Board of Trustees of the Glazing Health and Welfare Fund et al v. Aleut Facilities Support Services, et al
Filing
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ORDER granting #33 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge Andrew P. Gordon on 4/11/2017. (Copies have been distributed pursuant to the NEF - JM)
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UNITED STATES DISTRICT COURT
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DISTRICT OF NEVADA
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BOARD OF TRUSTEES OF THE
GLAZING HEALTH AND WELFARE
FUND, et al.,
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Plaintiffs,
v.
ALEUT FACILITIES SUPPORT SERVICES,
et al.,
Case No. 2:16-cv-02297-APG-PAL
ORDER GRANTING MOTION TO
DISMISS FOR LACK OF SUBJECT
MATTER JURISDICTION
(ECF No. 33)
Defendants.
Plaintiffs are the boards of trustees of various collectively bargained multi-employer
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employee benefit plans (the “Trusts”), which are subject to the Employee Retirement Income
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Security Act (ERISA). ECF No. 1 at 5. The Trusts previously filed a lawsuit in this court against
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Accuracy Glass & Mirror Company, Inc. under ERISA and the Labor Management Relations Act
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(LMRA). The Trusts alleged in that case that Accuracy had failed to make contributions to the
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Trusts as required under a collectively bargained agreement between the International Union of
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Painters and Allied Trades, District Council 15; Glaziers, Architectural Metal and Glassworkers’
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Local Union 2001; and the Glazing Contractors’ Association of Nevada (of which Accuracy was
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a member). Id. at 11-12. The Trusts prevailed in that action, with the court entering judgment in
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their favor on May 27, 2016. Id. at 12.
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The Trusts then brought this action to recover from other parties contributions that
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Accuracy failed to pay for a different time period than reflected in the prior judgment. For
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example, defendant Western Surety had issued a bond to Accuracy. Id. at 12-13. The Trusts
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contend Western must pay on the bond for Accuracy’s delinquencies. Id. at 13. The other
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defendants are either (1) companies who hired Accuracy to perform the work that gave rise to
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Accuracy’s indebtedness or (2) companies who issued bonds to the companies who hired
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Accuracy. Id. at 13-14. Accuracy is not a defendant in this case. The Trusts assert state law
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claims against the defendants for payment of labor indebtedness under Nevada Revised Statutes
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§ 608.150 and payment on the bonds under Nevada Revised Statutes § 624.273. Id. at 14-15.
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Defendants City Center Holdings, LLC and Mandarin Oriental Las Vegas, LLC move to
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dismiss the case for lack of subject matter jurisdiction. These defendants argue that although the
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complaint mentions ERISA and the LMRA as jurisdictional bases, it does not allege that any
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defendant has liability under ERISA or a labor contract with the plaintiffs. Rather, these
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defendants argue, the only claims asserted are state law claims. The defendants contend that
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subject matter jurisdiction in the complaint is thus predicated solely on supplemental jurisdiction
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based on the prior lawsuit against Accuracy. But, they contend, without at least one claim over
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which the court has subject matter jurisdiction in this case (as opposed to the prior action against
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Accuracy), the court cannot exercise supplemental jurisdiction.
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The Trusts respond by asserting that under § 608.150, the defendants are original
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promisors on the obligations giving rise to Accuracy’s indebtedness. The Trusts also argue that
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supplemental jurisdiction is appropriate because this case is part of the same case or controversy
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as the Accuracy litigation. Finally, the Trusts contend that dismissal would not be fair or efficient
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because the case was filed against more than 50 defendants, only two of whom are moving to
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dismiss, and has proceeded as if the court had jurisdiction.
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Title 28 U.S.C. § 1331 provides for original jurisdiction over “all civil actions arising
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under the Constitution, laws, or treaties of the United States.” There are three potential grounds
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for federal question jurisdiction: (1) the plaintiff has asserted a federal claim in the complaint,
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meaning that federal law creates the cause of action; (2) under the artful pleading doctrine, one or
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more of the plaintiff’s state law claims should be recharacterized as a federal claim; or (3) one or
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more of the plaintiff’s state law claims “necessarily turn[s] on the construction of a substantial,
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disputed federal question.” Rains v. Criterion Sys., Inc., 80 F.3d 339, 343 (9th Cir. 1996).
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In the complaint, the Trusts assert jurisdiction in this court under ERISA and the LMRA,
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with supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367(a). ECF No. 1 at
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4. As the party seeking to invoke federal jurisdiction, the Trusts bear the burden of establishing it
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exists. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). In their response
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brief, the Trusts do not explain how jurisdiction is predicated on the LMRA, so they have not met
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their burden of showing I have jurisdiction on that basis. I address below the parties’ arguments
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regarding § 608.150, ERISA, and supplemental jurisdiction.
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A. Section 608.150
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The Trusts argue that under § 608.150, an original contractor is liable for the indebtedness
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for labor incurred by its subcontractors.1 It is unclear what impact the Trusts believe this has on
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subject matter jurisdiction. If they are asserting that the defendants are liable as ERISA
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fiduciaries as a result of the operation of § 608.150 so that their claim arises under ERISA, then I
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disagree. Section 608.150 creates a “state law obligation to answer for [Accuracy’s] debts.”
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Trustees of Constr. Indus. & Laborers Health & Welfare Trust v. Desert Valley Landscape &
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Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003) (holding district court properly exercised
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supplemental jurisdiction over state law claim under § 608.150 where joined with an ERISA
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claim against the subcontractor that owed the ERISA contributions). The Trusts would have no
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means to collect from the defendants in this action but for Nevada state law. Accordingly, the
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Trusts’ § 608.150 claim asserts a cause of action that was created by state law.
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The Trusts agree that § 608.150 claims are not preempted by ERISA. See ECF No. 42 at
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6-7; see also United Ass’n of Journeymen & Apprentices of Plumbing & Pipefitting Indus. of U.S.
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& Canada AFL-CIO, Local No. 525 v. Grove Inc., 105 F. Supp. 2d 1129, 1130 (D. Nev. 2000)
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(stating a cause of action under § 608.150 seeks to enforce an “independent obligation created
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under the statute,” and thus is not preempted by ERISA). Thus, the Trusts’ § 608.150 claim
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should not be recharacterized as a federal claim.
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Finally, the Trusts do not argue that their § 608.150 claim necessarily turns on the
construction of a substantial, disputed federal question. Accordingly, the Trusts have not met
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Prior to recent amendments, § 608.150 provided that an “original contractor” assumes and is
liable for its subcontractor’s “indebtedness for labor” incurred while acting for the original contractor.
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their burden of showing that their § 608.150 claim gives rise to federal question subject matter
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jurisdiction.
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B. Supplemental Jurisdiction
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In their response, the Trusts appear to concede that they assert subject matter jurisdiction
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on the theory that I should exercise supplemental jurisdiction based on the prior, closed case
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against Accuracy. However, controlling authority precludes me from doing so.
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“Supplemental jurisdiction must be exercised in the same action that furnishes the basis
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for exercise of supplemental jurisdiction.” Ortolf v. Silver Bar Mines, Inc., 111 F.3d 85, 86 (9th
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Cir. 1997), as amended on denial of reh’g (June 10, 1997). As explained in Ortolf, the
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supplemental jurisdiction statute, 28 U.S.C. § 1367(a), extends a federal court’s power to exercise
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supplemental jurisdiction to “‘all other claims that are so related to claims in the action’ when a
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district court has original jurisdiction ‘in any civil action.’” Id. “The phrases ‘in any civil action’
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and ‘in the action’ require that supplemental jurisdiction be exercised in the same case, not a
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separate or subsequent case.” Id. at 87; cf. Herklotz v. Parkinson, 848 F.3d 894, 898 (9th Cir.
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2017) (holding that a “severed action must have an independent jurisdictional basis” and cannot
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“rely on the supplemental jurisdiction afforded by 28 U.S.C. § 1367(a)” once severed because
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“there is nothing left to supplement”).
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This is consistent with the United States Supreme Court’s decision in Peacock v. Thomas,
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516 U.S. 349 (1996). There, the plaintiff filed an ERISA action against his former employer,
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Tru-Tech, and a Tru-Tech officer and shareholder, D. Grant Peacock, for benefits due under the
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plan. Peacock, 516 U.S. at 351. The district court found the employer breached its fiduciary
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duties but that Peacock was not an ERISA fiduciary. Id. The district court thus entered judgment
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against the employer, and the Fourth Circuit affirmed. Id.
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The plaintiff did not upon execute the judgment while the appeal was pending, and in the
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meantime Peacock settled Tru-Tech’s accounts with various creditors, including himself. Id. at
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351-52. The plaintiff’s later collection efforts therefore were unsuccessful. Id. at 352.
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The plaintiff then sued Peacock in federal court for conspiracy to prevent collection of the
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prior ERISA-related judgment, for fraudulent transfers, and to pierce the corporate veil. Id. The
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district court pierced the corporate veil and made Peacock liable on the prior judgment. Id. The
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Fourth Circuit affirmed, holding that the district court properly exercised ancillary jurisdiction2
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over the case. Id.
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The Supreme Court reversed, holding that “[i]n a subsequent lawsuit involving claims
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with no independent basis for jurisdiction, a federal court lacks the threshold jurisdictional power
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that exists when ancillary claims are asserted in the same proceeding as the claims conferring
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federal jurisdiction.” Id. at 355. That Court specifically rejected the Trusts’ argument in this case
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that I may exercise supplemental jurisdiction based on the prior Accuracy litigation: “claims
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alleged to be factually interdependent with and, hence, ancillary to claims brought in an earlier
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federal lawsuit will not support federal jurisdiction over a subsequent lawsuit.” Id. at 355; see
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also id. at 357 (stating the exercise of ancillary enforcement jurisdiction is inappropriate in “a
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subsequent lawsuit to impose an obligation to pay an existing federal judgment on a person not
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already liable for that judgment”).
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Here, the Trusts have initiated a subsequent lawsuit asserting state law claims with no
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independent basis for subject matter jurisdiction. There is no claim establishing subject matter
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jurisdiction in this case, and I therefore cannot exercise supplemental jurisdiction because there is
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nothing to supplement.
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As to the Trusts’ fairness and efficiency arguments, once a federal court determines it
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lacks jurisdiction, it has no further power to act. Steel Co. v. Citizens for a Better Env’t, 523 U.S.
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83, 94 (1998) (“Without jurisdiction the court cannot proceed at all in any cause. Jurisdiction is
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power to declare the law, and when it ceases to exist, the only function remaining to the court is
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that of announcing the fact and dismissing the cause.”) (quotation omitted); see also Herklotz,
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848 F.3d at 897 (stating that “challenges to subject matter jurisdiction may be raised at any point,
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Congress enacted § 1367 to “codif[y] much of the common-law doctrine of ancillary jurisdiction
as part of ‘supplemental jurisdiction.’” Peacock, 516 U.S. at 354 n.5.
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including for the first time on appeal”). Fairness and efficiency concerns cannot overcome a lack
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of subject matter jurisdiction. I therefore grant the defendants’ motion to dismiss.
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C. Conclusion
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IT IS THEREFORE ORDERED that defendant City Center Holdings LLC and Mandarin
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Oriental Las Vegas LLC’s motion to dismiss (ECF No. 33) is GRANTED. The complaint in this
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case is dismissed for lack of subject matter jurisdiction. The clerk of court is instructed to close
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this case.
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DATED this 11th day of April, 2017.
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ANDREW P. GORDON
UNITED STATES DISTRICT JUDGE
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