Opinion
Case No. CV 08-2068 PSG (FFMx).
May 5, 2009
CIVIL MINUTES — GENERAL
Proceedings: (In Chambers) Order Granting Motion to Dismiss Counterclaims
Before the Court is USW's motion to dismiss the counterclaims. The Court heard oral argument on the matter on May 4, 2009. For the reasons set forth below, the Court GRANTS the motion.
I. Background
ConocoPhillips ("Defendant") is an international oil company which operates oil refineries in Los Angeles, Santa Maria, and Rodeo, California (the "refineries"). United Steel, Paper Forestry, Rubber, Manufacturing, Energy, Allied Industrial Service Workers International Union, AFL-CIO, CLC ("USW") is a labor organization that represents many of the employees who work at the refineries. Defendant and USW are parties to a collective bargaining agreement ("CBA") that governs the terms and conditions of covered employees working at the refineries.
USW and individually named Plaintiffs Raudel Covarrubias, David Simmons, and Stephen Swader filed a class action complaint in Los Angeles Superior Court on February 15, 2008, seeking damages and injunctive relief for Defendant's alleged failure to provide its employees with meal periods as required by California law. Defendant removed the action to this Court on March 27, 2008. On March 12, 2009, the Court granted Defendant's motion for leave to file counterclaims. Defendant filed its counterclaims on March 13, 2009. USW now moves to dismiss the counterclaims.
II. Legal Standard
Pursuant to Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a cause of action if the plaintiff fails to state a claim upon which relief can be granted. In evaluating the sufficiency of a complaint under Rule 12(b)(6), courts must be mindful that the Federal Rules require only that the complaint contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed.R.Civ.P. 8(a)(2). Even though a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, "a plaintiff's 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 Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007) (internal citations omitted). Rather, the complaint must allege sufficient facts to raise a right to relief above the speculative level. Id. (citing 5 C. Wright A. Miller, Federal Practice and Procedure § 1216 (3d ed. 2004)).
In deciding a 12(b)(6) motion, a court must accept all factual allegations in the complaint as true. Leatherman v. Tarrant County Narcotics Intelligence Coordination Unit, 507 U.S. 163, 164, 113 S. Ct. 1160, 122 L. Ed. 2d 517 (1993). Courts must also construe all reasonable inferences in the light most favorable to the plaintiff. See Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003). To further the inquiry, courts may consider certain documents outside the pleadings without converting the proceeding into summary judgment. See Branch v. Tunnell, 14 F.3d 449, 453-54 (9th Cir. 1994) (reversed on other grounds). "Documents attached to the complaint and incorporated therein by reference are treated as part of the complaint for purposes of a 12(b)(6) motion." William W. Schwarzer, A. Wallace Tashima, and James M. Wagstaffe, Federal Civil Procedure Before Trial § 9:212 (The Rutter Group 2008); see also Branch, 14 F.3d at 453. If the complaint necessarily relies on a document which the plaintiff fails to attach, the defendant may attach the document to a motion to dismiss to show that it does not support the plaintiff's claim. Branch, 14 F.3d at 454.
III. Discussion
The counterclaims include the following counts: (1) breach of contract; (2) indemnity or, alternatively, contribution; and (3) reformation or, alternatively, rescission based on mutual mistake. According to Defendant, USW breached the CBA by failing to take steps to ensure the health and safety of employees at the refineries. The counterclaims also allege that USW's conduct and representations in negotiating the employees' work schedule caused some or all of the damages named in Plaintiffs' complaint. Thus, Defendant contends, it should be indemnified or USW should be required to contribute to whatever damages were caused by the alleged meal break violations. Furthermore, Defendant argues, should it be found to have violated the law based on its actions in conformity with the CBA, the agreement should be reformed or rescinded based on mutual mistake.
Defendant urges the Court to deny USW's motion under the "law of the case" doctrine, since the Court previously granted Defendant's motion for leave to file counterclaims. The "law of the case" doctrine states that the decision of a legal issue by the same or a superior court must be followed in all subsequent proceedings in same case. Planned Parenthood of Cent. N. Ariz. v. Arizona, 718 F.2d 938, 949 (9th Cir. 1983). This rule promotes finality, and thus the discretion of a court to revisit issues previously decided should be exercised sparingly. Moore v. James H. Matthews Co., 682 F.2d 830, 833-834 (9th Cir. 1982). However, "the law of the case rule does not bind a court as absolutely as res judicata, and should not be applied 'woodenly' when doing so would be inconsistent with 'considerations of substantial justice.'" Id. (citations omitted). For the discretionary doctrine to apply, "the issue in question must have been decided explicitly or by necessary implication in the previous disposition." Milgard Tempering, Inc. v. Selas Corp. of Am., 902 F.2d 703, 715 (9th Cir. 1990) (internal punctuation and citation omitted).
The legal standard applicable to a motion for leave to file counterclaims "is identical to the one used when considering the sufficiency of a pleading challenged on a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)." Miller v. Rykoff-Sexton, Inc., 845 F.2d 209, 214 (9th Cir. 1988).
Here, USW's motion to dismiss raises arguments and cites authority not presented in its opposition to the motion for leave. Moreover, USW has attached a copy of the CBA to its 12(b)(6) motion; the Court did not have the benefit of considering the full text of the agreement when it ruled on the previous motion. Accordingly, the Court declines to apply the discretionary doctrine and will consider the merits of the instant motion.
A. Breach of Contract
Defendant's breach of contract claim alleges that:
. . . USW made express representations that USW is responsible for ensuring the health and safety of USW Members at the Refineries, including the taking of meal breaks.
USW specifically agreed that certain USW members would take paid 30-minute meal breaks under the CBA.
As material inducement to ConocoPhillips to enter into an agreement regarding the terms and conditions of employment of USW Members, as specified in the CBA, and to which terms ConocoPhillips would not have agreed to absent the express representation by USW that USW and USW Members would perform and adhere to such expectations, USW agreed to be responsible for monitoring, investigating, reviewing, and improving the health and safety conditions at the Refineries, including the issue related to the taking of meal breaks.Counterclaims ¶¶ 20-22. Defendant did not attach the CBA to the counterclaims; however, USW attached a copy as Exhibit A to the Declaration of Steven Sullivan in support of its motion to dismiss. Because Defendant does not contest the authenticity of the attached CBA, and because the counterclaims refer to the document, the Court may consider it in ruling on the motion to dismiss. Branch, 14 F.3d at 454.
Defendant's counterclaims do not specifically identify the provisions of the CBA that USW allegedly violated. However, both parties seem to have focused on Article 20 of the CBA and 2 Side Agreements in addressing the instant motion. After reviewing the entire CBA, the Court, too, finds these provisions to be the most pertinent to Defendant's counterclaims.
Article 20 states, in part:
There shall be established a joint Labor Management Health and Safety Committee, consisting of a minimum of four (4) Union and Company representatives each. There may be more than four (4) Union and Company representatives if mutually agreed upon by the parties. . . .
7. The Joint Committee shall meet as often as necessary, but not less than once each month, at a regularly scheduled time and place, for the purpose of jointly considering, inspecting, investigating and reviewing health and safety conditions and practices. Union members of the Joint Health and Safety Committee shall have the right to investigate accidents in accordance with procedures established by the Committee. The Joint Committee shall make constructive recommendations with respect thereto, including but not limited to the implementation of corrective measures to eliminate unhealthy and unsafe conditions and practice, and to improve existing health and safety conditions and practices.
Side Agreement 2 provides for the creation of a "Health and Safety Representative (H S Rep) position that will utilize an employee from the bargaining unit toward the objective of improving the health and safety of all employees in the refinery." It sets forth the job duties of the H S Rep, including the following:
1. Ex-officio member of the Joint Health Safety Committee.
2. Participate in the development and delivery of Philips safety training programs.
3. Participate in the inspection, investigation and review of health and safety conditions and practices.
4. Participate in developing and implementing recommendations regarding corrective measures which would eliminate unsafe conditions and practices.
5. Participate in the audit of the effectiveness of correcting measures.
Contract interpretation is a matter of law. United States v. King Features Entm't, Inc., 843 F.2d 394, 398 (9th Cir. 1988). The Court need not accept as true allegations in the complaint that are contradicted by the express terms of the contract. See Durning v. First Boston Corp., 815 F.2d 1265, 1267 (9th Cir. 1987). Similarly, since it is the Court's function to interpret the contract, it need not accept as true Defendant's construction of contractual language if it is not reasonable. See King Features, 843 F.2d at 398 (whether contract is ambiguous is a question of law); Transphase Sys., Inc. v. So. Cal. Edison Co., 839 F. Supp. 711, 718 (C.D. Cal. 1993) (on a motion to dismiss, the Court need not accept as true unreasonable inferences).
Here, Defendant's allegations are belied by the language of the CBA. There is nothing in Article 20 or the Side Agreements, nor any other provision of the CBA, which indicates that USW assumed a duty to ensure (or even to merely help ensure, as Defendant would have it) Defendant's compliance with California meal period requirements. Even if the members of the Joint Health and Safety Committee and the H S Rep serve as agents of USW, their only power, under the express language of the CBA, is to make recommendations. No language in the CBA suggests that it creates rights enforceable by Defendant against the Joint Committee or the H S Rep. The CBA is not reasonably susceptible to the interpretation urged by Defendant. Accordingly, the motion to dismiss the counterclaim for breach of contract is GRANTED.
B. Indemnity/Contribution
USW contends that Defendant's second counterclaim should be dismissed because no cause of action for indemnity or contribution exists under § 301. Defendant argues that the cases cited by USW are inapposite.
There is no general federal right to contribution. Northwest Airlines v. Transport Workers Union of Am., AFL-CIO, 451 U.S. 77, 86-87, 101 S. Ct 1571, 67 L. Ed. 2d 750 (1981); Overlie v. Owatonna Indep. Sch. Dist. No. 761, 341 F. Supp. 2d 1081, 1090 (D. Minn. 2004). Thus, under federal law, a right to contribution may arise only: (1) through the affirmative creation of a right of action by Congress, either expressly or implicitly, or (2) through the power of federal courts to fashion a federal common law of contribution. Northwest Airlines, 451 U.S. at 90; Doherty v. Wireless Broad. Sys. of Sacramento, Inc., 151 F.3d 1129, 1130-31 (9th Cir. 1998).
There is a dearth of case law on the right to contribution by way of a suit under § 301 for breach of a CBA. In Scott v. PPG Industries, Inc., 920 F.2d 927, 1990 WL 200655 at *4 (4th Cir. Dec. 13, 1990) (unpublished table decision), the Fourth Circuit noted that there is no express right to contribution under § 301. Rather than conferring substantive rights, the Court explained, § 301 "is a procedural or jurisdictional statute authorizing a federal forum for suits under a collective bargaining agreement." Id. at *4. The Court also determined that no implied right to contribution exists under § 301. However, it found that the right to contribution may exist if expressly provided for under a CBA or if the party asserting the claim establishes shows that it was an intended beneficiary of the relevant provisions of the labor agreement. Id.
Defendant argues that the instant case is distinguishable in that it, unlike the employer in Scott, was an intended beneficiary of the relevant provisions of the CBA. The Court disagrees. The provisions dealing with health and safety at the refineries are clearly intended to benefit the employees, not Defendant. While an employer may state a claim for breach of a CBA that harmed the employer, that is "entirely different from a right to compel the union to share the responsibility for a joint violation of a third party's rights." See Northwest Airlines, 451 U.S. at 93; Scott, 1990 WL at 200655, at *4. Defendant has failed to cite to a single authority in which a court allowed contribution in favor of an employer in a similar case.
At hearing, Defendant advised the Court that it had subsequently uncovered two cases which purportedly support its position: United Transp. Union Local No. 974, AFL-CIO v. Norfolk W. Ry. Co., 532 F.2d 336, 342 (4th Cir. 1975) and Sementilli v. Trinidad Corp., 155 F.3d 1130, 1138 (9th Cir. 1998). These cases appear to be distinguishable from the one at hand. Moreover, Defendant's belated citations did not allow USW a chance to respond. Accordingly, the Court declines to address them in detail here.
Turning to indemnification, in Rozay's Transfer v. Local Freight Drivers, Local 208, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen Helpers of Am., 850 F.2d 1321 (9th Cir. 1988), the Ninth Circuit upheld an award of rescission and indemnification to an employer that was fraudulently induced by a union to enter into a CBA, rejecting the union's argument that the district court had exceeded its remedial authority under § 301. The appellate court reasoned that the Supreme Court has construed § 301 as "a congressional mandate to the federal courts to fashion a body of federal common law to be used to address disputes arising out of labor contracts." Id. at 1334 (citing Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 209, 105 S. Ct. 1904, 85 L. Ed.2d 206 (1985)). The Ninth Circuit surveyed a number of cases, finding that federal courts have allowed a wide range of remedies similar to the one fashioned by the district court for breach of contract and breach of the duty of fair representation claims. Id. at 1335 (collecting cases). The Court concluded that it could discern no reason why "the federal district courts' broad remedial powers under section 301 should not similarly invest them with the power to devise 'make-whole' remedies," including indemnification. Id.
USW argues that indemnification would be inappropriate here, however, because absent an express contractual right, a party can state a common law claim for indemnification only if he or she is without fault. See United Air Lines, Inc. v. Wiener, 335 F.2d 379, 398-99 (9th Cir. 1964) ("There is general agreement that indemnity is permitted where the indemnitee has only an imputed or vicarious liability because of a special relationship with the actual wrongdoer but is not personally at fault."); Davis v. Am. President Lines, 106 F. Supp. 729, 730 (D.C. Cal. 1952) (looking to common law and admiralty law); 41 Am. Jur. 2d § 21. Defendant has not pled any fact which suggests that USW is required to hold Defendant harmless from any liability whatsoever under state meal period laws. In fact, Defendant's opposition brief fails to address USW's argument regarding indemnity. Furthermore, inasmuch as Defendant's claims for indemnity and/or contribution are simply remedies for its breach of contract claim, rather than independent causes of action, they clearly cannot stand. Accordingly, USW's motion to dismiss the second counterclaim is GRANTED.
C. Rescission/Reformation
Defendant's third counterclaim is for reformation or rescission of the CBA. USW argues that this claim must be dismissed as moot because the CBA was cancelled by its own terms on January 31, 2009. The Court rejected an identical argument by USW and the individual Plaintiffs in its Order granting Defendant leave to file counterclaims. In that Order, the Court held:
Federal courts "have been aggressive in determining that a collective bargaining dispute remains live because the disputed issue continues to shape the parties' periodic bargaining or day-to-day interaction." Int'l Ass'n of Machinists Aerospace Workers, Local Lodge 964 v. B.F. Goodrich Aerospace Aerostructures Group, 387 F.3d 1046, 1049 (9th Cir. 2004) (citations omitted) (action seeking a declaratory judgment that the terms of an expired CBA were illegal was not moot). In the instant case, the parties have not executed a new CBA or bargained to impasse. Accordingly, Defendant must continue to honor the terms and conditions of the expired CBA. See Litton Fin. Printing Div. v. Nat'l Labor Relations Bd., 501 U.S. 190, 198, 111 S. Ct. 2215, 115 L. Ed. 2d 177 (1991) (an employer commits an unfair labor practice if it effects a unilateral change in employment terms or conditions, even when an existing CBA has expired and negotiations on a new one are not completed); Laborers Health Welfare Trust Fund for N. Cal. v. Adv. Lightweight Concrete Co., Inc., 484 U.S. 539, 544 n. 6, 108 S. Ct. 830, 98 L. Ed. 2d 936 (1989). Thus, the "the disputed issue continues to shape the parties' periodic bargaining or day-today interaction," and Defendant's counterclaim for reformation and/or rescission is not moot. See B.F. Goodrich, 387 F.3d at 1049.
Docket No. 95 at p. 6. USW argues that the circumstances have changed because the parties have negotiated and ratified a new CBA, effective February 1, 2009.
In B.F. Goodrich, the Ninth Circuit considered whether a suit for declaratory judgment was moot where the CBA at issue had expired and the parties had reached a new agreement. The Court held that because the parties had retained the disputed provisions of the CBA without any significant changes, the controversy remained live:
Where parties to a legal action renew without material modification a disputed element of a collective bargaining agreement that has expired during pending litigation, such that the conduct called for by the challenged provision continues during the course of their legal action, or such that the provision or provisions in question otherwise continue to impact the parties' ongoing relationship, an action seeking a declaratory judgment concerning the legality of such provisions is appropriately subject to continued federal jurisdiction.387 F.3d at 1050.
In order to resolve the instant motion, a brief factual overview is necessary. Plaintiffs are employees who work as operators or in the laboratory on a shift schedule at Defendant's refineries. The parties agree that these employees work a 12-hour shift and are free to take breaks and eat meals during their shift as their work activities permit. Plaintiffs maintain that because operators are subject to interruptions during their meal breaks, their meal periods are "on duty." For an on-duty meal period to be permissible under California law, all three of the following conditions must be met: (1) the nature of the work must prevent the employee from being relieved of all duty during the meal period; (2) the employee and employer must have entered into a signed agreement authorizing an on-duty meal period; and (3) the signed agreement must expressly state that the employee may, in writing, revoke the agreement at any time. Cal. Code Regs., tit. 8 § 11010, subd. 11(C); see also DLSE Opinion Letter 2002-09-04. The parties dispute whether those requirements are satisfied here.
Attempting to distinguish the instant case from B.F. Goodrich, USW argues that the parties have "bargained and have addressed the question on which [Defendant] bases its allegation of mistake." According to USW, the new CBA contains an entirely new provision as follows:
All Operators who work the 12-hour shift are authorized to take meal breaks as they see fit subject to their recall to work assignments. To the extent that this constitutes an "on-duty" meal, the Union consents to such on behalf of all members of the bargaining unit who have filled or will fill such positions. Any such employee may revoke this agreement as it applies to him or her, in writing, at any time. . . .
Contrary to USW's assertions, it is clear that the new CBA does not resolve the parties' dispute regarding the legality of Defendant's meal period policies. Operators are not assured a meal period free of all duty under the 2009 CBA, nor does the new agreement resolve whether an on-duty meal period is lawful. The new provision appears to satisfy the third prerequisite to a lawful on-duty meal period, as it states that employees may revoke the agreement in writing at any time. However, the parties continue to disagree as to whether the nature of Plaintiffs' work prevents them from being relieved of all duty during the meal period. And although USW assumes arguendo in its opposition papers that the new CBA satisfies the second prong of the three-part test, it contends elsewhere that a union may not agree to an on-duty meal period on behalf of its members. Accordingly, the "conduct called for by the challenged provision [of the expired CBA] continues," and this case is not moot. See B.F. Goodrich, 387 F.3d at 1050.
However, the particular remedies sought by Defendant — rescission or reformation — are inappropriate because, as a practical matter, unlike a claim for declaratory or prospective relief, the relief Defendant seeks would have no practical effect. See id. at 1049-50; Kennecott Utah Copper Corp. v. Becker, 186 F.3d 1261, 1266 (10th Cir. 1999) ("The core question in mootness inquiry is whether grating a present determination of the issues offered . . . will have some effect in the real world."). Since the parties are now operating under the 2009 CBA, reformation or rescission of the old agreement would not require them to alter their conduct. Accordingly, Defendant's third counterclaim is dismissed.
B.F. Goodrich and the other cases cited by the parties discuss whether a case is moot (and thus, whether jurisdiction exists). Here, USW does not contend that the entire suit is moot; rather, it only seeks dismissal of Defendant's third counterclaim.
IV. Conclusion
For the foregoing reasons, the motion to dismiss the counterclaims is GRANTED.