CARPENTERS COMBINED FUNDS, INC. v. KELLY SYSTEMS, INC. et al
Filing
17
MEMORANDUM OPINION indicating that, for reasons stated more fully within, Defendants' Motion to Transfer 6 is granted and this matter will be transferred to the United States District Court for the Middle District of Pennsylvania, Harrisburg Division, forthwith. Insofar as Defendants also move to dismiss Count III, such matter shall be addressed by the transferee court. An appropriate Order follows. Signed by Judge Nora Barry Fischer on 5/29/15. (jg)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
CARPENTERS COMBINED FUNDS, INC.,
by James R. Klein, Administrator,
Plaintiff,
)
)
)
)
)
)
)
)
)
)
v.
KELLY SYSTEMS, INC. and NOVINGER
GROUP, INC.,
Defendants.
Civil Action No. 14-1681
Judge Nora Barry Fischer
MEMORANDUM OPINION
I. INTRODUCTION
This is an ERISA matter wherein Plaintiff Carpenters Combined Funds, Inc., (“Plaintiff”
or “Fund”), the Pittsburgh-based administrator and collection agent of non-party Greater
Pennsylvania Regional Council of Carpenters Union, (“Union”), seeks to enforce the collective
bargaining obligations of non-party and Harrisburg-based Novinger’s Inc., (“Novinger’s”),
against two related entities named as Defendants, Kelly Systems, Inc., (“Kelly”), and Novinger
Group, Inc., (“NGI”), also located in Harrisburg.
(Docket No. 1). Presently before the Court is
a Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) or to Dismiss Count III of
Plaintiff’s Complaint Pursuant to Fed. R. Civ. P. 12(b)(6) filed by Defendants, (Docket Nos. 6,
7), Plaintiff’s Brief in Opposition thereto, (Docket No. 12), and Defendants’ Reply, (Docket No.
16). The parties’ filings include various evidentiary submissions, consisting of: excerpts of
certain collective bargaining agreements; addenda thereto; other documents; and affidavits of
party representatives. (Docket Nos. 6, 7, 12, 16). For the following reasons, Defendants’
1
Motion [6] is granted to the extent that they seek this matter to be transferred to the United States
District Court for the Middle District of Pennsylvania. 1
II. BACKGROUND
This case arises out of two successive collective bargaining agreements between the
Union and Novinger’s for the periods of 2008-2012 and 2012-2015, (collectively, “CBAs” or
“2008 CBA”, “2012 CBA”), which cover various aspects of the relationship between Novinger’s
and Union carpenters working in counties located within the Middle and Eastern Districts of
Pennsylvania.2
(See Pl. Exs. “A” and “B” to Complaint, Docket Nos. 1-1; 1-2). The CBAs
were negotiated in the Harrisburg area, with the Keystone Contractors Association acting as the
bargaining agent for all employers, including Novinger’s. (Id.; Docket No. 6-1 at ¶¶ 2-3, 7-8).
Novinger’s maintains its headquarters in Harrisburg and at the time of the negotiations, the
Union was likewise based in Harrisburg. (Id.). Novinger’s President, James Novinger, executed
the Joinder agreement on behalf of the company, binding Novinger’s to the CBAs as an
“Employer.” (Pl. Ex. “C” to Complaint, Docket No. 1-3). Among other things, the CBAs
1
As noted, Defendants also move to dismiss Count III of Plaintiff’s Complaint. (Docket Nos. 6, 7).
Because this Court finds that the interests of justice require a transfer to the U.S. District Court for the Middle
District of Pennsylvania, it is in the interests of comity for the transferee court to resolve the dispute regarding the
plausibility of Plaintiff’s alternative theory set forth in its Count III whereby it seeks to hold Defendants liable as
“joint employers” with Novinger’s.
2
The CBAs state the following in a preface under the heading titled “Agreement,”
[CBA is entered into for t]he purpose of establishing hours of work; conditions
under which employees shall work for the Employer; and to facilitate without
resort to strikes, slowdowns, lockouts, peaceful adjustment of grievances and
disputes which may from time to time arise between the Employers and
carpenters engaged in building construction work in all of the following counties
in Pennsylvania:
Adams, Berks, Bradford, Columbia, Cumberland, Dauphin, Juniata, Lancaster,
Lebanon, Lycoming, Montour, Northumberland, Perry, Schuylkill, Snyder,
Sullivan (except Red Rock Air Base), Tioga, Union, York, the lower part of
Luzerne County, in Carbon County it would include Banks, Lausanne, Lehigh,
Packer, Kidder Township and that part of Penn Forest Township north of Route
903.
(See 2008 CBA; 2012 CBA). None of these counties are located within the Western District of Pennsylvania.
2
outline the obligations of Novinger’s to make certain monthly fringe benefit contributions to the
Union including, but not limited to amounts for pension and medical benefits. (Docket No. 1 at
¶ 11). The 2008 CBA and 2012 CBA contain identical provisions stating the following:
During the term of this contract and any extension thereof, the
employer shall pay into the appropriate benefit fund as agreed to
by the respective Boards of Trustees. Medical plan payments may
go to the Greater Pennsylvania Carpenters’ Medical Plan or the
Building Trades Health and Welfare Fund. Pension payments will
go to the Greater Pennsylvania Carpenters’ Pension Fund or the
Keystone Carpenters’ Pension Plan. Annuity payments will go to
the Greater Pennsylvania Carpenters’ Annuity and Savings Fund.
All of the terms and provisions of the Agreements and
Declarations of Trust creating the above said Funds are hereby
accepted by the parties hereto and copies of said Agreements and
Declarations of Trust are incorporated by reference in this Contract
and made a part hereof.
(See 2008 CBA at § XV; 2012 CBA at § XV). Both CBAs contain broad arbitration provisions
setting forth dispute resolution procedures governing all types of disputes between employers,
the Union and any employees.3 (See 2008 CBA at § XIII; 2012 CBA at § XIII (“Any and all
disputes, complaints, controversies or grievances whatsoever between the Union or any
employees and the Employer, which directly or indirectly arise under, out of, or in connection
with or in any manner relate to this Agreement, or the breach thereof, or the acts, conduct or
relations between the Parties shall be adjusted as follows: ….”)). These agreements lack any
forum selection clauses. (See generally 2008 CBA; 2012 CBA).
Neither the Union nor Novinger’s are parties to this lawsuit. (Docket No. 1). Rather, this
case is between Plaintiff, which administers the employee benefit funds on behalf of the Union
and serves as its agent to collect alleged delinquent benefits, and two other entities that are
owned by James Novinger but are not parties to the CBAs: NGI and Kelly. (Id.). Plaintiff is
3
As the Court describes in the discussion section below, the arbitration provisions have not been invoked by
Plaintiff which is attempting to rely on Trust documents in an effort to avoid the arbitration requirements. See § III,
supra.
3
headquartered in Pittsburgh. (Id.). The Harrisburg-based Union recently was a party to a merger
with additional unions from other areas, including the Western Pennsylvania regional carpenters
union to form the Keystone Mountain Lakes Regional Council of Carpenters. (Docket No. 12-4
at ¶ 9).
To be clear, Plaintiff neither claims that Novinger’s violated the CBAs nor asserts that
Novinger’s is delinquent in making necessary fringe benefit contributions to the Fund. (Docket
No. 1). Instead, Plaintiff avers that, from September 2010 to the present, parent company NGI
diverted drywall contracting work from its union subsidiary, Novinger’s, to non-union
subsidiary, Kelly, purportedly for the purpose of avoiding Novinger’s collective bargaining
obligations to make necessary contributions for fringe benefits to the Union for the benefit of its
members. (Id.). Plaintiff seeks to enforce Novinger’s obligations to pay fringe benefits against
NGI and Kelly under three alternative theories, including that: all three entities constitute a
“single employer”; NGI and Kelly are the “alter egos” of Novinger’s; and/or, all three entities
constitute a “joint employer.” (Id.). Plaintiff contends that the estimated principal delinquency
exceeds two million dollars and that it is also pursuing interest, contractual liquidated damages
plus attorneys’ fees and costs. (Id. at ¶ 33).
NGI and Kelly deny liability and will defend this case vigorously through an expected
non-jury trial. (Docket Nos. 6, 7). Notably, NGI has been operating Novinger’s and Kelly as
union and non-union drywall contracting companies, respectively, for decades and the non-union
companies, NGI and Kelly, have never made any contributions to the Fund for fringe benefits or
otherwise. (Docket No. 6-1 at ¶¶ 6-10). Hence, there is no established relationship between
NGI, Kelly and Plaintiff or the Union for that matter. It also appears that the Union previously
pursued an alter ego theory against NGI and Kelly before the National Labor Relations Board
4
several years ago but such claim was denied at the administrative level. (Id. at ¶ 11; Docket No.
6-2).
On behalf of Defendants, James Novinger declares that all of the potential evidence in
this case related to NGI and Kelly is located at their Harrisburg offices and any potential
testimony concerning those records and/or their business practices would necessarily come from
employees located in that region. (Docket No. 6-1 at ¶¶ 6-28). He adds that any evidence from
contracting jobs for third parties performed by those entities would also be related to
construction sites in the Middle and Eastern Districts of Pennsylvania because that is where those
companies do business. (Id. at ¶¶ 26-27). He further states that each of the three entities operate
independently; refuting the allegations in Plaintiff’s Complaint suggesting that the corporations
operate, in effect, as one entity, without adhering to the necessary corporate formalities. (Id. at
¶¶ 10-11, 21). Mr. Novinger also acknowledges that if his companies are found liable in this
lawsuit and/or another claim against it for withdrawal liability in Civil Action No. 14-956
seeking a judgment in excess of $1.9 million, that all three companies would be bankrupt.4
(Docket No. 6-1 at ¶ 29).
Plaintiff’s affiant, James Klein, suggests that its auditors intend to obtain the financial
records of NGI and Kelly during discovery and then examine those records in the Pittsburgh area
4
Mr. Novinger declares that:
[h]aving to litigate this case in Pittsburgh would cause severe financial hardship
to Kelly and to NGI, whose continued existence depends upon their ability to
defeat Plaintiff’s claims. The downturn in the economy that occurred in 2008
very nearly put all of my companies out of business. Both Novinger’s and Kelly
had to borrow large sums of money on lines of credit to continue operating.
Both companies remain marginal and each carries a significant amount of debt.
Despite being the controlling shareholder and President of Novinger’s, Kelly
and NGI, I have not received a salary from the companies in several years.
…
The Fund recently filed a summary judgment motion [in the case docketed at
No. 14-956] seeking a judgment in excess of 1.9 million dollars, which would
bankrupt all three companies.
(Docket No. 6-1 at ¶ 28).
5
where the auditors maintain offices. (Docket No. 12-4 at ¶ 24 (“Following discovery, these
auditors will have knowledge regarding the work performed by Novinger’s, as well as work
performed by Kelly Systems and Novinger Group”)). Klein additionally declares that Plaintiff’s
own records are maintained in this area, without specifying what records, if any, it has as to NGI
and Kelly.5 (Id. at ¶26). Plaintiff further notes that it would call one of its executives as a
possible witness, apparently to testify as to general topics akin to a 30(b)(6) deponent. (Id. at ¶
21). These potential witnesses for Plaintiff – an executive and auditors who have not yet started
their assignments – are located in Pittsburgh. (Id. at ¶¶ 25-27).
More broadly, the interested stakeholders in the case all work primarily in the Middle
District of Pennsylvania, although the territory covered by the CBAs includes a small portion of
the Commonwealth situated in the Eastern District of Pennsylvania. (See 2008 CBA; 2012
CBA). These interested individuals include the Union’s members in the Local 214 and Local
645, each of whom are third party beneficiaries of the CBAs and have a financial stake in this
lawsuit. (Id.). Further, all of the employees of NGI and Kelly work in that area. (Docket No. 61 at ¶¶ 26, 27). As noted, third parties which have contracted with Kelly and/or NGI for
carpentry services likewise do business in that area. (Id. at ¶ 15). Again, Plaintiff’s entire fringe
benefits claim relies upon the value of the carpentry services that non-union employees of NGI
and Kelly allegedly performed for these third party contractors and all such work occurred
outside of this District. (See Docket No. 1).
5
Instead, Klein declares that “the Funds maintain participants’ individual work histories, calculate eligibility
for benefits, send out benefit checks, receive applications for benefits, as well as other tasks regarding plan
administration.” (Docket No. 12-4 at ¶ 7). Of course, the records concerning the “Funds’ participants” necessarily
refers to those collected concerning members of the Union who are participants in the Funds and not to any records
of the non-union employees of NGI and Kelly that Plaintiff admits it needs to obtain from those entities during
discovery in this litigation.
6
It is not debatable that this case could have been filed in the U.S. District Court for the
Middle District of Pennsylvania as venue is authorized in ERISA matters “in the district where
the plan is administered, where the breach took place, or where a defendant resides or may be
found.” 29 U.S.C. §1132(e)(2). NGI and Kelly seek to transfer the case there; Plaintiff opposes
the transfer and argues that venue should remain here. (Docket Nos. 6, 7, 12). The pending
Motion has been fully briefed by the parties and is now ripe for disposition.
III. LEGAL STANDARD
Defendants move to transfer this case under 28 U.S.C. § 1404(a) which provides that
“[f]or the convenience of parties and witnesses, in the interest of justice, a district court may
transfer any civil action to any other district or division where it might have been brought or to
any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). It is well
established that Defendants bear the burden of proof to demonstrate that a discretionary transfer
of venue is appropriate and that this Court retains “broad discretion” to transfer venue when
justice so requires. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 883 (3d Cir. 1995); see also
Ogundoju v. Attorney General of U.S., 390 F. App’x 134, n.2 (3d Cir. 2010).
To determine whether to grant a motion to transfer venue under § 1404(a), the District
Court weighs both the private and public interests set forth by the United States Court of Appeals
for the Third Circuit in Jumara. See Jumara, 55 F.3d at 879-80. The relevant private interests
include: (1) each party’s forum preference; (2) where the claims arose; (3) the convenience of the
parties; (4) the convenience of the witnesses; and (5) the location of the books and records. Id.
The cited public interests include: (1) the enforceability of the judgment; (2) practical
considerations of expediting trial and reducing costs; (3) administrative difficulties in the two
fora due to court congestion; (4) the local interest in deciding local controversies; (5) public
7
policies of the fora; and (6) the familiarity of the trial judge with the applicable state law. Id. at
879–80. As noted above, “[t]he burden of establishing the need for transfer still rests with the
movant,” and “the plaintiff’s choice of venue should not be lightly disturbed.” Id. at 879.
IV. DISCUSSION
Naturally, the parties dispute the application of the Jumara factors to this case with
Plaintiff taking the view that its preferred venue in this Court should prevail to which Defendants
counter that the interests of justice will be better served if this case is transferred to the U.S.
District Court for the Middle District of Pennsylvania, Harrisburg Division. (See Docket Nos. 6,
7, 12). Before addressing the relevant Jumara factors, which the Court believes fully support the
requested transfer, the Court turns to a threshold question raised by Plaintiff concerning the
import of the Supreme Court’s decision in Atlantic Marine Const. Co., Inc. v. U.S. Dist. Court
for West. Dist. of Tex., 134 S.Ct. 568, 581-582 (2013).
To this end, Plaintiff argues that, in light of Atlantic Marine, a forum selection clause set
forth in Trust documents allegedly incorporated by reference into the CBAs should be given
presumptive effect such that the private Jumara factors should weigh wholly in its favor. See
(Docket No. 12); Atlantic Marine, 134 S. Ct. at 582 (“a court evaluating a defendant’s § 1404(a)
motion to transfer based on a forum-selection clause should not consider arguments about the
parties’ private interests … [and] a district court may consider arguments about public-interest
factors only.”). NGI and Kelly contend that they were not signatories to the CBAs and that the
cited forum selection clause should not be enforced against them or given such controlling
weight in this case. (Docket Nos. 6, 7). This Court agrees with Defendants’ position for several
reasons.
8
Initially, many subsequent courts have recognized that the Supreme Court’s seemingly
absolute pronouncements in Atlantic Marine concerning the presumptive enforcement of forum
selection clauses must be interpreted in the proper factual context of that case. In this regard, the
Supreme Court explicitly notes that “[o]ur analysis presupposes a contractually valid forumselection clause,” 134 S. Ct. at 581, n.5, such that this Court must determine in the first instance
if the challenged clause is valid prior to upsetting the traditional calculus under Jumara. See
Untitled 3, LLC v. Apex Energy Grp., LLC, No. 2:15-CV-164, 2015 WL 2169770, at *3 (W.D.
Pa. May 8, 2015) (“The issue before the Court is twofold: First, is the forum selection clause
valid? Second, if it is valid, should the Court enforce the clause and transfer the case…?”)
(Hornak, J.). Courts have also recognized that Atlantic Marine involved a mandatory forum
selection clause designating an exclusive venue between the parties to the agreement rather than
a permissive forum selection clause merely indicating that the parties consented to venue in a
particular jurisdiction, and have limited the reach of Atlantic Marine to cases involving
mandatory forum selection clauses. See Dawes v. Publish Am. LLLP, 563 F. App’x 117, 118 (3d
Cir. 2014), cert. denied sub nom., Dawes v. Publish Am. LLP, 135 S. Ct. 1159, 190 L. Ed. 2d 917
(2015) (citations omitted) (“If the contract does not contain a mandatory forum selection clause,
then a forum non conveniens analysis applies.”). But, this case is not a straightforward one
involving a mandatory forum selection clause between two parties set forth in a single contract.
(See Docket Nos. 1, 6-7, 12). Instead, Plaintiff relies on forum selection clauses which were
allegedly incorporated by reference into the CBAs and seeks to enforce them against Defendants
which are neither parties to the CBAs nor signatories to same. (Docket No. 6). Needless to say,
a careful analysis of the clauses Plaintiff seeks to enforce against Defendants as well as the
underlying CBAs is required.
9
Like the contracts that contain them, forum selection clauses are interpreted with
reference to state law. Pennsylvania law will be applied here.6 Pennsylvania rules of contract
interpretation require the court to “ascertain and give effect to the intent of the contracting
parties.” Murphy v. Duquesne Univ. of the Holy Ghost, 565 Pa. 571, 590–591, 777 A.2d 418 (Pa.
2001). Such intent is to be determined from reading the entire agreement as a whole and “when a
writing is clear and unequivocal, its meaning must be determined by its contents alone.” Murphy,
565 Pa. at 591, 777 A.2d 418 (citations omitted). If the terms of the agreement are unambiguous,
the plain meaning of the terms of the agreement will be enforced. Id. If the terms are ambiguous,
the agreement will be construed against the drafter. See Gallagher v. Fidelcor, Inc., 441 Pa.
Super. 223, 657 A.2d 31 (Pa. Super. Ct. 1995) (citation omitted). “The practice of incorporating
documents by reference has long been established in Pennsylvania.” Cable & Assocs. Ins.
Agency, Inc. v. AMS Servs., Inc., 102 F. App'x 234, 237 (3d Cir. 2004). “Incorporation by
reference is proper where the underlying contract makes clear reference to a separate document,
the identity of the separate document may be ascertained, and incorporation of the document will
not result in surprise or hardship.” Bent Glass Design v. Scienstry, Inc., No. CIV.A. 13-4282,
2014 WL 550548, at *10 (E.D. Pa. Feb. 12, 2014) (quoting Standard Bent Glass Corp. v.
Glassrobots Oy, 333 F.3d 440, 447 (3d Cir. 2003)).
The 2008 CBA and 2012 CBA contain virtually identical7 provisions stating the
following:
ARTICLE XV
6
All actions in this case took place in Pennsylvania and arise out of the CBAs governing the relationships
between the Union, its members and employers (including Novinger’s) within the Commonwealth. (Docket No. 1
and attachments). The instant venue dispute tasks the Court with deciding whether to keep the case in this venue or
to transfer it to the Middle District. (See Docket Nos. 6, 12, 16). No other jurisdiction has any interest in this case.
Thus, Pennsylvania law will be applied.
7
It appears that the provision in the 2008 CBA utilizes the word “may” in one instance where the 2012 CBA
says “will.” Compare 2008 CBA with 2012 CBA. This slight change in verbiage from the permissive “may” to the
mandatory “will” has no bearing on the outcome of this decision.
10
Fringe Benefits and Employee Deductions
During the term of this contract and any extension thereof,
the employer shall pay into the appropriate benefit fund as agreed
to by the respective Boards of Trustees. Medical plan payments
may go to the Greater Pennsylvania Carpenters’ Medical Plan or
the Building Trades Health and Welfare Fund. Pension plan
payments may go to the Greater Pennsylvania Carpenters’
Pension Fund or the Keystone Carpenters’ Pension Plan.
Annuity payments will go to the Greater Pennsylvania Carpenters’
Annuity and Savings Fund. All of the terms and provisions of
the Agreements and Declarations of Trust creating the above
said Funds are hereby accepted by the parties hereto and
copies of said Agreements and Declarations of Trust are
incorporated by reference in this Contract and made a part
hereof.
(2008 CBA at § XV; 2012 CBA at § XV (emphases added)). The 2008 CBA is effective from
June 1, 2008 to May 31, 2012. (2008 CBA at § I). The 2012 CBA is effective from June 1,
2012 to May 31, 2015. (2012 CBA at § I).
Plaintiff claims that this contractual language suffices to incorporate the following clause
into the CBAs:
The Employer waives any venue requirement and agrees that
Allegheny County, Pennsylvania shall be the proper venue for
bringing any action for collection of Employer contributions.
(Pl. Exs. A; B). For support, Klein states that true and accurate copies of the relevant Fund and
Trust documents were provided to the Court as Plaintiff’s Exhibits A and B.
“Exhibit A” is an
excerpt of a document titled Greater Pennsylvania Carpenters’ Pension Fund, which indicates
that it was “Amended and Restated … Effective as of January 1, 2014.” (Docket No. 12-1
(emphasis added)). Therefore, this document was created years after both CBAs were executed
and could not have been “accepted by the parties” with “copies” of same being “incorporated
into” the CBAs at the time of execution of either agreement. (2008 CBA § XV; 2012 CBA §
XV).
Yet, there is no language in § XV of the 2008 CBA or 2012 CBA purporting to
11
incorporate future documents or later amendments to existing documents into those agreements.
(2008 CBA at § XV; 2012 CBA at § XV). Further, the second document presented by Plaintiff
marked as “Exhibit B” is titled Carpenters’ Pension Fund of Western Pennsylvania, Agreement
and Declaration of Trust and notes that it is “Restated as of January 1, 1994 With Amendments
Incorporated through January 1998.”
(Docket No. 12-2 (emphasis added)).
Hence, this
document is not the “Greater Pennsylvania Carpenters’ Pension Fund” or the “Keystone
Carpenters’ Pension Plan” which are clearly referenced in the CBAs as documents that were
incorporated into the broader agreements.8 (2008 CBA at § XV; 2012 CBA at § XV).
As noted by the Court’s emphases, neither document provided by Plaintiff in this
litigation is clearly referenced in the CBAs; hence, the terms of same – including the forum
selection clauses – cannot be incorporated therein and made part of the CBAs. See Bent Glass
Design, 2014 WL 55048, at *10 (“Here, incorporation is barred because there was no clear
reference to the Terms and Conditions in the contract, and the incorporation of the Terms would
result in surprise and hardship.”). The CBAs also provide that the Union and Novinger’s agreed
that any amendments to same would be set forth in writing and executed by them and no such
writings stating that future documents and/or that the Western Pennsylvania Plans are binding
have been provided. (2008 CBA at § XXV; 2012 CBA at § XXV).
In light of this analysis, the Court finds that Plaintiff has failed to demonstrate that the
provisions it is seeking to enforce against NGI and Kelly were incorporated into the CBAs
between the Union and Novinger’s.9 Cf. Bent Glass Design, 2014 WL 55048, at *10. As such,
8
The Court again notes that Klein states elsewhere in his affidavit that the Harrisburg-based Greater
Pennsylvania Carpenters’ Union recently merged with the Western Pennsylvania regional contractors union to form
the Keystone Mountain Lakes Regional Council of Carpenters. (Docket No. 12-4 at ¶ 9).
9
Even if the documents were properly incorporated into the CBAs, the Court believes that the correct
interpretation of the language used in the forum selection clauses is permissive rather than mandatory. The clauses
simply do not set forth a sole and exclusive venue in this District (or Allegheny County). Rather, the language
merely indicates that the parties to that document – whoever they are – agreed that Allegheny County was the proper
12
the Court need not continue to determine for the purposes of the transfer motion whether nonsignatories NGI and Kelly are bound by the CBAs.10 Accordingly, since there is no forum
selection clause incorporated into the operative contracts, the Court will analyze the Jumara
factors utilizing the traditional approach, starting with the private factors. See Dawes, 563 F.
App’x at 118.
A. Private Factors
It is this Court’s opinion that a fair weighing of the private Jumara factors result in favor
of a transfer of this matter to the U.S. District Court for the Middle District of Pennsylvania. As
to the first factor, the opposing parties have their reasons for preferring to litigate in their
respective venues but neither party’s forum choice, by itself, forcefully outweighs the other.
Relatedly, Plaintiff’s choice of forum is given some weight but it is also not lightly disturbed by
a transfer because the Union (which maintains an office in Lebanon, Pennsylvania) and all of its
members (the third party beneficiaries of the CBAs) are located in the Middle District.
However, the liability theories that have been advanced in this case against Harrisburg-based
NGI and Kelly convince the Court that the claims arose, if at all, in the Middle District such that
the second factor strongly favors transfer. See Armstrong Dev. Props., Inc. v. Ellison, 2014 WL
1452322 at *6 (W.D. Pa. Apr. 14, 2014) (finding that transfer was warranted on private factors
venue and that the employer waived any requirement that venue be in a particular place. But, Defendants concede
that venue in this District is proper based on their transfer motion having been filed under 28 U.S.C. § 1404(a)
seeking a transfer for convenience of the parties rather than 28 U.S.C. § 1406 which is utilized when venue is
improper. (See Docket Nos. 6, 7).
10
The Court notes that the Carpenters’ Pension Fund of Western Pennsylvania, Agreement and Declaration of
Trust purports to override the CBAs’ arbitration and procedural dispute resolution procedures. However, the
provided excerpt of the post-dated Greater Pennsylvania Carpenters’ Fund document does not contain any language
permitting the parties to avoid the arbitration provision. It stands to reason that if Plaintiff wants to enforce the
CBAs against NGI and Kelly, it may have to do so in arbitration, absent the presentation of proof to the contrary.
Whether the arbitration provisions should be enforced is beyond the scope of the instant dispute but the transferee
court may wish to address this matter with the parties.
13
because the primary focus of plaintiff’s claims concerned the occurrence of alleged tortious
events in other Districts).
While this case involves ERISA claims, it is not the typical case involving an individual
claimant challenging a benefits determination by the administrator or a perfunctory collection
action by an administrator seeking to recover delinquent payments from an employer. See e.g.,
Schurich v. Principal Fin. Grp., 2005 WL 1229725, at *3 (M.D. Pa. May 24, 2005) (denying
motion to transfer venue as improper in individual benefits case); Sims v. Am. Postal Workers
Acc. Ben. Ass’n, 2012 WL 761237, at *3, n.6 (W.D. Pa. Mar. 7, 2012) (internal citations omitted)
(Hornak, J) (“While there is some authority for according greater judicial reluctance to the
transfer of an ERISA action, courts have transferred such actions where the § 1404(a) and case
law factors have strongly supported transfer, particularly when the operative facts of the case
have no material connection to the district in which the action was filed.”). The plaintiffs in
those types of matters are granted deference to their home venues in ERISA proceedings because
courts reason that it may be unfair to require them to litigate in a foreign venue seeking to collect
money to which they are very likely entitled. See id. But, this is not one of those cases.11
Plaintiff has not sued Novinger’s for failing to pay delinquent benefits due under the
CBAs; rather, Plaintiff is seeking to hold NGI and Kelly responsible for paying $2 million in
benefits into the Funds on a contested theory that NGI was diverting drywall work from
Novinger’s to Kelly from September 2010 until the present. (See Docket No. 1). These are
novel legal theories, the pursuit of which Plaintiff should expect may need to be litigated in a
11
The Court further notes that this case is distinct from Erwood v. LINA, Civ. A. No. 14-1284, 2015 WL
143892 (W.D. Pa. Jan. 12, 2015) (Kelly, M.J.), which was adopted as the opinion of this Court, Docket No. 52,
(W.D. Pa. Feb. 12, 2015). In Erwood, a motion to transfer the case to the Northern District of Georgia was denied
because the defendant administrator, LINA, operates here and had denied the out-of-state individual plaintiff’s claim
for benefits in its Pittsburgh office. Id. Hence, the suit was properly filed in the District where LINA resides and
does business and the prevailing Jumara factors did not favor a transfer of that particular lawsuit. Id.
14
different venue due to the simple fact that all of the alleged nefarious actions by NGI and Kelly
necessarily occurred within the Middle District. See e.g., Dist. 65 Pension Plan, et al. v. De
Marco Cal. Fabrics, Inc., et al., 2007 WL 2066386 (D.N.J. Jul. 13, 2007) (citing and quoting
cases) (Court sua sponte transferring ERISA withdrawal liability action brought by pension plan
from Fund administrators’ location in New Jersey to Southern District of New York where
events took place). Further, the underlying CBAs govern the working relationship between the
Union and the employer (Novinger’s) in that area and such agreements were negotiated and
executed there.
(See 2008 CBA; 2012 CBA; Docket No. 6-1 at ¶¶ 2-3, 7-8).
It is also
undisputed that the three Novinger’s entities have been operating with union (Novinger’s) and
non-union (Kelly) contracting companies for decades and NGI and Kelly have never made any
contributions to the Funds, despite the long-standing relationship between Novinger’s and the
Union. (Docket No. 6-1 at ¶¶ 6-10).
Plaintiff also maintains that Defendants are in a better position to absorb the costs
attendant to litigating in the out-of-town venue because it is a non-profit entity and Defendants
(and Novinger’s) are collectively the largest drywall contractors in the Commonwealth. (See
Docket No. 12). But, Plaintiff’s concerns about the costs of litigation are not well-taken in light
of the fact that it seeks $2 million in damages as well as attorneys’ fees and costs in this
litigation, such that the costs of which it complains may be recoverable if it is successful in this
endeavor. (See Docket No. 1). Of course, the counter-point offered by James Novinger is that a
damage award of that magnitude may force his “marginal” companies into bankruptcy, which he
would undoubtedly initiate in the Middle District. (Docket No. 6-1 at ¶ 28). The Court further
recognizes that earlier this year an arbitrator determined that Plaintiff’s claims seeking
withdrawal liability against Novinger’s, NGI and Kelly were “frivolous” and assessed attorneys’
15
fees and costs against Plaintiff due to its behavior in that litigation.12 (Docket No. 7-1). Despite
this ruling, Plaintiff continues to press forward with its withdrawal liability case filed at Civil
Action No. 14-956 and apparently is attempting to continue to litigate the arbitration.13 See
generally Civ. A. No. 14-956. These actions – separate and apart from the instant suit – undercut
the alleged need for the Court to defer to Plaintiff’s forum preference to the detriment of
Defendants for reasons set forth in the decisions upon which Plaintiff relies noting policy
considerations preserving the balance of the Funds.
Cf. Dist. 65 Pension Plan, 2007 WL
2066386 at *2 (citing and quoting omitted cases) (holding that “a finding that an ERISA case
may never be transferred under § 1404(a) if it is brought in the forum where the plan is
administered … is simply not the law … and thus it appearing that the Court is not bound by the
Plan’s choice of its home venue.”).
The third and fourth factors, which consider the convenience of the parties and witnesses,
see Jumara, 55 F.3d at 879-80, also favor a transfer because all of the parties and non-parties
12
Arbitrator Susan Grody Ruben, Esq. sets forth the basis for the assessment of attorneys’ fees and costs
against the Fund in footnote 1 of the “Arbitrator’s Ruling on Motion No. 2.” Arbitrator Ruben notes, among things,
that:
Here, the Fund’s determination that Novinger’s had incurred partial
withdrawal liability was frivolous, unreasonable, without foundation, and should
not have been issued. After leaving Novinger’s with no choice but to initiate
arbitration, the Fund then engaged in dilatory conduct that has needlessly
lengthened and increased the expense of this proceeding.
It is clear Novinger’s has incurred no partial withdrawal liability. All
of the facts necessary to make this determination have been known to the Fund
since July 26, 2013.
…
In spite of this information, the Fund issued a determination it knew
had no basis in fact or law, and then the Fund engaged in dilatory tactics during
this proceeding in an effort to salvage that unfounded determination by
attempting, unsuccessfully and without factual support, to change it. This is
precisely the type of conduct that warrants an award of costs and fees.
(Docket No. 7-1 at 17-18).
13
The Court notes that this case and the case filed at Civ. A. No. 14-956 was not deemed related by Plaintiff
on its Civil Cover Sheet. (Docket No. 1-4). Further, this Court has conferred with the Hon. Cathy Bissoon as to the
relationship between the cases and the Judges have collectively concluded that the matters are neither related nor
should they be consolidated. Hence, the presence of another, unrelated case in this District – where cross-motions
for summary judgment are now pending – bears little on the overall transfer analysis.
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have some connection to Harrisburg while the Pittsburgh connection to this case is attenuated, at
best. (See 2008 CBA; 2012 CBA; Docket Nos. 6-1, 12-4). In addition to the Harrisburg ties that
have already been mentioned, Plaintiff, the Fund administrator, contracted with the Union based
in Harrisburg and admits that it needs to obtain discovery from Defendants, in Harrisburg, prior
to its auditors becoming familiar with the case and relevant documents, at which point they will
be able to testify. (See Docket No. 12-4 at ¶¶ 24-27). So, the location of these auditors in
Pittsburgh is given little weight. In contrast, third party witnesses called by the Defendants
regarding contracting jobs that have been completed by Kelly and NGI and from which the
alleged liability in this case flows are located in central Pennsylvania. (Docket No. 6-1 at ¶¶ 15,
26, 27). While none of these witnesses are per se unavailable for trial; they would all be
inconvenienced by having to appear here for trial or otherwise. Plaintiff states in its papers that
it has already agreed to go to Harrisburg to take necessary depositions and points out that
litigating in this adjacent District would only be minimally inconvenient to Defendants,
undermining its own position that it is somehow inconvenienced by the transfer when clearly it
has fewer prospective witnesses to offer and will build its case based on information in
Defendants’ possession. (See Docket No. 12). As noted, Plaintiff admits that the books and
records that will be at issue in this case are not located in this District; but they can be produced
electronically, rendering this fifth factor generally neutral, except as noted above as it affects
witness location. See Armstrong, 2014 WL 1452322 at *6.
After careful consideration of the parties’ respective arguments and the facts of record,
the Court overrules Plaintiff’s objections to the Defendants’ transfer Motion and holds that the
private factors are all either neutral or weigh in favor of a transfer to the Middle District. See
Jumara, 55 F.3d at 879.
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B. Public Factors
Next, the Court further believes that a proper weighing of the relevant public factors
under Jumara likewise supports a transfer. Id. In this regard, the most relevant public factor is
that local courts have inherent interests in presiding over local controversies and this case
involves a localized dispute arising from a collective bargaining agreement between a regional
carpenters Union and an employer in the Middle District of Pennsylvania. Id. It appears that
this is precisely the type of dispute that should be decided within a local forum, rather than in an
adjacent District because this lawsuit raises genuine matters of public concern and possibly
affects many citizens – all of whom are in the Middle or Eastern Districts. Cf. Zanghi v.
FreightCar Am., Inc., Civ. A. No. 3:13-146, 2014 WL 130985 (W.D. Pa. Jan. 14, 2014)
(McVerry, J.) (“Further counseling in favor of denying this transfer request is the public interest
factor in having localized controversies decided at home. As provided above, the case involves
retirees who allege that they are entitled to welfare benefits under collective bargaining
agreements negotiated in this district. FreightCar maintains an administrative office in this
district; the USW is headquartered in this district; and the plant where all of the retirees worked
was located in this district.”).
Although it is not necessarily quantifiable, given the nature of this dispute and the
seriousness of the allegations, there should be significant public interest in this case in
Harrisburg. Yet, there is simply no reason for the public in Pittsburgh to have any real interest in
this Court deciding whether NGI and Kelly operated in a manner to avoid Novinger’s
collectively bargained obligations to pay fringe benefits to the Funds benefiting the carpenters
Union in central Pennsylvania. In stark contrast, the potential ramifications of Plaintiff’s claims
for the Union members and the employees of Novinger’s, NGI and Kelly are substantial and all
18
of these individuals are located around Harrisburg. If successful, the Union members would
benefit from the increased funding for their fringe benefits but if they lose, the fiduciaries
representing them will have utilized their dues in pursuit of a failed lawsuit. Based on the
declaration of James Novinger, his companies face possible bankruptcy if they lose this lawsuit,
the occurrence of which would negatively affect their employees and possibly put them out of
work. (Docket No. 6-1 at ¶ 28). Even if the companies do not end up in bankruptcy, the case
could have the effect of shifting future carpentry/drywall jobs from Kelly to Novinger’s. Since
this case potentially affects their respective livelihoods, any or all of these hard working
carpenters (union and non-union) should have the opportunity to appear in court and observe
proceedings if they so desire and it would be much more difficult for them to do so if this case
was to proceed in Pittsburgh.
Thus, the localized interest factor heavily favors transfer. Cf.
Zanghi, 2014 WL 130985; Dist. 65 Pension Plan, 2007 WL 2066386.
The Court also considers the relative congestion of the competing Districts, which is
neutral in the overall analysis and does not outweigh the other public factors favoring transfer.
See Armstrong, 2014 WL 1452322, at *7. The statistics provided to the Court demonstrate that
the Middle District has a greater weighted civil filing score than this District. (See Docket No.
12-3). But, all of the District Judge seats in the Middle District are currently filled while this
Bench is operating with three empty District Judge seats, and has been for more than a year.
(Id.).
Plaintiff suggests that this venue should be favored due to its Alternative Dispute
Resolution (“ADR”) Program, (Docket No. 12); however, the Middle District has its own ADR
system.
See U.S. District Court, Middle District of Pennsylvania, “Alternative Dispute
Resolution”, available at: http://www.pamd.uscourts.gov/?q=alternative-dispute-resolution (last
visited May 28, 2015). In short, both are relatively busy Districts with ADR programs. Further,
19
both Districts have able jurists that should be able to get the parties to trial in due course,
rendering this factor neutral.
Finally, the remaining public factors regarding the enforceability of judgments, public
policy considerations and familiarity of the Bench with relevant state law have no bearing on this
venue dispute since both Districts are within the Commonwealth. See Jumara, 55 F.3d at 882-83
(“The fact that the two fora are adjacent districts of the same state also obscures the interest-ofjustice analysis, which gives little reason to override the forum selection clause. None of the
following factors exist: (1) a likelihood of an enforcement problem; [ … ] (3) a different policy
preference in the two locales; (4) a disparity in the qualifications of the federal judges sitting in
the two districts to pass on the same Pennsylvania law; or (5) an appreciable difference in docket
congestion between the two districts.”). But, this Court finds that the local interest in deciding
this type of local controversy in the Middle District tips the scales of the public Jumara factors in
favor of the requested transfer.
C. Overall Weighing of Private and Public Factors
In summary, the Court holds that Defendants have met their burden to demonstrate that
venue for this case is most appropriately transferred to the U.S. District Court for the Middle
District of Pennsylvania given that the relevant private and public factors, individually and
collectively, strongly favor such a transfer.
See Jumara, 55 F.3d at 879-80.
The Court
recognizes that venue in this District is proper under the ERISA statute, 29 U.S.C. §1132(e)(2),
but the above noted factors clearly outweigh the Plaintiff’s choice of this venue.
To this end,
this Court believes that the instant case is more properly litigated and decided in the Middle
District, where: nearly all of the contested activities occurred; most of the discovery will take
place; the majority of the witnesses are located; and there is likely considerable local interest
20
from the public including numerous interested stakeholders in the litigation. Such a transfer is
also consistent with the interests of justice and will promote the “just, speedy, and inexpensive
determination of [these] proceeding[s].” FED. R. CIV. P. 1. Accordingly, an order transferring
this case will be entered by the Court.
V. CONCLUSION
Based on the foregoing, Defendants’ Motion to Transfer [6] is GRANTED and this
matter will be transferred to the United States District Court for the Middle District of
Pennsylvania, Harrisburg Division, forthwith. Insofar as Defendants also move to dismiss Count
III, such matter shall be addressed by the transferee court. An appropriate Order follows.
s/Nora Barry Fischer
Nora Barry Fischer
U.S. District Judge
Dated: May 29, 2015
cc/ecf: All counsel of record.
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