DHSC, LLC v. California Nurses Association/National Nurses Organizing Committee
Memorandum of Opinion and Order For the reasons set forth herein, the Court denies CNA's Motion to Dismiss. ECF No. 19 . Accordingly, Affinity's claims remain. Judge Benita Y. Pearson on 8/31/2015. (JLG)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
DHSC, LLC d/b/a AFFINITY MEDICAL
CALIFORNIA NURSES ASSOCIATION /
NATIONAL NURSES ORGANIZING
COMMITTEE (CNA/NNOC), AFL-CIO,
CASE NO. 5:13CV1770
JUDGE BENITA Y. PEARSON
MEMORANDUM OF OPINION
[Resolving ECF No. 19]
Pending is Defendant California Nurses Association/National Nurses Organizing
Committee, AFL-CIO’s (“CNA”) Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(6). 1
ECF No. 19. CNA moves the Court to dismiss the Amended Complaint (ECF No. 18) filed by
Plaintiff DHSC, LLC d/b/a Affinity Medical Center (“Affinity”).
After considering Affinity’s original complaint (ECF No. 1) and CNA’s subsequent
Motion to Dismiss (ECF No. 12), the Court ordered the Parties to jointly inform it of whether
they believed CNA’s pending Motion should be converted into one for Summary Judgment
Some of the factual circumstances in this case are related to those decided in Keener v. Nat’l
Nurses Org. Comm., No. 5:13CV1073, 2014 WL 1333195 (N.D. Ohio March 31, 2014)
(Pearson, J.), aff’d as modified, No. 14-3373, 2015 WL 3388651 (6th Cir. May 27, 2015).
under Fed. R. Civ. P. 12(d), or whether Affinity should be granted leave to amend its complaint.
ECF No. 15. In response to the Court’s order, the Parties filed a Joint Report in which the
Parties explained that they could not agree on how the litigation should be treated. ECF No. 16
at PageID#: 187, ¶ 2. Affinity requested leave to amend its complaint to remedy the Court’s
concerns articulated in the prior Order. ECF No. 16 at PageID#: 188-90, ¶ 3-15. CNA
requested that its prior Motion to Dismiss be treated as one for Summary Judgement to avoid
further litigation. ECF No. 16 at PageID#: 191-92, ¶ 16-21. After reviewing the Parties’ Joint
Report, the Court granted Affinity’s request to file an amended complaint. Order (ECF No. 17).
In the Amended Complaint (ECF No. 18), Affinity alleges that it has a valid implied-in-fact
collective bargaining agreement (“Implied Agreement”) with CNA which provides that both
Affinity and CNA must submit any unresolved disputes about compliance with, or construction
of, the Implied Agreement to binding arbitration. ECF No.18 at PageID#: 198, ¶ 3; 201, ¶ 18-20.
Affinity further alleges that CNA breached the Implied Agreement by not submitting all
unresolved disputes to final and binding arbitration. ECF No. 18 at PageID#: 205, ¶ 30-32; 206,
In early 2012, the Parties began negotiating a framework for an agreement governing
their relationship during CNA’s efforts to organize the registered nurses employed by Affinity,
as well as the Parties’ conduct during any collective bargaining negotiations that might follow.
ECF No. 18 at PageID#: 200, ¶ 14. The Parties produced two documents with the terms of their
negotiations – a Labor Relations Agreement (“LRA”) (ECF No. 18-1) and an Election Procedure
Agreement (“EPA”) (ECF No. 18-2). ECF No. 18 at PageID#: 213, 232. Both documents
provide terms for arbitration of disputes: the LRA provides that the Parties agree to submit “…
any unresolved disputes about … [the LRA] to final and binding arbitration[;]” and the EPA
provides that “… either party may … submit [an] unresolved dispute … for final and binding
resolution[.]” ECF No. 18 at PageID#: 223, 249. The Parties, however, did not sign or execute
either the LRA or the EPA. ECF No. 18 at PageID#: 200, ¶16.
On July 3, 2012, Jane Lawhon, CNA’s counsel, sent an email to Affinity’s representative,
Don Carmody, with the subject line “Notice of Intent by NNOC-OH/NNY to Organize Affinity
Medical Center in Massillon, Ohio.” In the body of the email, Lawhon wrote that CNA was
providing Affinity with written notice of its intent to organize Affinity’s registered nurses
“[p]ursuant to Paragraph 1 of the Election Procedure Agreement[.]” ECF No. 18-3 at PageID#:
From July 9, 2012 to August 29, 2012, both Parties performed actions consistent with the
terms detailed in the LRA and EPA, including: jointly issuing a notice to Affinity’s employees
about CNA’s organizing efforts and the upcoming union election; jointly conducting training
sessions about the organizing process for supervisors, managers, and union organizers; and
exchanging and pre-screening the other party’s literature about the organizing effort. Affinity
provided CNA organizers with access to company break rooms, conference rooms, bulletin
boards, and the cafeteria. Affinity granted unpaid leave to Affinity employees who were
facilitating CNA’s organizing activities. Both Parties also followed the dispute resolution
procedures detailed in the LRA and EPA to settle about 29 disputes. ECF No. 18 at PageID#:
204, ¶ 24.
On October 5, 2012, after Affinity’s nurses elected CNA as their exclusive collective
bargaining representative, the National Labor Relations Board (“NLRB”) certified the result of
the election. ECF No. 18 at PageID#: 199, ¶ 8.
Affinity alleges that as early as September 13, 2012, CNA breached the Implied
Agreement’s terms for dispute resolution by refusing to submit unresolved disputes to final and
binding arbitration. CNA refused to join Affinity in requesting that the NLRB hold resolution of
its unfair labor practices challenges in abeyance or submit its challenges to arbitration. Instead,
CNA actively participated in the NLRB’s resolution of challenges. ECF No. 18 at PageID#:
205-206, ¶ 31-35.
Affinity now brings three claims against CNA as a result of Defendant’s alleged breach
of the Implied Agreement: (1) CNA’s breach resulted in damages to Affinity, ECF No. 18 at
PageID#: 206-207, ¶ 38-43; (2) Affinity is entitled to CNA’s specific performance of the Implied
Agreement’s terms and conditions, including submission of unresolved disputes to final and
binding arbitration, ECF No. 18 at PageID#: 207-208, ¶ 44-47; and (3) Affinity is entitled to a
declaratory judgment mandating the Parties to submit all unresolved disputes under the Implied
Agreement to final and binding arbitration. ECF No. 18 at PageID#: 208-209, ¶ 48-51. For the
reasons given below, the Court denies CNA’s Motion to Dismiss.
To survive a Motion to Dismiss under Fed. R. Civ. P. 12(b)(6), the complaint must allege
enough facts to “raise a right to relief above the speculative level.” Bell Atlantic v. Twombly,
550 U.S. 544, 555 (2007). It also must “state a claim to relief that is plausible on its face.” Id. at
570. Upon reviewing a Motion to Dismiss, the Court shall take the pleadings as true and
construe them “liberally in favor of the party opposing the motion to dismiss.” Scott v. Ambani,
577 F.3d 642, 646 (6th Cir. 2009).
Claims set forth in a complaint must be plausible, rather than conceivable. Twombly, 550
U.S. at 570. “[W]here 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 ‘show[n]’— ‘that the
pleader is entitled to relief.’” Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009) (citing Fed. R. Civ. P.
8(a)(2)). The factual allegations in the complaint “must contain something more … than … a
statement of facts that merely creates a suspicion [of] a legally cognizable right of action.”
Twombly, 550 U.S. at 555 (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure §
1216, pp. 235-36 (3d ed. 2004)). In addition to reviewing the claims set forth in the complaint, a
court may also consider exhibits, public records, and items appearing in the record of the case as
long as the items are referenced in the complaint and are central to the claims contained therein.
Bassett v. Nat’l Collegiate Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008).
CNA contends that Affinity’s Amended Complaint (ECF No. 18) does not allege
sufficient facts from which the Court can plausibly infer a valid implied-in-fact collective
bargaining agreement that CNA breached by failing to submit all unresolved disputes to
arbitration. ECF No. 19-1 at PageID#: 262. Affinity maintains that it entered into a valid
implied-in-fact collective bargaining agreement with CNA because the Parties’ conduct was
consistent with previously negotiated terms included in the unexecuted LRA and EPA. ECF No.
20 at PageID #: 309.
Collective bargaining agreements are interpreted according to ordinary principles of
contract law, at least to the extent those principles are consistent with federal labor policy. M &
G Polymers USA, LLC v. Tackett, 135 S. Ct. 926, 929 (2015). An implied-in-fact contract is
“founded upon a meeting of minds, which … is inferred … from conduct of the parties showing,
in the light of the surrounding circumstances, their tacit understanding.” Baltimore & Ohio R.R.
Co. v. United States, 261 U.S. 592, 597 (1923). A collective bargaining agreement can be shown
to exist by parties manifesting their intention to abide by agreed-upon terms through their
conduct. Bobbie Brooks, Inc. v. Int’l Ladies’ Garment Workers Union, 835 F.2d 1164, 1168 (6th
Cir. 1987). Damages for a breach of contract are measured by “the loss of what the contractee
would have had if the contract had been performed[.]” Chicago, M. & St. P. Ry. Co. v. McCaullDinsmore Co., 253 U.S. 97, 100 (1920).
Here, Affinity claims that the Parties’ conduct throughout the 2012 union election period
supports its conclusion that CNA and Affinity had an implied-in-fact contract based on
previously negotiated terms, which mirror those in the unsigned LRA and EPA. ECF No. 20 at
PageID #: 303-305. Affinity supports its position with several examples of the Parties’ conduct,
The July 3, 2012, email sent by CNA’s legal counsel to Affinity’s representative
providing notice of CNA’s intent to organize Affinity’s nurses “[p]ursuant to
Paragraph 1 of the Election Procedure Agreement[.]” ECF No. 18-3 .
The Parties’ July 10, 2012 joint announcement to Affinity’s employees about CNA’s
organizing efforts, which provided that “the parties have come together and executed
this Election Procedure Agreement and they are committed to abide by it.” ECF No.
18-5 at PageID#: 254.
The Parties’ frequent use of the dispute resolution procedures set forth in the LRA
and EPA throughout the union election period. ECF No. 18 at PageID#: 204, ¶ 24(l).
The Parties’ conduct after the July 3, 2012 email plausibly suggests that CNA and
Affinity had a meeting of the minds based, at least in part, on the previously negotiated terms
which were included in the unexecuted LRA and EPA. The Parties jointly trained and
communicated with Affinity employees, and vetted each other’s communications. Affinity
granted CNA organizers access to the company’s facilities and provided Affinity employees with
unpaid leave to assist with CNA’s organizing efforts. Both Parties used the dispute resolution
procedures described in the LRA and EPA throughout the relevant period. In short, both Parties
conducted themselves in a manner consistent with previously-negotiated terms.
CNA disputes Affinity’s conclusion by pointing out that the LRA’s terms cannot serve as
evidence of the Parties’ intent to be bound in a contractual relationship. ECF No. 19-1 at
PageID#: 264-65. Defendant notes that the LRA provided that “[n]o draft of this Agreement
prior to that which is signed between the parties shall be used by any party, or be admissible in
any proceeding, to interpret the intent of the parties.” ECF No. 18-1 at PageID#: 228. Thus,
CNA concludes, this provision of the LRA clearly shows that the Parties intended the terms to be
binding only after they had mutually signed and executed the LRA. ECF No. 19-1 at PageID#:
CNA construes Affinity’s reliance on the LRA too broadly. Affinity does not claim that
the Implied Agreement is identical to the LRA; Affinity alleges that the Parties conducted
themselves according to terms detailed in the LRA and EPA throughout the relevant period,
including when both Parties used the dispute resolution procedures provided in those documents.
ECF No. 20 at PageID: 309-10. The extent to which the Implied Agreement’s dispute resolution
terms mirror those of the LRA is a question of fact, and the Court must construe them “liberally
in favor of the party opposing the motion to dismiss.” Scott v. Ambani, 577 F.3d 642, 646 (6th
Cir. 2009). Therefore the Court finds it plausible that Affinity and CNA had an implied-in-fact
contract which included dispute resolution terms similar to those of the unsigned LRA and EPA.
CNA also disputes that it had an implied-in-fact contract with Affinity because of the
substance of the Implied Agreement. CNA maintains that the dispute resolution terms of the
Implied Agreement restrict CNA's statutory right to bring unfair labor practices disputes to the
NLRB, despite the fact that CNA did not clearly and unmistakably waive its right to do so. ECF
No. 19 -1 at PageID #: 268-69. Any agreement between the Parties that restricts CNA’s
statutory right to bring unfair labor practice disputes to the NLRB must be made by clear and
unmistakable waiver. See, e.g. Wright v. Universal Mar. Serv. Corp., 525 U.S. 70, 79 (1998)
(holding that agreements to arbitrate statutory rights must be particularly clear). ECF No. 19 -1
at PageID #: 269. CNA supports its position by noting two substantially similar cases in which a
court dismissed a complaint against it, Hosp. of Barstow, Inc. v. California Nurses Ass'n, No.
EDCV 13-1063 CAS (DTBx), 2013 WL 6095559 (C.D. Cal. Nov. 18, 2013), appeal dism’d, No.
13-57131 (9th Cir. July 2, 2014), and Fallbrook Hosp. Corp. v. California Nurses Ass’n, No.
13cv1233–GPC (WVG), 2014 WL 2779763 (S.D. Cal. June 19, 2014). Both courts dismissed
the complaints against CNA for similar reasons. In Barstow, the plaintiff alleged it and CNA
had an oral agreement that was breached when CNA filed an unfair labor practices charge with
the NLRB. Barstow, 2013 WL 6095559, at *7. The Fallbrook court held that: (1) the plaintiff
alleged an oral agreement; and (2) the plaintiff alleged that the breach occurred when CNA filed
unfair labor practice charges with the NLRB. Fallbrook, 2014 WL 2779763, at *6.
This case is distinguishable from both Barstow and Fallbrook in two significant ways.
First, Affinity claims it had an implied-in-fact contract, not an oral contract. ECF No. 20 at
PageID#: 309. Second, Affinity accuses CNA of breaching the Implied Agreement by failing to
follow the contract’s terms for dispute resolution, not by filing an unfair labor practice charge
with the NLRB. ECF No. 18 at PageID#: 204-205, ¶ 26.
Unlike the plaintiffs in Barstow and Fallbrook, Affinity claims it had an implied-in-fact
contract with CNA, not an oral contract. Therefore, Affinity must show that the Parties
conducted themselves in a manner indicating mutual consent to the terms of the Implied
Agreement, not produce evidence of an oral understanding between them. See Baltimore & Ohio
R.R. Co., 261 U.S. at 597 (holding that the terms of an implied-in-fact contract are inferred from
the parties’ conduct). Affinity supported its position with evidence that both Parties conducted
themselves in accordance with the Implied Agreement, including when both Parties adhered to
dispute resolution procedures documented in the LRA. ECF No. 20 at PageID#: 309.
Also unlike the plaintiffs in Barstow and Fallbrook, Affinity does not claim that CNA
breached the Implied Agreement by filing an unfair labor practice charge with the NLRB.
Affinity declares that CNA breached the Implied Agreement when CNA refused to follow the
dispute resolution procedures for unresolved disputes. ECF No. 20 at PageID#: 318. This
distinction is important because CNA could be bound to follow the Implied Agreement’s dispute
resolution terms without waiving its statutory right to file an unfair labor practice charge with the
NLRB. As Affinity notes in its response to Defendant’s Motion to Dismiss, the NLRB
frequently permits parties to independently arbitrate disputes pending before the Board. ECF
No. 20 at PageID#: 318. The NLRB acts “against the backdrop of a federal policy supporting a
presumption in favor of arbitrability in the labor law context.” Teamsters Local Union 480 v.
United Parcel Serv., Inc., 748 F.3d 281, 288 (6th Cir. 2014). The NLRB may use arbitration as
an aid to settle disputes pending before it, but will only defer to an arbitrator’s resolution when
the Board is satisfied that the proceedings were fair and the arbitrator considered and clearly
decided all unfair labor practice charges. N.L.R.B. v. Magnetics Int'l, Inc., 699 F.2d 806, 811
(6th Cir. 1983). CNA could both file a charge with the NLRB and submit to private arbitration
without breaching the Implied Agreement. Only the NLRB may decide to defer a pending
charge to private arbitration.
To summarize, Affinity alleges it had an implied-in-fact agreement with CNA that
included dispute resolution terms from the unexecuted LRA and EPA. Both Parties consistently
performed actions in accordance with the terms of the LRA and EPA, including 29 instances in
which both Parties followed the dispute resolution procedures. The terms of the Implied
Agreement did not require CNA to waive its statutory right to file unfair labor practices charge
with the NLRB. Therefore, the Court finds that Affinity presents a plausible claim that the
Parties entered into an implied-in-fact collective bargaining agreement that CNA breached by not
submitting all unresolved disputes to binding arbitration. Accordingly, the Court denies CNA’s
Motion to Dismiss.
Affinity asserts three claims against CNA for breaching the Implied Agreement: (1)
damages; (2) specific performance; and (3) declaratory relief. ECF No. 18 at PageID#: 206-09, ¶
43-51. Affinity’s claims for specific performance and declaratory relief are remedies to which it
may be entitled. Those two claims address what Affinity would have had if CNA had followed
the terms of the Implied Agreement. See Chicago, M. & St. P. Ry. Co., 253 U.S. at 100 (holding
that damages for breach of contract are measured by the loss of what the contractee would have
had if the contract had been performed).
That brings us to Affinity’s claim for damages. The Amended Complaint asserts that
“Affinity has been damaged by [CNA’s] breach” of the Implied Agreement because Affinity
spent “… unnecessary time and expense … litigating disputes [with CNA.]” ECF No. 18 at
PageID#: 207, ¶ 43. Affinity has failed to: allege any traditionally compensable contract
damages; provide an explanation or justification for why it is entitled to alternative types of
damages; or produce any factual support for its assertion of suffering unnecessary expense. In
fact, what Affinity has done is assert “an unadorned, the-defendant-unlawfully-harmed-me
accusation.” Iqbal, 556 U.S. at 678. Affinity’s claim for damages is not dismissed is because
the claim is not a stand-alone cause of action. Damages are a possible remedy for a breach of
contract. The Court will consider, and if necessary, award damages to Affinity as justice
For the reasons stated above, the Court denies CNA’s Motion to Dismiss. ECF No. 19.
Accordingly, Affinity’s claims remain.
IT IS SO ORDERED.
August 31, 2015
/s/ Benita Y. Pearson
Benita Y. Pearson
United States District Judge
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