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Avila v. Sheet Metal Workers Local Union No. 293

United States District Court, D. Hawaii

August 15, 2019

MARK A. AVILA, Plaintiff,
v.
SHEET METAL WORKERS LOCAL UNION NO. 293, et al., Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

          ALAN C. KAY SR. UNITED STATES DISTRICT JUDGE.

         Plaintiff Mark Avila argues that Defendant Sheet Metal Workers Local Union No. 293 (“Local 293”) has violated his rights under Title I, Section 101 of the Labor Management Reporting and Disclosure Act (“LMRDA”), 29 U.S.C. § 411 (Section 101), by refusing to allow him to execute a collective bargaining agreement (“CBA”) on behalf of his Hawaii business. Plaintiff argues that Local 293's refusal has effectively precluded him from exercising his “right to transfer” his union membership between local affiliates. Local 293 has moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) (lack of subject matter jurisdiction), 12(b)(6) (failure to state a claim), and 12(b)(7) (failure to join an indispensable party).

         BACKGROUND

         I. Factual Background

         a. Plaintiff's Union Membership

         According to the First Amended Complaint (“FAC”), ECF No. 20, Plaintiff is the sole director, officer, and shareholder of a California profit corporation, Bayarea Balancing & Cleanrooms, Inc., (“BABC California”), and he holds the same positions with a Hawaii profit corporation with the same name, Bayarea Balancing & Cleanrooms, Inc. (“BABC Hawaii”). FAC ¶¶ 18-19. Plaintiff is currently an owner-member of Sheet Metal Workers Local Union No. 104 (“Local 104”), a local union affiliated with the International Association of Sheet Metal, Air, Rail and Transportation Workers (“SMART”) with jurisdiction over California. FAC ¶ 24. Defendant Local 293 is a local union also affiliated with SMART, with jurisdiction over Hawaii. FAC ¶ 2. Local affiliates of SMART are governed by SMART's Constitution and Ritual (the “SMART Constitution”). See FAC ¶¶ 22-23; see also Ex. B., Mot. Dismiss; Ex. A, Reply Br.

         b. Plaintiff's Attempt to Transfer Membership

         Plaintiff seeks to transfer his owner-membership status from Local 104 to Local 293. FAC ¶ 27. He alleges that the SMART Constitution “allows members to transfer their union membership to another local union by applying for a transfer card, ” FAC ¶ 25, but that he has been unable to exercise his right to transfer because Local 293 has declined to allow him to execute its CBA, FAC ¶ 59.

         In or around January 2017, Plaintiff notified Local 104 of his desire to transfer his membership. FAC ¶ 27. Local 104 issued a transfer card to Plaintiff, which, according to SMART's Constitution, would be “null and void unless deposited within 30 days from the date of issue.” FAC ¶ 29. Plaintiff presented the transfer card to Local 293 and, “[a]pproximately two weeks later, an employee or officer of Local 293 asked [Plaintiff] to come to Local 293's offices to execute Local 293's [CBA] on behalf of BABC.” FAC ¶ 30-31. Plaintiff executed the CBA but was not provided with an executed copy.[1]FAC ¶¶ 32-33. When Plaintiff later returned to tender his union dues, Local 293 advised him that it could not accept the dues because of “an ongoing investigation, which had been referred to Local 293's attorney.” FAC ¶ 34.

         On or about March 23, 2017, Local 293 sent a letter to Plaintiff advising that it had inquired with “the International Representative” of SMART; that the International Representative was “in discussions with [SMART's] General-Secretary about the matter”; and that Plaintiff would soon be notified “whether special approval is required by the General President of the International Association” to effectuate the transfer. FAC ¶ 35. According to the letter, “an attempt to transfer as an owner member is quite uncommon, ” which led Local 293 to inquire with SMART for guidance on how to proceed. FAC ¶ 35. Local 293 also informed Plaintiff of a “pending grievance” and “outstanding financial obligations” with Local 104, which precluded transfer of his membership. FAC ¶ 36.

         When Plaintiff eventually resolved his outstanding financial obligations and requested a new transfer card from Local 104, he was advised by Local 104's Secretary/Treasurer that he had to comply with certain conditions to receive a transfer card:

1. “[T]he owner-member provides proof of a signed Collective Bargaining Agreement with the SMART local union within the desired transfer area.”
2. “The owner-member provides proof that he or she has permanently relocated to the jurisdiction for which the transfer card is issued.” FAC ¶¶ 38-40 (the “Transfer Conditions”). Plaintiff, through his attorney, pushed back on those Transfer Conditions, arguing that they violate SMART's Constitution.

FAC ¶ 41. In response, Local 104's counsel advised that this interpretation of the SMART Constitution “is the International Union's interpretation, not Local 104's interpretation.” FAC ¶ 42.

         On February 14, 2018, Plaintiff sent a letter and accompanying affidavit to SMART appealing Local 104's decision to condition a transfer card on the identified Transfer Conditions. FAC ¶ 43. About one month later, SMART's General President, Joseph Sellers, Jr., denied Plaintiff's appeal. FAC ¶ 45. The General President advised that “a transfer card is available only to a member who intends to permanently relocate to another local union's jurisdiction” and that the sheet metal shop with which the member is connected must be “in signed agreement with the local union or local unions having jurisdiction over the shop.” FAC ¶ 46.

         After receiving the denial letter from SMART, Plaintiff requested on April 5, 2018, that Local 293 allow him to execute Local 293's CBA on behalf of BABC Hawaii. FAC ¶¶ 47-50. Local 293 advised Plaintiff, about one week later, that it was “still investigating the matter in light of recent correspondence from the International.” FAC ¶ 51. Several months later, on December 28, 2018, Local 293 formally denied Plaintiff's request to execute the CBA, without having requested any additional information. FAC ¶ 52-54. Plaintiff alleges that Local 293's denial set forth “arbitrary, capricious, unreasonable, and pretextual bases in support of its decision not to allow Mr. Avila to execute the CBA.” FAC ¶ 55. Plaintiff is apparently “ready, willing, and able to secure permanent residency in Honolulu, Hawaii” and his final hurdle is entering into the CBA with Local 293 on behalf of his business, BABC Hawaii. FAC ¶ 57-58.

         c. The SMART Constitution

         Plaintiff's claims and allegations rely on several provisions of the SMART Constitution.[2] First, the SMART Constitution provides that, inter alia, no owner “shall be eligible to make application for membership or be accepted as a member of this Association or of any local union or counsel thereof . . . .” SMART Const., Art. 16 § 1(c). The SMART Constitution carves out an exception for “owner-members” in Section 1(d):

An owner, employer, contractor, jobber, or anyone who otherwise participates as management in the sheet metal industry shall be eligible to retain or apply for membership in this International Association or any local union thereof as an owner-member with the same rights and duties as other members except as provided below:
(1). The sheet metal shop or business with which he or she is connected is in signed agreement with the local union or local unions having jurisdiction over the shop and the shop or business must employ at least one journeyman sheet metal worker who is a member of this Association.
(2). An owner-member shall not be entitled to attend any meetings or be permitted to vote for election of local union officers or on any question pertaining to wages, hours, benefits, or other terms or conditions of employment or on the acceptance or rejection of a collective bargaining agreement, and further, shall not be permitted to serve in a representative capacity or hold any office or position in the local union. An owner-member who returns to any classification represented by this Association shall not be permitted to run for local union office in any local union affiliated with SMART for a period of one (1) year. Such period starts from the date that his or her classification is changed on an official dues receipt issued by the financial secretary-treasurer of the local union.
(3). An owner-member shall not be permitted to work in any capacity in the sheet metal industry for another employer.
(4). Any owner-member who fails to fulfill his or her financial obligations by making proper payment to his or her employees for work performed or to contribute the contractual obligations to fringe benefit funds shall be subject to charges and penalties as prescribed in Article Seventeen (17) of this Constitution.
(5). Any owner-member working with the tools of the trade shall pay to all fringe benefit programs for the actual hours worked in accordance with the respective collective bargaining agreement, unless that collective bargaining agreement provides for a different requirement.
(6). Nothing herein shall be construed to confer eligibility for benefits to an owner-member from any particular employee or fringe benefit plan, nor supersede any minimum hours or participation requirements of such plans.

Id. § 1(d); see also FAC ¶ 26 (quoting a portion of this section).

         Section 9 of Article 16 addresses “transfer cards.” The Court will not quote all the provisions governing transfers of membership, but the SMART Constitution generally provides that “[a]ny good standing member of an affiliated local union who desires to transfer or accept employment in the jurisdiction of another local union, in the event such employment involves a transfer of permanent address, shall apply to the financial secretary-treasurer of his local union for an official transfer card.” SMART Const., Art. 16 § 9(a). Members are not entitled to a transfer card if charges are pending against them, and not until “all duties and all obligations, financial and otherwise, in connection with said charges or trial have been fully discharged.” Id. § 9(b). Members also must be current on their local union and SMART dues. Id. § 9(c).

         The SMART Constitution provides that a local union “is obligated to issue official transfer cards to good standing members in the manner specified in the Constitution without action or approval of the members of the local union.” SMART Const., Art. 16 § 9(d). And, when “properly issued and presented for deposit with proper identification, ” the transfer card of any “good standing member . . . shall be accepted by any local union in accordance with this Constitution, ” except in certain circumstances where strikes and other disputes are pending or unsettled. See id. § 9(n). Finally, “a good standing member shall obtain a transfer card in order to work within the jurisdiction of another local union in the event he or she changes his permanent residence to a location within the territorial jurisdiction of the local union in which he or she intends to perform work.” Id. § 9(s).

         d. Internal Union Appeals

         SMART's Constitution requires union members to appeal first to the General President, then to the General Executive Council, and then to the General Convention. SMART Const., Art. 19; see also FAC ¶¶ 6, 15. Plaintiff alleges in the FAC that he has satisfied the administrative perquisites to a claim under Section 101. See FAC ¶¶ 6-17. The dates and order of events is somewhat difficult to discern from the organization of the FAC; the Court does its best to accurately convey them here:

The First Appeal. Plaintiff submitted an appeal to SMART's General Secretary-Treasurer on May 9, 2018, after Local 293 first denied Plaintiff's request to execute Local 293's CBA (the “First Appeal”). FAC ¶ 6. Local 293 submitted an answer to the First Appeal on June 5, 2018. FAC ¶ 7. Plaintiff's appeal was denied on November 14, 2018. FAC ¶ 8. Plaintiff appealed once more to SMART's General Executive Council on January 9, 2019. FAC ¶ 9. Local 293 submitted its answer on March 4, 2019. FAC ¶ 12. At the time the FAC was filed, SMART's General executive Council had not rendered a decision as to the First Appeal. FAC ¶ 13.
The Second Appeal. At the same time, Plaintiff had also appealed Local 293's formal letter denying Plaintiff's request to execute the CBA, dated December 28, 2018 (the “Second Appeal”), to SMART's General President. FAC ¶¶ 10, 52-54. Local 293 submitted its answer to the Second Appeal on February 19, 2019. FAC ¶ 11. Like the First Appeal, SMART's General President had not rendered a decision on the Second Appeal at the time the FAC was filed. FAC ¶ 14.

         Plaintiff alleges that “SMART officials are hostile to Mr. Avila, and Mr. Avila cannot hope to obtain a fair hearing on his claim.” FAC ¶ 16. The FAC states that “[f]ull exhaustion of [Plaintiff's] internal union remedies would unreasonably delay [his] opportunity to obtain a judicial hearing on the merits of his claim.” FAC ¶ 17. The FAC emphasizes the First and Second Appeals, which began in May 2018 and are still pending before the General Convention. FAC ¶ 17. According to the FAC, the General Convention meets in August 2019 and Plaintiff “will be unable to fully exhaust internal union remedies until SMART's General Convention meets in 2024, as SMART's Constitution states that SMART ‘shall meet in a regular quinquennial (5-year) SMART General Convention.'” FAC ¶ 17.[3]

         II. Procedural Background

         The FAC alleges one cause of action against Local 293 under 29 U.S.C. § 411(a)(1):

Every member of a labor organization shall have equal rights and privileges within such organization to nominate candidates, to vote in elections or referendums of the labor organization, to attend membership meetings, and to participate in the deliberations and voting upon the business of such meetings, subject to reasonable rules and regulations in such organization's constitution and bylaws.

FAC ¶ 62 (quoting 29 U.S.C. § 411(a)(1)).

         Plaintiff's theory of liability is that Local 293 has, by its refusal to sign the CBA, effectively precluded Plaintiff from exercising his owner-member “right to transfer” his membership between local unions. FAC ¶ 59; see also FAC ¶ 64 (“Local 293 has denied Mr. Avila equal rights and privileges under SMART's Constitution by arbitrarily, capriciously, and unreasonably refusing to allow Mr. Avila to execute its CBA, and by relying on pretextual reasons for such refusal, thereby preventing Mr. Avila from obtaining a transfer card from Local 104 and interfering with his rights under Article 16, Section 9 of SMART's Constitution.”). He alleges that, “[a]s a result of Local 293's refusal to allow Mr. Avila to execute its CBA on behalf of BABC Hawaii, Local 293 is denying Mr. Avila each of the equal rights and privileges afforded to members of Local 293 under 29 U.S.C. § 411(a)(1).” FAC ¶ 66. On this basis, Plaintiff seeks injunctive relief to force Local 293 to execute the CBA with BABC Hawaii so that Plaintiff may effectuate the transfer between local affiliates. FAC ¶¶ 68-69.

         Defendant Local 293 has filed a motion to dismiss the FAC, alleging that (1) the district court lacks subject matter jurisdiction, (2) the complaint fails to state a claim under the LMRDA, (3) Plaintiff failed to join an indispensable party (SMART), and (4) declaratory relief is not warranted. See Mot. Dismiss, ECF No. 24-1. The Motion to Dismiss attaches twelve exhibits and the Reply brief attaches one, none of which were attached to the FAC. See Exs. A-L, Mot. Dismiss, ECF No. 24; Ex. A, Reply Br., ECF No. 29; see also FAC.

         Local 293 filed its opening brief on March 29, 2019. ECF No. 24. Plaintiff filed his opposition brief on July 23, ECF No. 28, and Local 293 filed a reply brief on July 29. A hearing was held on August 13, 2019, at 11:00 a.m.

         STANDARDS

         I. Motion to Dismiss for Lack of Subject Matter Jurisdiction

         A defendant may challenge a court's subject matter jurisdiction under Federal Rule of Civil Procedure (“Rule”) 12(b)(1). “A party invoking the federal court's jurisdiction has the burden of proving the actual existence of subject matter jurisdiction.” See Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996).

         A challenge to a court's subject matter jurisdiction may be either “facial” or “factual.” Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). In a facial attack, “the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction.” Id. (quoting Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004)). When opposing a facial attack on subject matter jurisdiction, the nonmoving party is not required to provide evidence outside the pleadings. Id.; see Doe v. Holy See, 557 F.3d 1066, 1073 (9th Cir. 2009) (treating defendant's challenge to subject matter jurisdiction as facial because defendant “introduced no evidence contesting any of the allegations” of the complaint). In deciding a facial Rule 12(b)(1) motion, the court must assume the allegations in the complaint are true and draw all reasonable inferences in the plaintiff's favor. Wolfe, 392 F.3d at 362 (citations omitted).

         By contrast, in a factual attack, “the challenger disputes the truth of the allegations that, by themselves, would otherwise invoke federal jurisdiction.” Id. (quoting Safe Air, 373 F.3d at 1039). The moving party may bring a factual challenge to the court's subject matter jurisdiction by submitting affidavits or any other evidence properly before the court. Colwell v. Dep't of Health & Human Servs., 558 F.3d 1112, 1121 (9th Cir. 2009). The nonmoving party must then “present affidavits or any other evidence necessary to satisfy its burden of establishing that the court, in fact, possesses subject-matter jurisdiction.” Id. (citation omitted). In these circumstances, the court may look beyond the complaint without having to convert the motion into one for summary judgment. U.S. ex rel. Meyer v. Horizon Health Corp., 565 F.3d 1195, 1200 n.2 (9th Cir. 2009). When deciding a factual challenge to the court's subject matter jurisdiction, the court “need not presume the truthfulness of the plaintiffs' allegations.” Id.

         II. Motion to Dismiss for ...


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