Unite Here Ret. Fund v. City of San Jose
| Decision Date | 28 January 2021 |
| Docket Number | Case No. 5:20-cv-06069-EJD |
| Parties | UNITE HERE RETIREMENT FUND, et al., Plaintiffs, v. CITY OF SAN JOSE, et al., Defendants. |
| Court | U.S. District Court — Northern District of California |
Before the Court is Defendant Dolce International/San Jose, LLC's ("Dolce") motion to dismiss certain claims brought by Plaintiffs Unite Here Retirement Fund and Trustees of the Unite Here Retirement Fund (collectively, the "Fund") and by Co-Defendant City of San Jose (the "City") pursuant to Federal Rule of Civil Procedure 12(b)(6). See Def.'s Mot. to Dismiss, Dkt. No. 46 ("Motion"). The Court heard oral argument on January 21, 2021. For the reasons below, the Court DENIES Dolce's Motion.
The City owned a hotel and conference center known as the Dolce Hayes Mansion ("Hayes Mansion") from 2003 to 2019, when the City ultimately sold Hayes Mansion to a party unrelated to the dispute at hand.1 First Am. Compl. ("FAC") ¶¶ 9, 13, Dkt. No. 18. In 2003, when the City came into possession of Hayes Mansion, the City and Dolce entered into a management agreement by which Dolce would operate and manage the City's Hayes Mansion as a hotel and conference center. FAC ¶ 10. Dolce did indeed manage and operate Hayes Mansion throughout the durationof the City's ownership of Hayes Mansion. Id.
From at least 2010, various Hayes Mansion employees were represented by UNITE HERE Local 19 (and/or its predecessor union) in entering into a series of collective bargaining agreements with Hayes Mansion. Id. ¶ 11. These collective bargaining agreements mandated contributions to the Fund and its predecessor fund, the National Retirement Fund, on behalf of the employees represented by UNITE HERE Local 19. Id. ¶ 12. The Fund is a multiemployer trust fund that established and maintains a plan known as the "Legacy Plan" to provide retirement income to employees for whom contributions are made by employers. Id. ¶ 4.
The obligation by an employer, either the City or Dolce, to make contributions to the Fund was terminated as a result of the City's sale of Hayes Mansion in 2019. Id. ¶ 13. Nonetheless, the Fund maintains that either Dolce or the City, as the entity required to contribute to the Fund, is an "employer" for the purposes of incurring a withdrawal liability under the Employee Retirement Income Security Act of 1974, as amended by the Multiemployer Pension Plan Amendments Act of 1980, ("ERISA") due to withdrawing from the Fund. Id. ¶¶ 16, 29. The Fund assessed a withdrawal liability in the principal amount of $1,136,944.00 payable in eighty quarterly installments of $21,744.50. FAC ¶¶ 18-20, 31, Ex. A, Dkt. No. 18-1. In June 2019, the Fund decided to notify the City and Dolce of the withdrawal liability amount, provided a schedule for withdrawal liability payments, and demanded payment in accordance with the schedule ("Notice and Demand"), as required by ERISA. Id. ¶¶ 17, 19, 31.
The City and Dolce claim that the other is responsible for the withdrawal liability payments and have taken different approaches with the Fund in regard to contesting the disputed contributions. Id. ¶ 14. In January 2020, Dolce timely exercised its right under ERISA to request a review of the Notice and Demand with the Fund. Id. ¶ 32. In that request for review, Dolce denied any obligation to contribute to the Fund and asserted that such an obligation was instead held by the City. Id. ¶ 34. In any event, beginning in December 2019, Dolce proceeded to make the demanded quarterly withdrawal liability payments to the Fund in accordance with ERISA's "pay now, dispute later" provisions. Motion, p. 1. In December 2020, Dolce timely exercised its rightunder ERISA to demand arbitration of its dispute with the Fund. FAC ¶ 33; Pls.' Mot. to Stay Processing of the Demand for Arb. by Def., Dkt. No. 60, p. 4. In contrast, the City did not request review of the withdrawal liability nor did it submit the first quarterly payment demanded by the Fund. FAC ¶¶ 21-22; Pls.' Resp. to Motion, Dkt. No. 47, p. 3.
On April 28, 2020, the Fund originally brought this lawsuit against the City in the United States District Court for the Southern District of New York, where the Fund's plan was administered, to collect the entire outstanding withdrawal liability. UNITE HERE Retirement Fund, et al. v. City of San Jose, Civ. No. 20-cv-3319 (S.D.N.Y. 2020), Dkt. No. 1 (original complaint). After the lawsuit was transferred to this Court due to a related case here,2 the Fund amended its original complaint to include Dolce as an additional defendant, seeking the Court to adjudicate whether the City or Dolce is the "employer" for the purposes of imposing the ERISA-mandated withdrawal liability pursuant to Sections 4201 through 4225 and 4301 of ERISA, 29 U.S.C. § 1381-1405, 1451. FAC ¶¶ 1, 36.
Dolce filed the present Motion, seeking to dismiss claims by the City and the Fund. At the time of the filing of Dolce's Motion, the City had a cross-claim against Dolce alleging that Dolce, not the City, is the "employer" within the meaning of Section 4212(a) of ERISA. Def. City's Answer to FAC and Cross-cl., Dkt. No. 23, p. 5. The City later filed an amended answer which no longer includes the cross-claim against Dolce. Def. City's First Am. Answer to FAC, Dkt. No. 48. For that reason, the Court deems Dolce's Motion moot as to the City.
As to the Fund, Dolce argues that pursuant to ERISA's mandatory arbitration provisions, the determination of who is an "employer" under ERISA must be arbitrated rather than adjudicated by this Court. Motion, p. 2. While the Fund agrees that certain withdrawal liability disputes under ERISA are subject to arbitration, the Fund opposes the Motion, arguing that the determination of who is an "employer" under ERISA is a threshold jurisdictional question that isproper for this Court to decide before a party is required to arbitrate. Pls.' Resp. to Motion, Dkt. No. 47, p. 5, 9.
Federal Rule of Civil Procedure 8(a) requires a plaintiff to plead each claim with sufficient specificity to "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal quotations omitted). A complaint which falls short of the Rule 8(a) standard may be dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). "Dismissal under Rule 12(b)(6) is appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). Moreover, the factual allegations "must be enough to raise a right to relief above the speculative level" such that a claim "is plausible on its face." Twombly, 550 U.S. at 555, 570, 127 S.Ct. 1955.
When deciding whether to grant a motion to dismiss, the court generally "may not consider any material beyond the pleadings." Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). The court must accept as true all "well-pleaded factual allegations." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The court must also construe the alleged facts in the light most favorable to the plaintiff. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1998). Furthermore, "material which is properly submitted as part of the complaint may be considered." Hal Roach Studios, 896 F.2d at 1555 n.19. However, "courts are not bound to accept as true a legal conclusion couched as a factual allegation." Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
In its Motion, Dolce argues that the Fund's claim should be dismissed because they are subject to arbitration first. Motion, p. 2. More specifically, Dolce contends that an arbitrator, and not the court, must decide whether Dolce is the "employer" of the bargaining unit employees at Hayes Mansion and thus, subject to a withdrawal liability. Id. In support of this assertion, Dolcepoints to Section 4221 of ERISA, and specifically the "MPPAA," which states in part that "[a]ny dispute between an employer and the plan sponsor of a multiemployer plan concerning a determination made under sections 1381 through 1399 of this title shall be resolved through arbitration." 29 U.S.C. § 1401(a); see also Bd. of Trustees of Const. Laborers' Pension Tr. for S. California v. M.M. Sundt Const. Co., 37 F.3d 1419, 1420 (9th Cir. 1994) ("M.M. Sundt") ().3 This statutory requirement to arbitrate extends to "[i]ssues concerning whether an employer has withdrawn from a plan and, if so, the amount of withdrawal liability are committed to arbitration." Irigaray Dairy v. Dairy Employees Union Local No. 17 Christian Labor Ass'n of the United States of Am. Pension Tr., 153 F. Supp. 3d 1217, 1257 (E.D. Cal. 2015).
The Ninth Circuit has not directly addressed whether the statutory requirement to arbitrate extends to the specific issue raised here—namely, whether a defendant is an "employer" under the MPPAA. See generally Irigaray Dairy 153 F. Supp. 3d at 1257. Several other circuit courts, however, "have held that whether a defendant is an employer under the MPPAA is subject to judicial review, not arbitration." Irigaray Dairy 153 F. Supp. 3d at 1257-58 (citing N.Y. State Teamsters Conf. Pension & Ret. Fund v. Express Servs. Inc., 426 F.3d 640, 645 (2d Cir. 2005) ("Express Servs."); Galgay v. Beaverbrook Coal Co., 105 F.3d 137, 142 (3d Cir. 1997); Rheem Mfg. Co. v. Cent. States Se. & Sw. Areas Pension Fund, 63 F.3d 703, 706 (8th Cir. 1995); Teamsters Joint Council No. 83 v. Centra, Inc., 947 F.2d 115, 122 (4th Cir. 1991); Carriers Container Council, Inc. v. Mobile S.S. Ass'n Inc.-Intern. Longshoreman's Ass'n, AFL-CIO Pension Plan & Trust, 896 F.2d...
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