Mittleider v. Canadian Pacific Ry. Co.

• Decision Date: 12 April 2012
• Docket Number: CIV. 11-4054-KES
• Parties: CLYDE F. MITTLEIDER, Plaintiff, v. CANADIAN PACIFIC RAILWAY COMPANY; and CANADIAN PACIFIC RAILWAY LTD., Defendants.
• Court: U.S. District Court — District of South Dakota

CLYDE F. MITTLEIDER, Plaintiff,

v. CANADIAN PACIFIC RAILWAY COMPANY;and CANADIAN PACIFIC RAILWAY LTD., Defendants.

CIV. 11-4054-KES

UNITED STATES DISTRICT COURT DISTRICT OF SOUTH DAKOTA SOUTHERN DIVISION

Dated: April 12, 2012

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 locomotiveengineer 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 oftransferring 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, AssistantDirector 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 withDM&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).

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 facialchallenge 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 theRLA 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...