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BRADY v. GENERAL DYNAMICS CORP.

January 26, 1996

A. EDWARD BRADY, et al., Plaintiffs,
v.
GENERAL DYNAMICS CORP., and CONVAIR RECREATION ASSOCIATION, et al., Defendants.



The opinion of the court was delivered by: BREWSTER

 On January 16, 1996, this Court held a hearing in the above-captioned matter on plaintiffs' motion for remand and on the motion of General Dynamics Corporation (hereafter "General Dynamics") to dismiss, in which co-defendant Convair Recreation Association (hereafter "CRA") joined. Timothy Blood, Esq. and Sherri Pym, Esq., appeared on behalf of plaintiffs. Charles Bird, Esq., Craig Martin, Esq., Anthony Porcelli, Esq., and Claudette Wilson, Esq., appeared on behalf of defendants. After due consideration of the briefs filed, the record in this case and all evidence and arguments presented at the hearing, this Court hereby GRANTS plaintiffs' motion for remand, TAKES OFF CALENDAR defendants' motion to dismiss and DECLINES to award fees and costs for the improvident removal by defendants.

 BACKGROUND

 This is a putative class action seeking damages and injunctive relief alleging claims under state law for, inter alia, breach of contract and breach of fiduciary duty arising out of the winding up and dissolution of the CRA. Plaintiffs are a prospective class of former General Dynamics employees, now retired, who reside in California. Defendant General Dynamics is a Delaware corporation with its principal place of business in Virginia. With the support and assistance of General Dynamics, Defendant CRA became a California employee-run unincorporated association formed by, and operated on behalf of, all the employees of General Dynamics. CRA finances and manages recreational benefits for General Dynamics' employees and retirees. The by-laws of CRA, provide that its objects and purposes are:

 
To provide a means of fostering, managing, conducting, and coordinating the various recreational activities of all the employees General Dynamics (sic) at San Diego, California; to provide a means of fostering, managing, conducting, and coordinating social welfare activities of the said employees and their dependents; to provide a means of cooperation and coordination between the employees and management of General Dynamics in connection with all social, recreational, athletic, and welfare activities of the Association for the benefit of said employees.

 By-laws of General Dynamics/Convair Recreation Association, Article 3, section 1.

 Plaintiffs allege that General Dynamics promised them certain recreational benefits, including membership in CRA, as part of the inducement to join General Dynamics and as part of their employment compensation. *fn1"

  CRA membership included access to, among other things, the facilities at Missile Park. The amenities at Missile Park include: (a) a 19,000 square foot clubhouse with health fitness center *fn2" and meeting rooms; (b) picnic facilities; (c) a lighted track; (d) softball and multi-purpose fields; (e) tennis and volleyball courts; (f) a Merry-Go-Round; (g) an antique fire engine; and (h) a miniature railroad which encircles the park.

 General Dynamics owns the Kearney Mesa property on which Missile Park is located, but originally issued and periodically has renewed a license to CRA for its use of Missile Park. The most recent license, dated 1991, provides that it can be terminated by either party on ninety days' written notice. The evidence before the Court also shows that General Dynamics licensed to CRA the right to operate vending machines at General Dynamics' plants in San Diego. CRA apparently has used the proceeds from the vending machines to purchase certain assets and to pay its operating expenses. CRA asserts that, with the severe downsizing of General Dynamics employment, vending machine proceeds have dwindled in recent years and, as a result, CRA has sold some of its assets to defray some of its costs. None of the sale proceeds went to General Dynamics; all proceeds were used by CRA. Recently, as part of the winding up of General Dynamics' business in San Diego, the license has been terminated and CRA is in the process of liquidating all its assets and dissolving.

 Under CRA's by-laws, all employees of General Dynamics at San Diego are automatically members of CRA. By-laws, Article V, section 1. The by-laws of CRA stipulate that membership in CRA lasts "during the life of this Association." Article V, section 1. Further, the by-laws provide that CRA "may be dissolved at any time" upon proper notice, Article III, section 4, and that, upon dissolution, the "funds remaining after paying debts, dues, and obligations of the Association and the expenses of settling the Association's business, shall be distributed for welfare or recreational purposes or for both purposes...."

 Plaintiffs originally filed their complaint in state court on November 7, 1995. Defendants timely removed the case to federal court on November 29, 1995 on the basis that plaintiffs' claims are completely preempted by the Employee Retirement and Income Security Act of 1974 (ERISA), 29 U.S.C. 1001-1461.

 On December 8, 1995, this Court heard and denied plaintiffs' motion for a temporary restraining order, finding that, assuming federal jurisdiction, plaintiffs had failed to show any likelihood of success on the merits or any irreparable injury.

 CONCLUSIONS OF LAW

 A. Standards of ...


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