Marshall et al v. Anderson Excavating and Wrecking Co.

Filing 51

MEMORANDUM AND ORDER that the defendant's motion for judgment on the pleadings, or in the alternative, motion to dismiss 49 is denied. The parties are ordered to show cause by November 20, 2015, as to why the Court should not stay this action pending arbitration between the Union and the defendant. Ordered by Judge John M. Gerrard. (JSF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
ROD MARSHALL, TRUSTEE, et al.,
Plaintiffs,

8:14-CV-96

vs.
MEMORANDUM AND ORDER
ANDERSON EXCAVATING AND
WRECKING CO., a/k/a ANDERSON
EXCAVATING CO.,
Defendant.
This matter is before the Court on defendant Anderson Excavating and
Wrecking Co.'s motion for judgment on the pleadings and/or alternative
motion to dismiss (filing 49). For the reasons discussed below, the Court will
deny the defendant's motion, but will enter an order to show cause as to why
this action should not be stayed pending arbitration.
BACKGROUND
The plaintiffs are the International Union of Operating Engineers,
Local 571 ("the Union"); and the trustees ("the Trustees") of both the
Contractors, Laborers, Teamsters and Engineers Health and Welfare Plan
("Welfare Plan") and the Contractors, Laborers, Teamsters and Engineers
Pension Plan ("Pension Plan"). Filing 1 at ¶¶ 2–7. The two trusts were
established by various construction labor unions and contractors to
administer health benefits and a pension program for employees represented
by the unions. Filing 1 at ¶ 4–5. Anderson Excavating is a Nebraska
corporation. Filing 1 at ¶ 7.
According to the plaintiffs, in 2004, the Union and Anderson
Excavating entered into a collective bargaining agreement (CBA). See, filing
1 at ¶ 8; filing 1-1 at 1. The plaintiffs allege that this CBA binds the parties
to two separate trust agreements, which obligate Anderson Excavating to
contribute to the Welfare Plan and Pension Plan, filing 1 at ¶ 8; submit to
audits, filing 1 at ¶ 9; and deposit collateral for its payments to the Welfare
Plan and Pension Plan, filing 1 at ¶ 13, 14. The plaintiffs allege that although
Anderson Excavating has made contributions to the Welfare Plan and
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Pension Plan, it has refused to allow the Trustees to audit its records, filing 1
at ¶ 9, and has not deposited collateral, filing 1 at ¶ 15.
The plaintiffs have sued Anderson Excavating under 29 U.S.C. §
185(a), 29 U.S.C. § 1132, and 29 U.S.C. § 1145 for specific performance of the
CBA and the two trust agreements. Filing 1 at ¶ 1. The plaintiffs ask the
Court to allow them to perform an audit of the defendant's records, to require
the defendant to pay any amount still owing into the Welfare Plan and
Pension Plan, to deposit collateral as security for the Welfare Plan and
Pension Plan, and to pay the plaintiffs' costs and attorney fees. Filing 1 at ¶¶
11, 16. The defendant counters that under the terms of the CBA, the
plaintiffs were required to submit their dispute to arbitration, rather than
filing suit. Filing 49 at ¶ 9. Thus, according to the defendant, this Court has
no subject-matter jurisdiction over the dispute, and should either issue a
judgment on the pleadings or dismiss the suit. Filing 49 at ¶ 1.
STANDARD OF REVIEW
As a general rule, a Fed. R. Civ. P. 12(c) motion for judgment on the
pleadings is reviewed under the same standard as a Fed. R. Civ. P. 12(b)(6)
motion to dismiss. Ginsburg v. InBev NV/SA, 623 F.3d 1229, 1233 n.3 (8th
Cir. 2010). A Rule 12(c) motion requires the Court to view all facts pleaded by
the nonmoving party as true and grant all reasonable inferences in favor of
that party. Poehl v. Countryside Home Loans, Inc., 528 F.3d 1093, 1096 (8th
Cir. 2008). Judgment on the pleadings is appropriate only when there is no
dispute as to any material facts and the moving party is entitled to judgment
as a matter of law. Ashley Cty. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir.
2009); Poehl, 528 F.3d at 1096.
A complaint must set forth a short and plain statement of the claim
showing that the pleader is entitled to relief. Fed. R. Civ. P. 8(a)(2). This
standard does not require detailed factual allegations, but it demands more
than an unadorned accusation. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
The complaint need not contain detailed factual allegations, but must provide
more than labels and conclusions; and a formulaic recitation of the elements
of a cause of action will not suffice. Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). For the purposes of a motion to dismiss a court must take all of
the factual allegations in the complaint as true, but is not bound to accept as
true a legal conclusion couched as a factual allegation. Id.
And to survive a motion to dismiss under Fed. R. Civ. P. 12(b)(6), a
complaint must also contain sufficient factual matter, accepted as true, to
state a claim for relief that is plausible on its face. Iqbal, 556 U.S. at 678. A
claim has facial plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the defendant is liable
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for the misconduct alleged. Id. Where the well-pleaded facts do not permit the
court to infer more than the mere possibility of misconduct, the complaint has
alleged—but it has not shown—that the pleader is entitled to relief. Id. at
679.
Determining whether a complaint states a plausible claim for relief will
require the reviewing court to draw on its judicial experience and common
sense. Id. The facts alleged must raise a reasonable expectation that
discovery will reveal evidence to substantiate the necessary elements of the
plaintiff’s claim. See Twombly, 550 U.S. at 545. The court must assume the
truth of the plaintiff’s factual allegations, and a well-pleaded complaint may
proceed, even if it strikes a savvy judge that actual proof of those facts is
improbable, and that recovery is very remote and unlikely. Id. at 556.
ANALYSIS
The defendant argues that the Court has no subject-matter jurisdiction
over this dispute because the CBA contains a provision requiring the
plaintiffs to submit their dispute to arbitration rather than filing suit.1 Filing
49 at ¶¶ 8, 9. The plaintiffs oppose the defendant's motion primarily on two
grounds.
First, the plaintiffs oppose the defendant's motion on the ground that it
fails to comply with NECivR 7.1(a)(1)(A), which provides, "A motion raising a
substantial issue of law must be supported by a brief filed and served
together with the motion. The brief must be separate from, and not attached
to or incorporated in, the motion or index of evidence." The defendant has
failed to file such a brief in this case. The Court does not endorse the
defendant's failure to do so. However, a litigant generally may raise a court's
lack of subject-matter jurisdiction at any time in the same civil action,
Kontrick v. Ryan, 540 U.S. 443, 444 (2004), and the Court would be obliged to
consider it sua sponte even if the parties had failed to raise the issue entirely.
See Jones v. United States, 255 F.3d 507, 511 (8th Cir. 2001). Accordingly—in
this narrow instance—the Court chooses to overlook the defendant's
noncompliance with the Court's local rules.
The defendant also argues that the Union "fail[ed] to comply with statutory conditions
precedent to filing suit." Filing 49 at ¶ 9. However, the defendant omits identifying these
statutory conditions. As such, the Court is unable to determine whether the plaintiffs failed
to meet them. Additionally, the defendant notes that it does not intend to waive either its
statute of limitations defense, or its argument that the Court, in its previous summary
judgment order (filing 45) incorrectly ruled that the CBA contained an evergreen clause.
Filing 49 at ¶¶ 8, 10. The Court does not understand either of these assertions to be
additional arguments in support of the defendant's instant motion, and therefore does not
consider them in resolving the motion.
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Second, the plaintiffs contend that the CBA's arbitration provision does
not apply to the instant dispute. Filing 50 at 3–4. Because the parties'
arguments depend in part on whether the Trustees and the Union have the
same contract rights against the defendant, the Court analyzes the
applicability of the dispute provision separately with respect to the Trustees
and the Union.
(a) The mandatory dispute provision and the Union
Paragraph B of Article XII of the CBA provides in part:
Any grievance or dispute as to the proper interpretation of this
Agreement, or any condition of employment not specifically
covered hereby other than the negotiation of over-all wage rates
and disputes over jurisdiction, and any other grievance or dispute
shall be settled by the Business Agent of the Union and the
Contractor or its representatives. In the event that such dispute
or grievance is not satisfactorily adjusted by said Business Agent
and the Contractor within five (5) days from the time it is
presented to the Contractor, it shall be referred to a Board of
Conciliation . . . .
Filing 1-1 at 14. Paragraph B goes on to give specific instructions about
deadlines and the makeup of the Board of Conciliation. Filing 1-1 at 14. It
additionally provides that any determination of the Board shall be "final,
conclusive and binding." Filing 1-1 at 14.
The Court finds that this clause clearly requires the Union and the
defendant to submit their disputes to arbitration rather than initiating suit.
And, indeed, the plaintiffs do not dispute this point: they note, "[T]he
CBA . . . binds the Defendant and Local 571 to resolve their disputes with
each other through arbitration." Filing 50 at 8.
However, contrary to the defendant's contention, this fact does not strip
the Court of subject-matter jurisdiction. The Federal Arbitration Act (FAA)
provides that a court, "upon being satisfied that the issue involved in [a] suit
or proceeding is referable to arbitration" under a written arbitration
agreement, "shall on application of one of the parties stay the trial of the
action until such arbitration has been had in accordance with the terms of
the agreement." 9 U.S.C. § 3. In other words, the FAA authorizes a court to
stay a proceeding when the dispute is referable to arbitration, but does not
require dismissal for lack of subject-matter jurisdiction.
Some courts "rel[y] upon a judicially-created exception to the general
rule which indicates district courts may, in their discretion, dismiss an action
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rather than stay it where it is clear the entire controversy between the
parties will be resolved by arbitration." Green v. SuperShuttle Int'l, Inc., 653
F.3d 766, 769–70 (8th Cir. 2011). The Eighth Circuit has not expressly
decided whether a district court has the discretion to dismiss instead of stay
a proceeding under the FAA. See Pickering v. Urbantus, LLC, 827 F. Supp. 2d
1010, 1017 n.4 (S.D. Iowa 2011). However, among district courts there is
"general acceptance in this circuit that only a stay is authorized." Id. at 1017.
In any event, this Court is not convinced that it is "clear the entire
controversy between the parties will be resolved by arbitration." Green, 653
F.3d at 770.
Therefore, with respect to the Union and the defendant, the Court
denies the motion to dismiss. Instead, the Court orders the Union and
defendant to show cause as to why the Court should not stay these
proceedings pending arbitration according to the terms of the CBA.
(b) The mandatory dispute provision and the Trustees
Although it seems clear that the mandatory dispute provision binds the
Union and the defendant, it is less clear why the provision should bind the
Trustees. The defendant argues that because it is not a signatory to either
trust agreement, any obligation to abide by the terms of the trust agreements
necessarily derives from the CBA. Filing 49 at ¶ 8. Thus, the defendant
argues, any dispute regarding its obligations to the trusts should be
controlled by the terms of the CBA, including the mandatory dispute
provision. Filing 49 at ¶ 8.
The defendant's argument, as the Court understands it (though the
defendant has cited no authority in support of its position), is premised on
"the general rule that the promisor may assert against [a] beneficiary any
defense that [it] could assert against the promisee if the promisee were suing
on the contract." Schneider Moving & Storage Co. v. Robbins, 466 U.S. 364,
370 (1984). However, the Supreme Court has held that this general rule does
not apply when "the language of the contract, or the circumstances under
which it was executed, establish that the parties have provided that the right
of the beneficiary is not to be affected by any defenses that the promisor
might have against the promisee." Id. at 371.
In Robbins, the Court found that the trustees of two multiemployer
trust funds were not bound by a mandatory dispute provision in the
collective-bargaining agreement between a union and an employer for several
reasons. Id. at 376. First, the provision in the agreement clearly referenced
only disputes between the union and the employer, not the trustees. Id. at
373. Second, the trust agreements themselves provided that the trustees
could initiate any legal proceedings they deemed necessary. Id. Third, the
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Court noted that it "will not infer that the parties to the two multiemployer
trust funds intended to condition the trustees' enforcement authority on the
arbitration procedures contained in" individual employers' collectivebargaining agreements. Id. at 374.
In this case, the plaintiffs argue that the language of the CBA, as well
as surrounding circumstances, indicate that the mandatory dispute provision
was not intended to apply to the Trustees. Filing 50 at 10. And, indeed, the
facts here are nearly identical to those in Robbins. First, as in Robbins, the
dispute provision refers only to disputes between the Union and the
employer: it specifies that disputes are to be handled by "the Business Agent
of the Union and the Contractor or its representatives." Filing 1-1 at 14.
Furthermore, it includes no language suggesting that third-party
beneficiaries are required to participate, nor does it indicate that the Union
should represent the interests of third-party beneficiaries in arbitration.
Additionally, like in Robbins, each trust agreement contains a clause
preserving the authority of the Trustees to enforce the trust agreements
through litigation: the Welfare Plan states that "[t]he Trustees may take any
legal action necessary to enforce payment of the contributions," filing 1-2 at 7,
and the Pension Plan states that "the Trustees in their discretion and to the
extent permitted by law[] may bring legal action to compel payment," filing 13 at 13. Finally, as in Robbins, the trusts at issue are large, multiemployer
trusts, filing 1 at ¶¶ 4–5, and the parties are unlikely to have intended to
subordinate the enforceability of their trust agreements to the varying terms
that individual employers and unions might agree to.
Thus, the Court finds that the Trustees are not bound by the dispute
provision in the CBA. However, the FAA grants courts the authority to stay
"any suit . . . brought in any of the courts of the United States upon any issue
referable to arbitration." 9 U.S.C. § 3 (emphasis supplied). This authorization
is "broad enough to permit the stay of litigation between nonarbitrating
parties as long as that lawsuit is based on issues referable to arbitration"
under the FAA. Contracting Northwest v. City of Fredericksburg, 713 F.2d
382, 387 (8th Cir. 1983). Here, the Union and the Trustees are all seeking to
enforce the defendant's obligation to comply with the terms of the trust
agreements. Furthermore, staying the proceedings as to one plaintiff but not
the others could subject the defendant to inconsistent obligations and cause
confusion. See id. (discussing a district court's "inherent power" to grant a
stay to "control its docket, conserve judicial resources, and provide for a just
determination").
Thus, the Court denies the defendant's motion for judgment on the
pleadings or in the alternative motion to dismiss, but orders the parties to
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show cause why the Court should not stay these proceedings pending
arbitration between the Union and the defendant.
IT IS ORDERED:
1.

The defendant's motion for judgment on the pleadings, or in
the alternative, motion to dismiss (filing 49) is denied.

2.

The parties are ordered to show cause by November 20,
2015, as to why the Court should not stay this action
pending arbitration between the Union and the defendant.

Dated this 10th day of November, 2015.
BY THE COURT:

John M. Gerrard
United States District Judge

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