United Union of Roofers, Waterproofers, and Allied Trades No. 40 v. Insurance Corp. of America

• Decision Date: 04 December 1990
• Docket Number: No. 89-15068,89-15068
• Citation: 919 F.2d 1398
• Parties: 136 L.R.R.M. (BNA) 2013, 117 Lab.Cas. P 10,441, 18 Fed.R.Serv.3d 963 UNITED UNION OF ROOFERS, WATERPROOFERS, AND ALLIED TRADES NO. 40, an unincorporated labor organization, Plaintiff-Appellant, v. INSURANCE CORPORATION OF AMERICA, a corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1398

919 F.2d 1398

136 L.R.R.M. (BNA) 2013, 117 Lab.Cas. P 10,441,

18 Fed.R.Serv.3d 963

UNITED UNION OF ROOFERS, WATERPROOFERS, AND ALLIED TRADES

NO. 40, an unincorporated labor organization, Plaintiff-Appellant, v. INSURANCE CORPORATION OF AMERICA, a corporation, Defendant-Appellee.

No. 89-15068.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 13, 1990.

Decided Dec. 4, 1990.

Roger A. Carnagey, Oakland, Cal., for plaintiff-appellant.

Peter E. Romo, Jr. and Peter A. Smalbach, Adams, Duque & Hazeltine, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before CHOY, TANG and BEEZER, Circuit Judges.

CHOY, Circuit Judge:

The United Union of Roofers, Waterproofers, and Allied Trades, Local No. 40 (Union), appeals from the order of the district court dismissing its complaint against Insurance Corporation of America (ICA) and the court's refusal to file its first amended complaint. This appeal involves the questions whether the Union had standing to assert the rights of its members who sought payment of past wages from a payment bond issued by ICA, and whether the court should have accepted the Union's first amended complaint. We AFFIRM the district court's order denying the Union associational standing to assert the rights of its members, but we REVERSE and REMAND to the district court with instruction to consider whether the Union, by amending its complaint, can assert an independent right to standing.

FACTUAL AND PROCEDURAL BACKGROUND

The facts are not in dispute, nor do the parties discuss them in detail. Apparently several members of the Union worked on a public project for A-Plus Roofing (A-Plus). As part of the requirements to obtain a contract on the project, A-Plus had to obtain a payment bond. ICA is the surety on the bond. A-Plus allegedly failed to pay in full the Union members' wages.

The Union brought suit in a federal court sitting in diversity. It sought enforcement of the payment bond, and specifically requested damages in the amount of its members' lost wages. It claimed to be suing as the "agent" of its members, or, alternatively, under the "associational representation" doctrine. ICA brought a motion to dismiss, arguing that the Union did not have standing to assert the rights of its members because it sought money damages that would require individual participation of some of its members.

On December 2, 1988, the district court granted the motion to dismiss. It held that federal standing law applied and that the Union had not met the third requirement for obtaining associational standing, namely, that the suit would not require the individual participation of any of its members. The court order did not say anything about the other two reasons for dismissal asserted by ICA.

No separate final judgment was ever entered after the district court granted the motion to dismiss, nor did the order say the dismissal was with prejudice or without leave to amend. The Union attempted to file its first amended complaint, which asserted that the Union had its own independent basis for standing to sue on the payment bond. The Union received a letter from the district court's law clerk dated December 23, 1988, which stated that the district court's dismissal was with prejudice and did not allow leave to amend. The amended complaint was returned and never filed.

On January 13, 1989, the Union filed a Notice of Appeal from the December 2 order granting the motion to dismiss and the December 23 letter refusing to file the amended complaint. ¹ On January 26, 1989, the district court issued a supplemental order explaining that the reason it did not accept the first amended complaint was that it had already determined that plaintiff lacked standing.

STANDARDS OF REVIEW

We review the district court's determination on standing de novo. Bruce v. United States, 759 F.2d 755, 758 (9th Cir.1985). We review the district court's denial of leave to amend (or refusal to accept the Union's First Amended Complaint) for abuse of discretion. Loehr v. Ventura County Community College Dist., 743 F.2d 1310, 1313 (9th Cir.1984). However, a party is entitled to amend once as a matter of law at any time before a responsive

pleading is served. Fed.R.Civ.P. 15(a). A district court may abuse its discretion if it does not apply the correct law or if it rests its decision on a clearly erroneous finding of a material fact. Hunt v. National Broadcasting Co., Inc., 872 F.2d 289, 292 (9th Cir.1989) .

DISCUSSION

I.

A. Associational Standing Under Federal Standing Law

The Union argues that California standing law applies in this diversity suit. Even if the district court was correct that federal law applies, the Union argues that the special representative obligations it has to its members should allow it to seek damages on behalf of those workers allegedly owed past wages in this case. Assuming for the moment that the district court was correct that standing in this case depends entirely on federal law, the court was correct in rejecting the Union's "associational standing" argument.

In Hunt v. Washington State Apple Advertising Commission, 432 U.S. 333, 342-43, 97 S.Ct. 2434, 2440-41, 53 L.Ed.2d 383 (1977), the Supreme Court set out three requirements for an association to have standing to bring suit on behalf of its members:

an association has standing to bring suit on behalf of its members when: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit.

Hunt, 432 U.S. at 343, 97 S.Ct. at 2441.

The Union acknowledges that no federal court has allowed an association standing to seek monetary relief on behalf of its members. See Telecommunication Research & Action Center v. Allnet Communication Servs., Inc., 806 F.2d 1093, 1095 (D.C.Cir.1986). The courts that have addressed this issue have consistently held that claims for monetary relief necessarily involve individualized proof and thus the individual participation of association members, thereby running afoul of the third prong of the Hunt test.

In Alaska Fish & Wildlife Federation and Outdoor Council, Inc. v. Dunkle, 829 F.2d 933 (9th Cir.1987), we granted the association "associational standing" to assert its members' claims because it sought "declaratory and prospective relief rather than money damages, [and thus] its members need not participate directly in the litigation." Id. at 938. Here the Union seeks monetary relief requiring the participation of individual members. If the federal rules of standing apply, the district court correctly ruled that the Union lacked standing.

The Union points out that courts have not generally declared a per se rule against granting an association standing to seek money damages. It argues that it has special representative obligations to its members that make it an appropriate association to sue for damages on behalf of its members. We find this argument unpersuasive.

Even assuming, arguendo, that a Union does have a special representative duty to its members that distinguishes it from many other associations, there is absolutely no authority that such a factor would negate the required application of the test established in Hunt. In this case, it is clear that individual Union members will have to participate at the proof of damages stage. There is no escaping the fact that the Union in this case cannot overcome the third hurdle placed before it by Supreme Court precedent.

B. Associational Standing Under California Law

Assuming, arguendo, that California standing law is applicable once the federal constitutional requirements for standing are met, the Union would still fail in its effort to obtain associational standing to seek damages for its members. In Brotherhood of Teamsters and Auto Truck Drivers Local No. 70 v. Unemployment The Union cites two cases it argues would give it standing under California law. The first, I.B.E.W. v. Board of Harbor Commissioners, 68 Cal.App.3d 556, 137 Cal.Rptr. 372 (1977), involved an attempt by a union to enforce the prevailing wage provisions of the California Labor Code. The court affirmed the lower court's sustaining of the defendant's demurrer to the extent that the complaint sought monetary damages because the complaint did not allege compliance with the claims provision of the Governmental Tort Act. Id. at 560, 137 Cal.Rptr. 372. The court then dismissed the part of the complaint seeking to enforce the wage provisions on the basis that the project in question was not a "public work." Id. at 563, 137 Cal.Rptr. 372. Finally, the court held that the union lacked standing to bring an action to enforce the prevailing wage provisions because its members were all paid above the prevailing wage.

Insurance Appeal Board, 190 Cal.App.3d 1515, 236 Cal.Rptr. 78 (1987), a California appellate court looked to the federal law of associational standing and adopted its reasoning. In Teamsters the court granted the union standing because it met the requirements of the Hunt test since it was not seeking monetary relief, nor was there any other reason that individual members would need to participate in the case. Thus it appears that the requirements for associational standing under California and federal law are nearly identical. ²

It is the standing portion of Board of Harbor Commissioners that the Union believes supports its position that California courts would grant it standing in this case. The Union argues that if the union members in Board of Harbor Commissioners had been paid below the prevailing wage, then the union would have had standing. This argument stretches Board of Harbor Commissioners almost beyond recognition. The court in that case merely held that the plaintiff...