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Rady Children's Hospital, San Diego v. Service Employees International Union

May 5, 2008

RADY CHILDREN'S HOSPITAL, SAN DIEGO, PLAINTIFF,
v.
SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 2028; SERVICE EMPLOYEES INTERNATIONAL UNION, UNITED HEALTHCARE WORKERS -- WEST; AND DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: Honorable Barry Ted Moskowitz United States District Judge

DISMISSAL OF FIRST AMENDED ORDER GRANTING VOLUNTARY COMPLAINT, DENYING MOTIONS TO DISMISS AS MOOT, AND GRANTING MOTIONS FOR SANCTIONS

Defendants Service Employees International Union, Local 2028 ("Local 2028") and SEIU, United Healthcare Workers -- West ("UHW") (collectively "Defendants") have filed motions to dismiss Plaintiff's First Amended Complaint. Plaintiff filed a "Statement of Non-opposition to Defendants' Motions to Dismiss First Amended Complaint and Notice of Withdrawal of First Amended Complaint." The Court construes the notice of withdrawal as a request to voluntarily dismiss the First Amended Complaint. The Court GRANTS the request for voluntary dismissal and DENIES AS MOOT Defendants' motions to dismiss.

Defendants have also filed motions for Rule 11 sanctions or, in the alternative, attorney's fees under 28 U.S.C. § 1927. For the reasons discussed below, the Court GRANTS UHW's motion for Rule 11 Sanctions and GRANTS Local 2028's motion for attorney's fees under 28 U.S.C. § 1927.

I. BACKGROUND

On June 28, 2007, Plaintiff commenced this action. Plaintiff alleged that although the NLRB certified Local 2028 as the exclusive bargaining representative for approximately 700 service and maintenance employees at Plaintiff's hospital, Local 2028 has not "participated in any aspect of the administration of the collective bargaining agreement," and, by all appearances, has "disclaimed its interest in the agreement and effectively ceded all authority to SEIU-UHW." (Compl. ¶ 13.)

Plaintiff also alleged upon information and belief that Local 2028 no longer exists: "As part of a statewide SEIU restructuring plan, SEIU merged Local 2028 into another local of SEIU, Local 221. Local 221 has since inhabited Local 2028's former offices and employed a number of Local 2028's former officers and employees." Plaintiff alleged that it has been unable to uncover any evidence that Local 2028 has its own assets, directors, officers, employees, payroll, or bank accounts. (Compl. ¶ 14.)

The original complaint asserted two causes of action. In the first cause of action, Plaintiff sought declaratory relief that Local 2028 has ceased to exist and that the collective bargaining agreement is therefore null and void. (Compl. ¶ 21.) Plaintiff also sought a declaration that Local 2028 attempted to assign all of its rights and obligations under the collective bargaining agreement ("CBA") without satisfying the requirements of Section 1.05 of the CBA, that the attempted assignment of rights was therefore ineffective, and that the Hospital has no contractual obligations toward UHW based on the CBA between Local 2028 and Plaintiff. (Compl. ¶ 22.)

Plaintiff's second cause of action was for breach of contract. Plaintiff alleged that Local 2028 has effectively disclaimed its interest in the bargaining unit and the CBA and has unilaterally attempted to transfer its contract rights to UHW without complying with Section 1.05 of the CBA. (Compl. ¶¶ 26-27.)

In an order filed on November 26, 2007, the Court granted motions to dismiss brought by Defendants. The Court held that this case, when "stripped to essentials," was representational and fell within the primary jurisdiction of the NLRB. See United Ass'n of Journeymen v. Valley Engineers, 975 F.2d 611, 614 (9th Cir. 1992). The Court explained, "Whether Local 2028 still exists after the merger with Local 221 and whether UHW has taken on the role of bargaining representative are questions that fall within the NLRB's exclusive jurisdiction."

Although the Court dismissed Plaintiff's Complaint, the Court granted Plaintiff leave to file an amended complaint. However, the Court questioned whether Plaintiff would be able to plead causes of action that do not fall within the NLRB's primary jurisdiction and cautioned Plaintiff that "the amended complaint must not be a reiteration of the original complaint."

On December 20, 2007, Plaintiff filed its First Amended Complaint ("FAC"). For the most part, the FAC alleges the same facts as the original complaint and reasserts the causes of action for declaratory relief and breach of contract. The FAC also asserts additional causes of action for fraud in the inducement and violation of 29 U.S.C. § 462. In the fraud in the inducement claim, Plaintiff alleges that it was fraudulently induced to enter into the CBA by representations by individuals from UHW that Local 2028 was a viable entity. (FAC ¶ 12.) Plaintiff alleges that Local 2028 is not and was not a viable entity and seeks rescission of the CBA. (FAC ¶¶ 25, 29.) In the claim for violation of 29 U.S.C. § 462, Plaintiff alleges that a trusteeship asserted over Local 2028 on July 10, 2007 by the International President of SEIU is invalid because Local 2028 is not a viable entity and cannot be a subordinate body. (FAC ¶ 33.)

II. DISCUSSION

A. Rule 11 Sanctions

Before filing a Rule 11 motion for sanctions, the moving party must serve the opposing party and give them at least 21 days to withdraw or otherwise correct the offending paper. Fed. R. Civ. P. 11(c)(2). In the Ninth Circuit, the "safe harbor" provision is enforced strictly, and sanctions cannot be awarded when the moving party has failed to ...


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