Mittleider v. Canadian Pacific Railway Company et al
Filing
39
ORDER denying 17 Motion for Judgment on the Pleadings; denying 23 Motion to Strike; granting 25 Motion for Leave to amend complaint. Signed by Chief Judge Karen E. Schreier on 4/12/2012. (KC)
UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
SOUTHERN DIVISION
CLYDE F. MITTLEIDER,
Plaintiff,
vs.
CANADIAN PACIFIC RAILWAY
COMPANY; and
CANADIAN PACIFIC RAILWAY LTD.,
Defendants.
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CIV. 11-4054-KES
ORDER
Plaintiff, Clyde F. Mittleider, brought this action against defendants,
Canadian Pacific Railway Company (CPR Co.), and Canadian Pacific Railway
Ltd. (CPR Ltd.) (collectively defendants) alleging state-law breach of contract
and promissory estoppel claims. Defendants move for judgment on the
pleadings (Docket 17), which Mittleider opposes. Mittleider moves to strike the
collective bargaining agreement (CBA) from the record (Docket 23), which
defendants resist. Mittleider also moves to amend his complaint (Docket 25),
which defendants resist.
BACKGROUND
Assuming all of the factual allegations in the complaint as true, the
pertinent facts to this order are as follows:
Dakota, Minnesota, and Eastern Railroad (DM&E) hired Mittleider on
June 16, 1987, as a conductor and brakeman. He qualified as a locomotive
engineer in October of 1987. On June 26, 1990, when the first CBA between
DM&E and the United Transportation Union (the Union) became effective,
Mittleider was listed on the seniority roster as a brakeman, conductor, and
engineer. On December 1, 1996, DM&E promoted Mittleider to manager of
train operations in Huron, South Dakota, which was a non-union position.
Clyde remained in that position until June of 2002.
In 2002, DM&E purchased the assets of I & M Rail Link Railroad, and
renamed the line the Iowa, Chicago, and Eastern Railroad (IC&E). DM&E
combined the management and dispatching duties of the two railroads under
the holding company of Cedar American Rail Holdings. DM&E asked Mittleider
to accept a position as a superintendent in Mason City, Iowa, but Mittleider
was concerned about losing the seniority he had accumulated over the years.
Robert L. Brownell, then a DM&E vice-president, assured Mittleider that
if he accepted the Mason City job he would retain his seniority at DM&E. Kevin
Schieffer, DM&E’s then-president, similarly affirmed that Mittleider’s seniority
would be retained if he accepted the job. Mittleider periodically expressed
concerns to Brownell and Schieffer about losing his seniority and both men
reassured Mittleider that he would not lose his seniority rights. Brownell and
Schieffer also assured Mittleider that, in the event that a dispute over his
seniority arose and resulted in an unfavorable arbitration award, Mittleider
would be made whole for the loss of any seniority benefits as a result of
2
transferring to IC&E. Mittleider claims that he relied on these promises in
accepting the Mason City position.
In 2004, Mittleider was promoted to assistant chief transportation officer
in Sioux Falls, South Dakota with duties and responsibilities at both DM&E
and IC&E. DM&E again promised that Mittleider’s union security would remain
intact. The Union challenged Mittleider’s seniority rights and argued that
Mittleider should be removed from DM&E’s Union seniority roster.
The seniority dispute proceeded to arbitration before the Public Law
Board Number 6820 (the Board). In August of 2005, the Board ruled that
Mittleider’s name would be removed from the seniority roster.
On October 31, 2007, defendants finalized their purchase of DM&E
(which also included the purchase of IC&E and Cedar American Rail Holdings)
in a stock purchase agreement. As a result of these acquisitions, defendants
are responsible for the debts and obligations of IC&E and Cedar American Rail
Holdings, including all agreements. Defendants assumed day-to-day operations
of DM&E after the acquisition. Schieffer’s employment with DM&E ended in
October of 2008.
In May of 2010, Doug McFarland, President of CPR Co.’s United States
operations, contacted Mittleider and informed him that his position was being
relocated to Minneapolis. Defendants denied Mittleider’s request to commute to
Minneapolis. Instead, defendants gave Mittleider a different position, Assistant
3
Director of NMC-DME in Sioux Falls. On June 24, 2010, defendants informed
DM&E employees that the company’s principal operations would be moved to
Minneapolis.
In a letter dated September 30, 2010, Terry Bagaus, defendants’ general
manager for transportation, offered Mittleider a position in Minneapolis. In
Mittleider’s response letter dated October 8, 2010, Mittleider stated that he
desired to return to “the ranks” and requested a job in Brookings, South
Dakota. Mittleider included a letter dated August 28, 2009, from Brownell and
approved by Schieffer, which confirmed the promises from these two men that
Mittleider would retain his seniority if he accepted the Mason City position.
Defendants did not offer Mittleider a position in Brookings.
On February 22, 2011, Mittleider received a letter from Bagaus notifying
him that his current position in Sioux Falls would be eliminated on March 25,
2011. On April 22, 2011, Mittleider filed his federal complaint alleging a breach
of contract claim for retention of seniority, a breach of contract claim for the
promise to make him whole in the event of an adverse Board decision, and a
promissory estoppel claim.
After the parties’ June 13, 2011, Rule 26 conference, defendants
indicated to Mittleider via email that DM&E is the correct defendant. Docket
27-1 at 1 (“DM&E remains a separate corporation and is the only employer of
Clyde Mittleider after the merger. All liabilities and obligations remained with
4
DM&E after the merger. We seek your substitution of DM&E as the sole
defendant[.]”). On July 7, 2011, Mittleider requested financial information from
defendants regarding DM&E before he would consent to a substitution. Docket
27-1 at 1. On September 7, 2011, Mittleider’s counsel sent a letter to
defendants’ counsel requesting that they consent to an amendment of the
complaint. Docket 27-2. On September 12, 2011, defendants’ counsel sent an
email indicating that they were evaluating the request to stipulate to the
amendment. Docket 27-3. Defendants did not send a formal response to the
proposed amendment before filing their motion for judgment on the pleadings.
DISCUSSION
Defendants move for judgment on the pleadings under Rules 12(b)(1),
12(b)(6), 12(c), and 12(d) and assert two primary arguments. First, defendants
assert that the Railway Labor Act (RLA), which governs railroad labor disputes,
see 45 U.S.C. § 151a, preempts Mittleider’s claims and, thus, the court lacks
subject matter jurisdiction over this action. The court will construe this portion
of the motion as being made pursuant to Rules 12(b)(1) and 12(d). Second,
defendants argue that they are the incorrect defendants in this action because
Mittleider cannot pierce the corporate veil to recover from them. The court will
construe this portion of the motion as being made pursuant to Rules 12(b)(6)
and 12(c).
5
I.
Rule 12(b)(1) Motion
A. Standard of Review
Federal Rule of Civil Procedure 12(b)(1) provides that the court may
dismiss an action for lack of subject matter jurisdiction. Rule 12(b)(1) “ ‘is
rooted in the unique nature of the jurisdictional question.’ ” Osborn v. United
States, 918 F.2d 724, 729 (8th Cir. 1990) (quoting Williamson v. Tucker, 645
F.2d 404, 413 (5th Cir. 1981)). In determining a Rule 12(b)(1) motion, the court
may look to evidence outside the pleadings. Id. Reviewing outside evidence
under Rule 12(b)(1) does not convert the motion into a Rule 56(c) summary
judgment motion like reviewing outside evidence does in the context of a Rule
12(b)(6) motion to dismiss or a Rule 12(c) motion for judgment on the
pleadings. Deuser v. Vecera, 139 F.3d 1190, 1192 n.3 (8th Cir. 1998).
Defendants assert that they are raising a facial, not factual, challenge to
subject matter jurisdiction, which allows the court to consider documents
beyond the pleadings as long as those materials are referenced in the
complaint or the documents’ authenticity is undisputed. See Jenisio v. Ozark
Airlines, Inc., 187 F.3d 970, 972 n.3 (8th Cir. 1999) (reasoning that the district
court did not err in examining the CBA and pension plan to assess subject
matter jurisdiction). Mittleider does not dispute that defendants raise a facial
challenge. See Docket 22 at 4 (“The Defendants state they are making a ‘facial’
attack on Clyde’s Complaint. This argument will not alter the standard that the
Court uses to review their Motion.” (internal citation omitted)). Upon a facial
6
challenge to jurisdiction, all of the factual allegations in the complaint are
presumed to be true. Titus v. Sullivan, 4 F.3d 590, 593 n.1 (8th Cir. 1993)
(citations omitted).
The plaintiff bears the burden to establish that subject matter
jurisdiction exists. V S Ltd. P'ship v. Dep't of Hous. & Urban Dev., 235 F.3d
1109, 1112 (8th Cir. 2000) (citing Nucor Corp. v. Neb. Pub. Power Dist., 891
F.2d 1343, 1346 (8th Cir. 1989)). If the court finds that subject matter
jurisdiction is lacking, it must dismiss the case. Fed. R. Civ. P. 12(h)(3);
Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583-84 (1999) (citations
omitted).
B. Preemption
Defendants contend that the court lacks subject matter jurisdiction over
this action because the RLA preempts Mittleider’s claims. “Whether a federal
law preempts a state law establishing a cause of action is an issue of
congressional intent,” Hawaiian Airlines, Inc. v. Norris, 512 U.S. 246, 252 (1994)
(citing Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 208 (1985)), and “ ‘should
not be lightly inferred.’ ” Id. (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S.
1, 21 (1987)).
The Supreme Court interpreted RLA’s congressional intent in Hawaiian
Airlines, Inc. v. Norris, 512 U.S. 246 (1994):1 “Congress’ purpose in passing the
1
The RLA also applies to the airline industry. See Taggart v. Trans World
Airlines, Inc., 40 F.3d 269, 272 (8th Cir. 1994) (“The RLA was enacted in 1926
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RLA was to promote stability in labor-management relations by providing a
comprehensive framework for resolving labor disputes.” Id. at 252 (citing
Atchison, Topeka & Santa Fe Ry. Co. v. Buell, 480 U.S. 557, 562 (1987); 45
U.S.C. § 151a). “To realize this goal, the RLA establishes a mandatory arbitral
mechanism for ‘the prompt and orderly settlement of two classes of disputes,’ ”
namely major and minor disputes. Hawaiian Airlines, 512 U.S. at 252 (quoting
45 U.S.C. § 151a). If a dispute is minor and does not depend on the
interpretation of a CBA, then it preempts a state-law claim, and the claim may
only be adjudicated through a railroad adjustment board, meaning that the
district court does not have subject matter jurisdiction. Id. at 253. If it is major,
then the claim need not be adjudicated through an adjustment board and the
district court has jurisdiction. Id.
In Hawaiian Airlines, the Supreme Court adopted a narrower preemption
standard for the RLA than that which had been previously utilized. See Schiltz
v. Burlington N. R.R., 115 F.3d 1407, 1415 (8th Cir. 1997) (citing Hawaiian
Airlines and acknowledging that “that the scope of RLA preemption has been
narrowed by [a] recent Supreme Court decision[.]”); see also Taggart v. Trans
World Airlines, Inc., 40 F.3d 269, 272 (8th Cir. 1994) (“We think Hawaiian
Airlines narrowed the scope of federal pre-emption [sic] under the RLA.” (citing
Westbrook v. Sky Chefs, Inc., 35 F.3d 316, 317-18 (7th Cir. 1994); Piper v.
and was extended to cover the airline industry in 1936.”).
8
Alaska Airlines, Inc., 34 F.3d 1073, 1994 WL 424292, at *4 (9th Cir. 1994)
(table decision))).
Hawaiian Airlines adopted the preemption test from Lingle v. Norge
Division of Magic Chef, Inc., 486 U.S. 399 (1988), which addressed preemption
under the Labor Management Relations Act. Hawaiian Airlines, 512 U.S. at
266. According to Lingle, if the issue to be decided is a purely factual question,
then the issue is not preempted by the RLA. Id. at 266 (citing Lingle, 486 U.S.
at 407). A claim is preempted only if it is firmly rooted in a breach of the CBA.
“ ‘[M]inor disputes’ subject to RLA arbitration are those that involve duties and
rights created or defined by the CBA.” Id. at 258 (citing Buell, 480 U.S. at 557);
see also Gore v. Trans World Airlines, 210 F.3d 944, 949 (8th Cir. 2000) (“Under
the RLA, parties are obligated to arbitrate minor disputes, which are
controversies arising out of the application or interpretation of the collective
bargaining agreement, and therefore, complete preemption applies to disputes
involving duties and rights created or defined by the collective bargaining
agreement.” (citing Hawaiian Airlines, 512 U.S. at 256-59)). Essentially, “ ‘major
disputes seek to create contractual rights, minor disputes to enforce them.’ ”
Hawaiian Airlines, 512 U.S. at 253 (quoting Consol. Rail Corp. v. Ry. Labor
Execs. Ass’n, 491 U.S. 299, 302 (1989)). See also Bhd. Ry. Carmen v. Mo. Pac.
R.R. Co., 944 F.2d 1422, 1426 (8th Cir. 1991) (“In general, a major dispute
involves an effort to secure new contractual rights, while a minor dispute
9
involves the interpretation or application of an existing agreement.” (citations
omitted)).
As the employer, defendants have the burden to establish that the
dispute is minor. Bhd. Ry., 944 F.2d at 1427 (citing Consol. Rail, 491 U.S. at
305-06, 319). But Mittleider retains the burden to prove that the court has
subject matter jurisdiction. V S Ltd., 235 F.3d at 1112. The Eighth Circuit has
reasoned “that a party shoulders a relatively light burden in establishing
exclusive arbitral jurisdiction under the RLA. In fact, there is a presumption
that disputes are minor and thus arbitrable.” Jenisio, 187 F.3d at 973 (internal
citations and quotations omitted); see also Schiltz, 115 F.3d at 1414 (“If doubts
arise as to the type of dispute at issue, a court should construe the dispute as
minor.” (citing Int’l Ass’n of Machinists & Aerospace Workers v. Soo Line R.R.,
850 F.2d 368, 377 (8th Cir. 1988) (en banc))).
Mittleider alleges three causes of action, a breach of contract claim based
on retention of seniority, a breach of contract claim to make him whole for the
loss of seniority, and a promissory estoppel claim.2 Mittleider claims that
2
Under South Dakota law, “[t]he elements of a breach of contract are
(1) an enforceable promise; (2) a breach of the promise; and (3) resulting
damages.” Bowes Constr., Inc. v. S.D. Dep’t of Transp., 793 N.W.2d 36, 433
(S.D. 2010) (citation omitted). South Dakota law allows oral contracts unless a
statute requires the contract to be in writing. SDCL 53-8-1. South Dakota
employs a three-part promissory estoppel test: (1) “the detriment suffered in
reliance must be substantial in an economic sense;” (2) “the loss to the
promisee must have been foreseeable by the promisor;” and (3) “the promisee
must have acted reasonably in justifiable reliance on the promise made.”
Hahne v. Burr, 705 N.W.2d 867, 873 (S.D. 2005) (citations omitted).
10
Brownell and Schieffer promised him that he would maintain his Union
seniority and both men made multiple promises to Mittleider after he began
work ensuring him that he would maintain his seniority. Docket 1 ¶ 39.
Mittleider argues that DM&E breached these promises, which gives rise to his
breach of contract claim on the retention of seniority and his promissory
estoppel claim. Docket 1 ¶ 40. Mittleider further claims that Brownell and
Schieffer promised to make him whole if he lost his seniority benefits, which is
the basis of his breach of contract claim on the promise to make him whole for
any loss of seniority rights in the event of an adverse Board decision. Docket 1
¶ 44.
Barbanti v. MTA Metro North Commuter Railroad, 387 F. Supp. 2d 333
(S.D.N.Y. 2005) is instructive here. In Barbanti, the plaintiff was employed as
an electronic specialist by a railroad. Id. at 335. The defendant-railroad’s
representative, which had a CBA with a union, told the plaintiff that if he left
his current job he would be given a protected, supervisory position as a signal
inspector. Id. The plaintiff left his job and began working as a signal inspector.
Id. The union objected to plaintiff’s placement in this position and the plaintiff
was forced out of the signal inspector position into a lower-paid electronic
technician position. Id. The plaintiff asserted state-law claims for fraudulent
inducement, breach of contract, and negligent/reckless misrepresentation
against the defendant railroad. Id. at 336. The court found that because the
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plaintiff essentially created a separate contract with the defendant, the
plaintiff’s claims were “grounded in rights and obligations that exist
independent of the collective-bargaining agreement[,]” and none of the
plaintiff’s claims “would require interpreting the . . . CBA.” Id. at 337-38. Thus,
the plaintiff’s claims were not preempted. Id. at 338.
Here, Mittleider does not claim that he is entitled to seniority rights due
to a provision in the CBA. Accepting as true the facts contained in Mittleider’s
complaint, all of his state-law claims stem from the promises that Brownell and
Schieffer made to him concerning his seniority rights. These promises created
rights independent of those that exist in the CBA. Because the dispute here
does not involve an interpretation of the CBA, the RLA does not preempt the
dispute. See Hawaiian Airlines, 512 U.S. at 256 (“[T]he RLA’s mechanism for
resolving minor disputes does not pre-empt causes of action to enforce rights
that are independent of the CBA.”).
Defendants argue that Mittleider “challenges the Public Law Board’s
decision striking Mittleider’s name from the UTU seniority list and DM&E’s
compliance with that directive,” and that the court cannot resolve this question
without interpreting the CBA. Docket 18 at 8. The court has reviewed
defendants’ cited cases in support of their argument and finds that the
majority of the cases are not persuasive because they were decided under the
broader pre-Hawaiian Airlines standard and because the cases are factually
12
distinguishable from this case.3 Defendants, however, rely on two postHawaiian Airlines cases, Schiltz v. Burlington N. R.R., 115 F.3d 1407 (8th Cir.
1997) and Evermann v. BNSF Railway Co., 608 F.3d 364 (8th Cir. 2010), which
are factually distinguishable from this action.
In Schiltz, the employee began working for a railroad as a union member
in Chicago. Id. at 1409. After the railroad merged with defendant, Burlington
Northern Railroad (BNR), the employee voluntarily took a non-union position
with BNR in St. Paul, Minnesota. Id. The employee worked in this position for
21 years until he received a termination notice stating that his non-union
position would be eliminated. Id. BNR gave the employee three options and the
employee chose to exercise his union seniority rights in a location where he
had union seniority. Id. at 1410. The employee attempted to exercise his
seniority rights in the St. Paul district, but his seniority rights were only valid
in the northeastern district, which did not include St. Paul. Id. The employee
grieved the location of his seniority rights and all levels of review held that his
3
See, e.g., Allen v. United Transp. Union, 964 F.2d 818, 821-22 (8th Cir.
1992) (reasoning that the RLA preempted state-law claims regarding how
seniority was calculated under the CBA because a resolution of the claims
would involve an interpretation of the CBA); Melanson v. United Air Lines, Inc.,
931 F.2d 558, 563 (9th Cir. 1991) (holding that the RLA preempted a state-law
claim of an employee who transferred companies and reasoned that Lingle’s
standard of preemption did not apply to the RLA, a position which Hawaiian
Airlines expressly rejected); Brown v. Am. Airlines, Inc., 593 F.2d 652, 655-56
(5th Cir. 1979) (holding that the RLA preempted state-law claims concerning a
breach of a settlement agreement for a laid-off employee because the validity of
the agreement could only be assessed by interpreting the CBA).
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seniority rights were only valid in the northeastern district. Id. The employee
then filed suit in federal court alleging, among other claims, a breach of
contract claim and a breach of the duty of fair representation under the RLA.
Id.
The Eighth Circuit reasoned that the dispute was minor because “[t]he
gravamen of [plaintiff’s] argument revolves around the interpretation of the
contract language in the CBA . . . and the place of the vesting of Schiltz’s
seniority rights.” Id. at 1414. The CBA’s language directly addressed the issue
facing the court. See id. (“ ‘When a Protected Employee transfers to another
seniority district as a result of changes of operation or work transfer, his
seniority shall be dovetailed into the roster to which transferred and his name
shall be removed from the roster from which he transfers.’ ” (quoting the CBA)).
In Evermann, the employee brought suit pursuant to a Nebraska statute
because the employer-railroad would not reimburse him for “productivity
shares” that he lost when he served on a federal grand jury. Id. at 366. The
court held that the RLA preempted the employee’s state-law claim because
“[n]ot only the existence but also the scope of the entitlement depends on the
collective bargaining agreement.” Id. (citation omitted).4
4
Defendants, citing Order of Railroad Telegraphers v. Railway Express
Agency, Inc., 321 U.S. 342 (1944) and Spearfish Education Association v.
Spearfish School District No. 40-2, 780 N.W.2d 481 (S.D. 2010), contend that
the enforceability of an extra-CBA labor contract depends upon an
interpretation of the CBA. Order of Railroad Telegraphers is factually
distinguishable because there the employer made no additional promises to the
14
Here, unlike Schiltz and Everman, defendants cite no provision of the
CBA that the court will need to interpret to determine if promises were made by
Brownell and Schieffer to Mittleider and whether those promises were
breached.5 Even if Mittleider were successful in his claims and the court had to
consult the CBA to determine how much seniority Mittleider should be
awarded, consulting the CBA in awarding a remedy does not mean that the
RLA preempts the plaintiff’s claim. See id. at 367 (reasoning that “ ‘the bare
fact that a collective-bargaining agreement will be consulted in the course of
state-law litigation plainly does not require the claim to be extinguished.’ ”
(quoting Hawaiian Airlines, 512 U.S. at 256)). Brownell and Schieffer’s promises
were made independent of any rights that Mittleider had in the CBA regarding
seniority and, thus, neither the existence nor the scope of Mittleider’s
entitlement to those rights depends on the CBA.
Schiltz, Evermann, and defendants’ other arguments are not persuasive.
Defendants have not met their burden to prove that the RLA preempts
Mittleider’s claims. To the extent that the court construed defendants’ motion
as a Rule 12(b)(1) motion for lack of subject matter jurisdiction, the motion is
denied.
employees and expressly violated the CBA in its actions. See 321 U.S. at 344.
Spearfish is legally distinguishable because it involves an interpretation of
state-law collective bargaining rights. See 780 N.W.2d at 488.
5
The court has reviewed Section 1.20 of the CBA and finds that an
interpretation of Section 1.20 is not necessary to resolve Mittleider’s claims.
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II.
Rule 12(c) Motion
A. Standard of Review
“ ‘Judgment on the pleadings is appropriate only when there is no
dispute as to any material facts and the moving party is entitled to judgment as
a matter of law,’ the same standard used to address a motion to dismiss for
failure to state a claim under Rule 12(b)(6)[.]” Ashley Cnty., Ark. v. Pfizer, Inc.,
552 F.3d 659, 665 (8th Cir. 2009) (quoting Wishnatsky v. Rovner, 433 F.3d
608, 610 (8th Cir. 2006)).
A motion to dismiss under Rule 12(b)(6) or Rule 12(c) challenges the legal
sufficiency of the complaint. Neitzke v. Williams, 490 U.S. 319, 326–27 (1989)
(“[I]f as a matter of law it is clear that no relief could be granted under any set
of facts that could be proved consistent with the allegations a claim must be
dismissed.” (internal citation and quotations omitted)). To survive a motion for
judgment on the pleadings, “the factual allegations in a complaint, assumed
true, must suffice ‘to state a claim to relief that is plausible on its face.’ ” Ritchie
v. St. Louis Jewish Light, 630 F.3d 713, 716 (8th Cir. 2011) (quoting Northstar
Indus., Inc. v. Merrill Lynch & Co., 576 F.3d 827, 832 (8th Cir. 2009)).
To meet the plausibility standard, the complaint must contain “factual
content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662,
____, 129 S. Ct. 1937, 1949 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007) (reasoning that a plaintiff must allege enough facts to “nudge
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[its] claims across the line from conceivable to plausible[.]”). In making this
determination, the court must accept the facts alleged as true, even if they are
doubtful. Twombly, 550 U.S. at 555.
B. Analysis
Defendants argue that Mittleider brought suit against the wrong
defendants because “[t]he only conceivable theory of liability against [CPR Co.
or CPR Ltd.] would be piercing the corporate veil—allegations that cannot be
found in the complaint and that lack factual basis.” Docket 18 at 14.6
Mittleider responds that this argument is premature because the complaint
adequately alleges that defendants are liable for DM&E’s debts and obligations.
In his complaint, Mittleider alleged that when defendants acquired
DM&E, they also “assumed the obligations of DM&E, which would have
included promises and contractual obligations made by the Chief Executive
Officers Mr. Brownell and Mr. Schieffer[.]” Docket 1 ¶¶ 27-28. At the judgment
6
Early in their brief, defendants state that they “challenge personal
jurisdiction,” Docket 18 at 1, but later request that the court decide their
motion on the merits, meaning determining whether the court has subject
matter jurisdiction or if the RLA preempts this action. It appears that
defendants have waived their personal jurisdiction claim. A defendant can
waive personal jurisdiction by its conduct, including failing to contest personal
jurisdiction in a Rule 12 motion. See, e.g., Carlson v. Hyundai Motor Co., 164
F.3d 1160, 1163 (8th Cir. 1999) (“Hyundai Motor Company voluntarily
appeared in the district court and joined in defendants’ Rule 12(b)(6) motion to
dismiss without contesting the court’s personal jurisdiction, thereby waiving
that issue.” (citing Fed. R. Civ. P. 12(h)(1))); see generally Fed. R. Civ. P.
12(h)(1) (discussing when parties have waived a defense of lack of personal
jurisdiction).
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on the pleadings stage, the court assumes that the complaint’s factual
allegations are true. Ritche, 630 F.3d at 716. If those allegations are true,
Mittleider has stated a cause of action against defendants.
Defendants also request oral argument pursuant to D.S.D. Civ. LR 7.1,
which provides that the court may order oral argument on a motion. Finding
oral argument unnecessary to resolve this motion, defendants’ request for oral
argument is denied.
III.
Motion to Amend the Complaint
A. Standard of Review
“[A] party may amend its pleading only with the opposing party’s written
consent or the court's leave.” Fed. R. Civ. P. 15(a)(2). After the parties’ Rule 26
conference, defendants indicated to Mittleider that the proper corporate
defendant was DM&E. After requesting time to investigate DM&E’s assets,
Mittleider agreed that DM&E should also be named as a defendant and sought
leave to amend from defendants. Defendants did not respond to Mittleider’s
request to consent to the amendment before filing their motion for judgment on
the pleadings. Thus, Mittleider needs the court’s permission to amend his
complaint.
The purpose of pleading under the federal rules “is to facilitate a proper
decision on the merits.” Foman v. Davis, 371 U.S. 178, 181-82 (1962). The
federal rules further this purpose by declaring that “[t]he Court should freely
18
give leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2). “[T]his
mandate is to be heeded.” Foman, 371 U.S. at 182.
“Given the courts’ liberal viewpoint towards leave to amend, it should
normally be granted absent a good reason for denial.” Popp Telcom v. Am.
Sharecom, Inc., 210 F.3d 928, 943 (8th Cir. 2000) (citing Thompson-El v. Jones,
876 F.2d 66, 67 (8th Cir. 1989)). The court should grant leave “[u]nless there is
a good reason for denial, ‘such as undue delay, bad faith, or dilatory motive,
repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the nonmoving party, or futility of the amendment.’ ” Becker v.
Univ. of Neb., 191 F.3d 904, 907-08 (8th Cir. 1999) (quoting Brown v. Wallace,
957 F.2d 564, 566 (8th Cir.1992)). The district court retains discretion to grant
or deny leave to amend a complaint. Foman, 371 U.S. at 182
B. Analysis
Defendants’ only argument in opposition to Mittleider’s motion to amend
is that amendment would be futile because Mittleider’s claims, no matter which
company is named as a defendant, are preempted by the RLA. As stated above,
however, the RLA does not preempt Mittleider’s claims.
There is no indication that Mittleider unduly delayed seeking leave of
court to amend his complaint, that he acted in bad faith or had a dilatory
motive, and there has been no repeated failure to cure deficiencies. There is no
undue prejudice to defendants, especially because defendants initially
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proposed to Mittleider that he amend his complaint to include DM&E as a
defendant. Because an amendment to Mittleider’s complaint serves the
interests of justice, Mittleider’s motion to amend is granted.
IV.
Motion to Strike
Mittleider moves to strike exhibit one, a copy of the CBA, from Decker’s
affidavit dated September 13, 2011. Docket 19-1. Mittleider argues that Decker
cannot provide foundation for the CBA and, because defendants moved for
judgment on the pleadings, the court cannot look to evidence outside the
pleadings. Defendants later cured Mittleider’s foundational concerns. See
Docket 32 at 2. Because defendants moved under Rule 12(b)(1) to challenge the
court’s subject matter jurisdiction, the court can review material contained
outside the pleadings. Osborn, 918 F.2d at 729. The court only reviewed the
CBA as it concerned the Rule 12(b)(1) motion. Thus, Mittleider’s motion to
strike is denied.
CONCLUSION
Defendants challenge the court’s subject matter jurisdiction under Rule
12(b)(1) by arguing that the RLA preempts Mittleider’s state-law claims.
Because the RLA does not preempt Mittleider’s claims, the court has subject
matter jurisdiction over this case. Defendants further argue, pursuant to Rule
12(c), that they are entitled to judgment on the pleadings because Mittleider
named the wrong defendants. Because the court assumes all allegations in the
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complaint to be true when ruling on a motion for judgment on the pleadings,
defendants’ motion is denied. Absent a finding of RLA preemption, defendants
do not oppose Mittleider’s motion to amend his complaint. Thus, the motion to
amend is granted. Mittleider’s motion to strike the CBA from the record is
denied because Rule 12(b)(1) allows the court to review materials outside the
pleadings in determining whether the court has subject matter jurisdiction.
Accordingly, it is
ORDERED that defendants’ motion for judgment on the pleadings
(Docket 17) is denied.
IT IS FURTHER ORDERED that plaintiff’s motion to amend the
complaint (Docket 25) is granted.
IT IS FURTHER ORDERED that plaintiff’s motion to strike (Docket 23) is
denied.
Dated April 12, 2012.
BY THE COURT:
/s/ Karen E. Schreier
KAREN E. SCHREIER
CHIEF JUDGE
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