Trustees of the Operating Engineers Pension Trust et al v. Sagebrush Property Ventures, LLC et al

Filing 26

ORDER Denying 9 Motion to Dismiss Counterclaim by Blake Barsy and to Strike Affirmative Defenses of all Defendants. Signed by Judge James C. Mahan on 1/30/2012. (Copies have been distributed pursuant to the NEF - SLR)

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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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TRUSTEES OF THE OPERATING
ENGINEERS PENSION TRUST, et al.,

2:11-CV-1179 JCM (PAL)

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Plaintiffs,

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v.

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SEQUOIA ELECTRIC, LLC., et al.,

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Defendants.

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ORDER

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Presently before the court is plaintiffs and counter-defendants (“plaintiffs”) Trustees of the

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Operating Engineers Pension Trust, et. al.’s motion to strike defendants’ affirmative defenses and

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motion to dismiss counterclaim by Blake Barsy. (Doc. #9). Defendants and counter-claimants

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(“defendants”) Blake Barsy, et. al. filed an opposition. (Doc. #13). Plaintiffs then filed a reply.

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(Doc. #14).

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Plaintiffs filed this motion in response to defendants’ answer to the original complaint.

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However, on November 8, 2011, plaintiffs moved to amend the complaint. (Doc. #18). The court

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granted plaintiffs’ motion to amend on November 9, 2011. (Doc. #19). Defendants did not file an

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answer to the first amended complaint until December 14, 2011. (Doc. #25). Defendants’ answer

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to the first amended complaint asserts the same twenty-four affirmative defenses as the original

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answer and the same counterclaim. (See Docs. #6 and #25). Accordingly, the court interprets

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plaintiffs’ motion as a motion to strike the affirmative defenses and dismiss the counterclaim from

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James C. Mahan
U.S. District Judge

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defendants’ answer to the first amended complaint.

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Motion to strike affirmative defenses

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Pursuant to Federal Rule of Civil Procedure 12(f), the court “may strike from a pleading an

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insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Plaintiffs first

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seek to strike each of the twenty-four affirmative defenses raised in the defendants’ answer to the

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complaint, arguing that affirmative defenses are not permitted in suits filed under § 306(a) of the

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Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1145. (Doc. #9).

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Plaintiffs argue that the affirmative defenses available to employers in § 1145 suits are

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extremely limited. (Doc. #9). “In fact, the Ninth Circuit’s decision in [Southern California Retail

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Clerks v. Bjorklund, 728 F.2d 1262 (9th Cir. 1984)] implies illegality may be the only defense to a

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trust fund delinquent contribution collection action.” (Doc. #14). In response, defendants argue that

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illegality is not the only permissible affirmative defense in § 1145 suits. (Doc. #13).

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In Kaiser Steel Corp. v. Mullins, 455 U.S. 72, 87 (1982), the United States Supreme Court

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stated that Congress enacted § 1145 “because ‘simple collection actions brought by plan trustees

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have been converted into lengthy, costly and complex litigation concerning claims and defenses

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unrelated to the employer's promise and the plans’ entitlement to the contributions,’ and steps must

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be taken to ‘simplify delinquency collection.’” The Kaiser court further found that “the legislators

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did not say that employers should be prevented from raising all defenses; rather they spoke in terms

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of ‘unrelated’ and ‘extraneous’ defenses.” Id. at 88.

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Courts in the Ninth Circuit recognize that the affirmative defenses available to employers in

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§ 1145 suits are limited. See Sw. Adm’rs, Inc. v. Rozay’s Transfer, 791 F.2d 769, 773 (9th Cir.

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1986); Carpenters Health and Welfare Trust Fund for California v. Bla-Delco Construction, Inc.,

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8 F.3d 1365, 1369 (9th Cir. 1993). Nevertheless, the Ninth Circuit has not held that illegality is the

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only defense permitted for employers. Indeed, the Ninth Circuit has taken a more individualized

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approach to determine the validity of affirmative defenses in trust fund contribution suits. See id.

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Plaintiffs seek to strike all of the defendants’ affirmative defenses, arguing that affirmative

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defenses, broadly speaking, are not permitted in § 1145 suits. (Doc. #9). The court is not inclined

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James C. Mahan
U.S. District Judge

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to strike all of the affirmative defenses in one fell swoop based on this broad statement. While the

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court does not grant plaintiffs’ instant motion to strike, plaintiffs may bring a new motion to strike,

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demonstrating that the specific affirmative defenses asserted in this case are either not permitted in

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§ 1145 suits or not applicable to the facts of this case.

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Motion to dismiss counterclaim by Blake Barsy

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Plaintiffs next move to dismiss the counterclaim by defendant Blake Barsy for unjust

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enrichment. (Doc. #9). Plaintiffs argue that this is not a valid claim under Nevada law because there

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is an express, written contract. Further, even if the claim would otherwise be valid under Nevada

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law, it is preempted by federal law.

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Defendants argue that 29 U.S.C. § 1103 specifically permits an employer to recover a

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contribution or payment made under mistake of fact or law. (Doc. #13). Further, defendants allege

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that the contract in this case had expired when Mr. Barsy made the “overpayments.” Thus, there was

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no written contract at the time of the overpayment, and Nevada law does permit a suit for unjust

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enrichment. (Doc. #13).

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In reply, plaintiffs assert that § 1103 does not apply in this case because the trust fund is in

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critical status and, therefore, “the equities do not weigh in favor of allowing [Mr. Barsy] to recover

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. . . .” (Doc. #14). Further, plaintiffs argue that Mr. Barsy accepted the terms of a new collective

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bargaining agreement through his conduct, so he cannot claim that he made the “overpayments”

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under a mistake of law or fact. (Doc. #14).

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In a motion to dismiss, “all well-pleaded allegations of material fact are taken as true and

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construed in a light most favorable to the non-moving party.” Wyler Summit P’ship v. Turner Broad.

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Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). There is a strong presumption against dismissing an

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action for failure to establish a plausible entitlement to relief. Bell Atl. Corp. v. Twombly, 550 U.S.

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544, 556 (2007). The allegations must amount to “more than mere labels and conclusions, [or] a

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formulaic recitation of the elements of a cause of action.” Id. at 555.

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Title 29 U.S.C. § 1103(c)(2)(A)(ii) states that “if [a] contribution or payment is made by an

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employer to a multiemployer plan by a mistake of fact or law . . . [this section] shall not prohibit the

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James C. Mahan
U.S. District Judge

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return of such contribution or payment to the employer within 6 months after the plan administrator

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determines that the contribution was made by such a mistake.” An employer must establish “that

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the equities favor restitution in order to succeed on the merits.” Award Service, Inc. v. N. Cal. Retail

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Clerk’s Union, 763 F.2d 1066, 1068-69 (9th Cir. 1985). “The critical question is whether refunding

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the [employer’s] contributions would undermine the financial stability of the plan.” Chase v.

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Trustees of the W. Conference of Teamsters Pension Trust Fund, 753 F.2d 744, 753 (9th Cir. 1985).

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Plaintiffs submitted a document purporting to show that the trust is in critical status as

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defined under 29 U.S.C. § 1085(b)(2). (Doc. #14, Ex. 2). However, plaintiffs attached this

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document to their reply brief and did not raise this argument until filing the reply. (Doc. #14, Ex.

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2). Therefore, defendants have not had an opportunity to respond to plaintiffs’ argument that the

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trust is in critical status and that the equities do not weigh in favor of restitution. Further, the court

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is not inclined to find, at this stage of the litigation, that the equities do not favor restitution.

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Plaintiffs may file a motion for summary judgment on the counterclaim once discovery is completed

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and there is a clear indication of the impact restitution would have on the financial stability of the

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plan.

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Accordingly,

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IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that plaintiffs and counter-

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defendants Trustees of the Operating Engineers Pension Trust, et. al.’s motion to strike defendants’

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affirmative defenses and motion to dismiss counterclaim by Blake Barsy (doc. #9) be, and the same

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hereby are, DENIED without prejudice.

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DATED January 30, 2012.

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UNITED STATES DISTRICT JUDGE
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James C. Mahan
U.S. District Judge

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