Columbia Exp. Terminal v. ILWU-PMA Pension Fund
| Decision Date | 16 May 2023 |
| Docket Number | 20-cv-08202-JSW |
| Parties | COLUMBIA EXPORT TERMINAL, LLC, Plaintiff, v. ILWU-PMA PENSION FUND, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Now before the Court for consideration is the motion to dismiss filed by the ILWU-PMA Pension Plan and the ILWU-PMA Welfare Plan (collectively the "Plans"). The Court has considered the parties' papers, relevant legal authority the record in this case, and it HEREBY GRANTS the Plans' motion, with leave to amend.
(Compl. ¶¶ 11-12.)
"Under the CBA, CET was required to make contributions to [the Plans] based on actual man-hours worked" by the Employees. (Id. ¶ 9 (quoting CBA, Art. X,¶10-3).) CET alleges it discovered that certain bargaining unit employees ("the Employees") "short-manned jobs" and did not actually work the hours reported on time sheets. CET describes two practices that allegedly resulted in excess contributions to the Plans:
One practice involved employees routinely splitting shifts, with one working the first half and the other working the second half, yet submitting time sheets indicating falsely that both had worked the full shift. Another practice involved employees not showing up at all and yet those who did show up submitting time sheets indicating that the absent employee worked a full shift.
(Id. ¶ 13.) CET's position is that it should not have paid those contributions because the covered employees did not work those hours. (See Id. ¶¶ 14-16.)
CET asked the Plans to reimburse the allegedly excess contributions, but the Plans denied its request. (Id. ¶¶ 17-18 & Exs. B-C.) The Plans took the position that if CET's "claim for return of contributions rests on an argument over whether or not certain time entries were or were not compensable," CET needed to provide the Plans denied CET's claim. (Compl., Ex. C at 2.)
Before CET filed its Complaint in this case, it sued the ILWU for an alleged violation of the RICO in the United States District Court for the District of Oregon. CET's RICO claim was based on the same employment practices that CET alleges resulted in the overpayments at issue in this case. (Compare Dkt. Nos. 45, 45-1, Plans' Request for Judicial Notice ("Plans' RJN"), Ex. 1A
On December 20, 2019, the district court in the RICO Litigation dismissed the case, without prejudice, on the basis that the claim was preempted under the Labor Management Relations Act ("LMRA"). (Dkt. Nos. 45-6 and 45-7, Plans' RJN Exs. 1F ("Recommendation"), 1G ("Order").) That court reasoned that in order to determine whether the Employees committed predicate acts of wire or mail fraud, it would be required to interpret the terms of the CBA. The court also concluded CET was required to comply with grievance procedures contained in the CBA, which it had not done. (See Recommendation at 12-13, 18-19; Order at 1 n.1, 5-6.)
CET appealed that decision to the United States Court of Appeals for the Ninth Circuit. In June 2021, the Ninth Circuit affirmed.[2] See CET v. IWLU, 2 F.4th 1243 (9th Cir. 2021), withdrawn and superseded on denial of reh 'g en banc, 24 F.4th 836 (9th Cir. 2022) ("CET'). After the Ninth Circuit issued its ruling, CET filed a petition for a writ of certiorari with the United States Supreme Court. Before the Supreme Court ruled, CET and ILWU settled the RICO Litigation.
The Court will address additional facts as necessary in the analysis.
The Plans argue this case should be dismissed because: (1) CET's claims are precluded by Section 301 of the LMRA; (2) CET fails to state a claim based on the terms of the Plan Agreements; (3) CET failed to exhaust administrative remedies required by the Plan Agreements; and (4) CET agreed not to grieve or otherwise contest the man-hours paid when it settled with ILWU.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) should be granted when the pleadings fail to state a claim upon which relief can be granted. A court's "inquiry is limited to the allegations in the complaint, which are accepted as true and construed in the light most favorable to the plaintiff." Lazy Y Ranch LTD v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008). Even under the liberal pleading standard of Federal Rule of Civil Procedure 8(a)(2), "a plaintiffs obligation to provide the 'grounds' of his 'entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)).
Pursuant to Twombly, a plaintiff must not merely allege conduct that is conceivable but must instead allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570. "A claim has facial plausibility when the plaintiff pleads 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, 678 (2009) (citing Twombly, 550 U.S. at 556). If the allegations are insufficient to state a claim, a court should grant leave to amend, unless amendment would be futile. See, e.g., Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990); Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv., Inc., 911 F.2d 242, 246-47 (9th Cir. 1990).
CET argues the Court should deny the Plans' motion because they violated Federal Rule of Civil Procedure 12(g)(2). That rule provides that if a party omits a defense from a motion to dismiss under Rule 12(b), it cannot raise that defense in a subsequent Rule 12(b) motion. The Plans originally moved to dismiss on the basis that CET's claims were not ripe but did not move to dismiss for failure to state a claim. Under Rule 12(g), they cannot raise a 12(b)(6) defense through the current motion. See Fed. R. Civ. P. 12(h)(2) ( defense may be raised in an answer, a motion for judgment on the pleadings, or at trial).
However, the Ninth Circuit has been "forgiving" when a district court rules "on the merits of a late-filed Rule 12(b)(6) motion because strict adherence to Rule 12(g)(2) "can produce unnecessary and costly delays." In re Apple iPhone Antitrust Litig., 846 F.3d 313, 317-18 (9th Cir. 2017); see also DeSoto Cab Co., Inc. v. Uber Techs., Inc., No. 16-cv-6385-JSW, 2020 WL 10575294, at *2 (N.D. Cal. Mar. 25, 2020) () (citation omitted). In light of the Court's decision to stay this matter pending resolution of the appeal in the RICO Litigation and the guidance provided by the CET opinion, the Court concludes that resolving the motion would facilitate judicial economy and efficiency.
CET also argues that because the Plans submitted the plan agreements and the Settlement Agreement, the Court should treat the motion as a motion for summary judgment, defer its ruling, and permit the parties to engage in discovery. The Plans submitted the former to support an argument that the Court does not reach, and it has not considered them. The Court considers the Settlement Agreement solely for purposes of determining whether amendment would be futile.
Relying on CET, the Plans argue CET's ERISA claim is precluded by the LMRA. In order to determine whether a state law claim is preempted by Section 301, a court applies a well-established two-step analysis:
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