citing Cohill, 484 U.S. at

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350 n.7).

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resolved in favor of the defendants, who also sought dismissal of

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the state law claims.

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resolution of the federal claims, the Ninth Circuit also cited

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Cohill’s factors of “judicial economy, convenience, fairness, and

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comity.”

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the parties have already thoroughly litigated the enforceability

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of the arbitration agreement and have conducted discovery into the

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licensed status of ZEI.

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practice, having submitted a declaration in support of ZEI and

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Horak’s position.

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substantial analysis of the applicability of California Labor Code

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section 2750.5, specifically of whether the LMRA preempts the

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section.

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dismissal.

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resolved the claims against Horak and ZEI in the Union’s favor

See Oliver v. Ralphs Grocery Co., 654 F.3d 903, 911

In those cases, however, the federal claims were

Further, rather than relying solely on the

Here, the B-Side shares counsel with ZEI and Horak, and

B-Side participated in the earlier motion

Additionally, the Court has already conducted

Thus, judicial economy and convenience do not favor
Further, the fact that the summary judgment order

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means that dismissal of the remaining claims would not promote a

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fair result; here, unlike in Oliver and Bryant, if those claims

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had gone to trial, they would have been adjudicated in favor of

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the Union.

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manner prior to trial, and were found meritorious, does not mean

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that the Union is then barred from proceeding with its other

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claims.

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733, 745 (11th Cir. 2006) (stating that that court could locate no

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authority in which state law claims were “dismissed against a

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United States District Court
For the Northern District of California

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party’s preference after the federal claims had been tried and

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resolved in that party’s favor”).

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district courts in Oliver and Bryant did not abuse their

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discretion in declining supplemental jurisdiction over the state

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law claims in those cases does not mean that they necessarily

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would have abused their discretion by accepting jurisdiction.

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The fact that they were resolved in a more efficient

See also Parker v. Scrap Metal Processors, Inc., 468 F.3d

Finally, the fact that the

Accordingly, the Court DENIES B-Side’s motion to dismiss the

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first cause of action.

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II.

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Second cause of action
B-Side moves to dismiss the second cause of action, arguing

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that the claim is moot, because on May 2, 2012, Horak sent the

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Union a check for $3,581.41 in full satisfaction of the claimed

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damages for the failure to pay timely the benefits for January

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through March 2011.

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The Court rejects this argument for a number of reasons.

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First, on its face, this check did not meet Horak’s outstanding

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liability for his contributions made between January and March

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2011.

The check’s amount covered interest only through March 27,

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2012 when the Union filed its verified calculation.

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continued to accrue, and Horak did not tender that amount.

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Interest

Further, more importantly the check amounts to a settlement

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offer, which the Union rejected.

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Union’s contention that Horak is bound by the Trust Funds’

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established allocation policy, applying the payment to his oldest

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indebtedness first.

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amount of relief sought: the Union also seeks costs and attorneys’

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fees to cover expenses incurred in this action.

B-Side does not reply to the

Further, Horak did not satisfy the full

While B-Side

United States District Court
For the Northern District of California

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cites cases in which courts have held that “an interest in

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attorney’s fees is insufficient to create an Article III case or

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controversy where a case or controversy does not exist on the

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merits of the underlying claim,” here, the settlement offer

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without attorneys’ fees was rejected, not accepted, so the

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underlying claim was not resolved or mooted.

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in which a claim was rendered moot “by payment and satisfaction of

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a final judgment.”

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Geraghty, 445 U.S. 388, 401 (1980)).

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final judgment entered; thus, Horak did not satisfy any such final

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judgment.

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and attorneys’ fees.

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B-Side cites cases

Reply, at 1 (quoting U.S. Parole Commission v.
However, here, there was no

When a final judgment is entered, it may include costs

Accordingly, the Court DENIES B-Side’s motion to dismiss the
second cause of action.
CONCLUSION
For the reasons set forth above, the Court DENIES B-Side’s
motion to dismiss (Docket No. 91).

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Having considered the parties’ separate case management

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statements, the Court sets forth the following case management

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schedule:

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Event

Date

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Completion of fact discovery

Thursday, August
30, 2012

Deadline for Counter-Plaintiffs to file their
motion for summary judgment, in a brief of
twenty-five pages or less.

Thursday, September
13, 2012

Deadline for B-Side to file its opposition to
Counter-Plaintiffs’ motion and its crossmotion for summary judgment, if any, in a
single brief of twenty-five pages or less.

Thursday, September
27, 2012

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United States District Court
For the Northern District of California

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Deadline for Counter-Plaintiffs to file their
Thursday, October
reply in support of their motion for summary
4, 2012
judgment and their opposition to B-Side’s
cross-motion for summary judgment, in a single
brief of fifteen pages or less.
Deadline for B-Side to file its reply in
Thursday, October
support of its cross-motion for summary
11, 2012
judgment, in a brief of fifteen pages or less.
Deadline for the parties to file a joint case
management conference statement.

Thursday, October
18, 2012

Hearing on motions for summary judgment, and
further case management conference.

Thursday, October
25, 2012 at 2:00
p.m.

Final pretrial conference

Wednesday, January
23, 2012 at 2:00
p.m.

One-day bench trial

Monday, February 4,
2012 at 8:30 a.m.

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The Court will entertain a stipulation to change the case

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management schedule, provided that opposing briefs are filed in

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series as described above, not contemporaneously, that the

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parties’ briefing is completed at least two weeks prior to the

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hearing date, and that the hearing on the motions for summary

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judgment takes place at least three months before the start of

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trial.

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IT IS SO ORDERED.

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Dated:

6/27/2012

CLAUDIA WILKEN
United States District Judge

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United States District Court
For the Northern District of California

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