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Irigaray Dairy v. Dairy Employees Union Local No. 17 Christian Labor Ass'n of the United Am. Pension Trust

United States District Court, E.D. California

September 2, 2014

IRIGARAY DAIRY, CHARLES VAN DER KOOI DAIRY, HENRY JONGSMA & SON DAIRY, and COW-WEST NORTH STAR DAIRY, Plaintiffs,
v.
DAIRY EMPLOYEES UNION LOCAL NO. 17 CHRISTIAN LABOR ASSOCIATION OF THE UNITED STATE OF AMERICA PENSION TRUST, and BOARD OF TRUSTEES OF THE DAIRY EMPLOYEES UNION LOCAL NO. 17 CHRISTIAN LABOR ASSOCIATION OF THE UNITED STATES OF AMERICA PENSION TRUST, Defendants

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[Copyrighted Material Omitted]

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For Irigaray Dairy, Charles Van Der Kooi Dairy, Henry Jongsma & Son Dairy, Cow-West North Star Dairy, Plaintiffs: Howard A. Sagaser, LEAD ATTORNEY, Ian Blade Wieland, Sagaser and Associates, Fresno, CA.

For Dairy Employees Union Local No. 17 Christian Labor Association of the United States of America Pension Trust, Board of Trustees of the Dairy Employees Union Local No. 17 Christian Labor Association of the United States of America Pension Trust, Defendants: Donna L Kirchner, LEAD ATTORNEY, George M. Kraw, Kraw & Kraw Law Group, Mountain View, CA.

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MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' FIRST AMENDED COMPLAINT WITH LEAVE TO AMEND Doc. # 16

Anthony W. Ishii, SENIOR UNITED STATES DISTRICT JUDGE.

This is an action for damages and declaratory relief by plaintiffs Irigaray Dairy, Charles Van Der Kooi Dairy, Henry Jongsma & Son Dairy and Cow-West Northstar Dairy (" Plaintiffs" ) against defendants Dairy Employees Union Local No. 17, Christian Labor Association of the United States of America Pension Trust and the Board of Trustees of the Dairy Employees Union Local 17 Christian Labor Association of the United States of America Pension Trust (" Defendants" ). Currently before the court is Defendants' motion to dismiss Plaintiffs' first amended complaint pursuant to F.R.C.P. 12(b)(6). Federal Subject matter exists pursuant to 28 U.S.C. § 1331. Venue is proper in this court.

PROCEDURAL HISTORY

The original complaint in this action was filed on July 18, 2013. Like the currently operative First Amended Complaint, the original complaint alleges a claim for declaratory judgment pursuant to 28 U.S.C. § § 2201 and 2202 and a claim for damages pursuant to California's Unfair Competition Law (" UCL" ), Cal. Bus. & Prof. Code § 17200. On February 10, 2014, the court granted Defendant's motion to dismiss Plaintiffs' complaint and granted leave to amend. Plaintiffs First Amended Complaint (" FAC" ) was filed on March 10, 2014. The instant motion to dismiss the FAC was filed on March 24, 2014. Plaintiffs filed their opposition on April 7, 2014 and Defendants filed their reply on April 14, 2014. The matter was taken under submission without oral argument as of April 21, 2014.

FACTUAL BACKGROUND

This is an action by Plaintiffs seeking declaratory judgment to hold Plaintiffs not liable under 29 U.S.C. § 1381, a provision of ERISA that makes employers who withdraw from employee benefit plans liable for unfunded fund liability at the time of

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employer withdrawal. For " decades," Plaintiffs made regular contributions to an employee benefit plan administered by Defendant Board of Trustees (hereinafter, the " Plan" ). Plaintiffs allege that the Christian Labor Association Union (" CLA" ) is not a union certified by the Agricultural Labor Relations Board (" A.L.R.B" ) and is thus cannot lawfully represent agricultural workers through any collective bargaining agreement (" CBA" ). The " agricultural workers" in question in this action are local milk truck drivers (the " Drivers" ) who service the Plaintiff dairies. Plaintiffs allege that the Drivers were " members of and/or affiliated with the CLA Union." Doc. # 15 at 9-10. Plaintiffs allege that sometime in the unspecified past the " local milk truck drivers who picked up Plaintiffs' milk threatened and extorted Plaintiffs into making payment to the union and Defendants by refusing to pick up milk from Plaintiffs' dairies unless Plaintiffs made payments to the CLA Union and Defendants." Plaintiffs allege that " such arrangement was illegal and void under California law." Doc. # 15 at 17. Plaintiffs' FAC does not allege that there was or was not a writing that purported to require payment to Defendants; only that Plaintiffs suffered coercive and extortionate pressure in the first instance to make contributions to Defendants and continued to do so; passing the practice along to younger family members without question in the mistaken belief that such payments were legally required. Plaintiffs allege Defendants were able to force Plaintiffs to establish the practice of making payments to Defendants in the first instance by taking advantage of Plaintiffs' relative ignorance of the law.

LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure can be based on the failure to allege a cognizable legal theory or the failure to allege sufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533-34 (9th Cir.1984). To withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint must set forth factual allegations sufficient " to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (" Twombly" ). While a court considering a motion to dismiss must accept as true the allegations of the complaint in question, Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976), and must construe the pleading in the light most favorable to the party opposing the motion, and resolve factual disputes in the pleader's favor, Jenkins v. McKeithen, 395 U.S. 411, 421, 89 S.Ct. 1843, 23 L.Ed.2d 404, reh'g denied, 396 U.S. 869, 90 S.Ct. 35, 24 L.Ed.2d 123 (1969), the allegations must be factual in nature. See Twombly, 550 U.S. at 555 (" a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do" ). The pleading standard set by Rule 8 of the Federal Rules of Civil Procedure " does not require 'detailed factual allegations,' but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation." Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (" Iqbal" ).

The Ninth Circuit follows the methodological approach set forth in Iqbal for the assessment of a plaintiff's complaint:

" [A] court considering a motion to dismiss can choose to begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. While legal

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conclusions can provide the framework of a complaint, they must be supported by factual allegations. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief."

Moss v. U.S. Secret Service, 572 F.3d 962, 970 (9th Cir. 2009) (quoting Iqbal, 129 S.Ct. at 1950).

DISCUSSION

I. Plaintiffs' Claim for Declaratory Relief

Plaintiffs' first claim for relief seeks a declaration of the rights of the parties with regard to two related issues. First, Plaintiffs seek judicial declaration that they are not obliged to make withdrawal liability payments under the federal Employees Retirement Income Security Act (" ERISA" ), and second, that they are not bound to arbitrate disputes with regard to liability under ERISA under a system that places ...


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