Merryman Excav. V. Intern. Union of Operating Eng.
| Decision Date | 25 February 2008 |
| Docket Number | No. 06 C 5160.,06 C 5160. |
| Parties | MERRYMAN EXCAVATION, INC., Plaintiff, v. INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150, AFL-CIO, et al., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Merryman Excavation, Inc. ("Merryman") filed suit against: (i) International Union of Operating Engineers, Local 150, AFL-CIO ("Local 150"); (ii) The Mid-America Regional Bargaining Association ("MRBA"), John Vignocchi, Tim Scully, and Joseph Benson (collectively "the MARBA Defendants"); and (iii) Charles August, Melinda Hensel, John Rabine, Ray Herron, Michael Kresge and Richard Dunlap (collectively "the Individual Union Defendants") alleging violations of § 301 of the Labor Management Relations Act (the "LMRA"), Illinois common law civil conspiracy, and civil Racketeering Influenced Corrupt Organization Act ("RICO"), 18 U. S.C. § 1962. The MARBA Defendants and the Individual Union Defendants moved via two separate motions to dismiss Count XIII, the RICO charge. For the reasons stated herein, Defendants' Motions to Dismiss are granted and Count XIII is dismissed with prejudice.
On January 16, 2007, Merryman filed its First Amended Complaint alleging, among other allegations, that Defendants violated the RICO Act. On April 25, 2007, this Court dismissed Merryman's RICO claim without prejudice. In its order, the Court instructed Merryman to re-plead Count XIII within 14 days after which time Defendants could re-file motions to dismiss Count XIII on any and all grounds including preemption by § 301 of the LMRA. The Court did not address the issue of preemption by § 301 because the resolution of the issue depended upon the specifics of the RICO allegations and the Court found that Merryman did not properly plead a RICO claim. Merryman filed a Third-Amended Complaint repleading the RICO claim.
At the motion to dismiss stage, all of the plaintiffs allegations are accepted as true. Merryman is an Illinois Corporation engaged in the business of installing underground sewer piping.3d Am. Cplt. ¶ 9. Local 150 is a labor organization representing members throughout Illinois, Iowa, and Indiana. Id. at ¶ 10. MARBA is an Illinois corporation made up of multi-employer associations representing contractor-employers in the Chicago area. On or about April 1, 2000, Merryman entered into a Memorandum of Agreement with Local 150 that incorporated an existing collective bargaining agreement (the "CBA") between Local 150 and MARBA. Id. at ¶ 31. By virtue of the Memorandum, Merryman became bound by two substantially similar "Master Agreements" known as the Illinois Heavy Highway and Underground Agreements. Id. at ¶ 31.
The CBA provides a three-step procedure to resolve disputes between an employer and Local 150. Id. at 33-34. In the first phase of the procedure, the CBA requires that the parties hold an informal conference concerning the grievance ("Step One"). If this fails to resolve the dispute, the parties are required to reduce the grievance to writing within seven days and conduct a conference between officials from Local 150 and from the employer ("Step Two"). If this fails to resolve the dispute, the parties must submit the written grievance to the Joint Grievance Committee ("JGC") for resolution within fifteen days ("Step Three"). As for the composition of the JGC, the CBA requires that the "committee shall consist of an equal number of members representing Employers and the Union." See 3d Am. Cplt. ¶ 36; Ex. C, Article XIII, Section 1, page 41. If the JGC enters an award against an employer, the CBA requires the employer to pay the aggrieved worker double rate for each hour that the aggrieved worker would have worked but for the employer's violation.
On August 2, 2006, the JGC held eight conferences for worker grievances involving Merryman. The JGC comprised either two or three representatives from Merryman and some or all of the six union members. The JGC awarded damages against Merryman for six of the eight grievances. During the conference, Robert Hanlon, attorney representative for Merryman, voiced an objection to the JGC's jurisdiction. Id. at ¶ 48. Specifically, Merryman complained that the JGC failed to comply with the provisions of the CBA and JGC's procedural rules because Local 150 and Merryman did not engage in a Step One conference, Local 150's request for a Step Two conference was beyond the prescribed seven business days from the purported Step One conference, and the Step Three conference was beyond the prescribed 15 days from the Step Two conference. Additionally, Merryman alleged that Local 150 did not engage in a meaningful attempt to resolve the grievance prior to its submission to the JGC; there were more union representatives present at the proceeding than employer representatives; and the award improperly directed payment by Merryman to Local 150. Merryman also alleged that the JGC's procedural rules were violated when Joseph Vignocchi ("Vignocchi"), a voting member of the union and 18-year member of the JGC, left the August 2, 2006 proceedings reducing the required quota of three to two.
Merryman refused to pay the grievance awards and on September 11, 2006, a member of Local 150 "threatened enforcement" of the six unpaid grievances. Id. at ¶¶ 133, 149. In Merryman's RICO claim, Merryman pleads that Defendants committed acts of mail fraud and extortion in violation of 18 U.S.C. § 1341 and § 1951 when they mailed letters to Merryman associated with the August 2 conference, threatened "job action" for noncompliance with the JGC orders, and wrongfully directed Merryman to comply with the awards. Id. at ¶ 237(a)-(oo).
On October 25, 2006, after Merryman had filed suit in this Court, a second JGC meeting occurred. Id. at 167. This time, the JGC awarded damages against Merryman for three grievances. Id. at ¶ 170. Two members of Merryman and attorney Hanlon attended the JGC meeting. Hanlon again objected to the jurisdiction of the JGC for the same reasons set forth during the August 2, 2006 conference. Id. at ¶¶ 177, 188.
Merryman refused to pay the additional grievance awards and on December 4, 2006, a member of Local 150 "threatened enforcement" of two of the three unpaid grievances awarded at the JGC meeting on October 25. In Merryman's RICO claim, Merryman pleads that Defendants committed acts of mail fraud and extortion in violation of 18 U.S.C. § 1341 and § 1951 when they mailed letters to Merryman associated with the October 25 conference, threatened "job action" for noncompliance with the JGC orders, and wrongfully directed Merryman to comply with the awards. Id. at ¶ 237(oo)-(aaa). Merryman pleaded that Local 150 extorted money from Merryman by convincing Merryman to settle four of the grievances. ¶ 237(bbb) (ddd)(eee)(hhh).
Merryman seeks a declaratory judgment that the nine monetary awards and two deadlocks reached by the JGC be declared void as impartial and outside the scope of the CBA. Merryman also alleges a claim of Illinois civil conspiracy against the MARBA Defendants and the Individual Union Defendants, and a civil RICO claim against all Defendants for mail fraud and extortion in furtherance of an illegal enterprise designed to cause Merryman harm.
Motions to Dismiss are construed in the light most favorable to the plaintiff. McCready v. eBay, Inc., 453 F.3d 882, 888 (7th Cir.2006). The court must take as true "all well-pleaded factual allegations and making all possible inferences from those allegations in" the plaintiffs favor. Id. (citation omitted). In order to state a claim, a plaintiff must allege facts that plausibly suggest he is entitled to relief. See Bell Atlantic Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007). To allege plausible grounds for relief, the complaint must allow a "reasonable expectation" that discovery will reveal evidence of illegality. Id. at 1965. If the allegations do not suggest such a right to relief, "the plaintiff pleads itself out of court." Id.
Merryman's RICO claim is Preempted by § 301
Defendants move to dismiss Count XIII of the Third-Amended Complaint, the civil RICO claim, for lack of subject matter jurisdiction, as well as for other deficiencies. Defendants argue that the civil RICO claim is preempted by § 301 of the LMRA. Section 301(a) of the LMRA states, in relevant part:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties.
29 U.S.C. § 185(a). Section 301 authorizes federal courts to "fashion a body of federal common law to be used to address disputes arising out of labor contracts", including suits to enforce or vacate arbitration awards. Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 209, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985); General Drivers, Warehousemen & Helpers Local 89 v. Riss & Co., 372 U.S. 517, 519, 83 S.Ct. 789, 9 L.Ed.2d 918 (1963). "The preemptive force of § 301 displaces any independent federal or state cause of action when the claim concerns a legitimate labor dispute and involves the breach of a collective bargaining agreement." U.S. v. Palumbo, 145 F.3d 850, 864 (7th Cir.1998), citing Allis-Chalmers, 471 U.S. at 211, 105 S.Ct....
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