Docket Nos. 31, 38, 44 in C-18-0411 EMC Docket No. 16 in C-18-1958 EMC.
EDWARD M. CHEN, District Judge.
Plaintiffs are two individuals, Rolando Pimentel and Zacharias Salas, who, during the relevant period of events, were members of a local union, the Teamsters Local Union No. 601 ("Local 601"). They have filed two actions that have been related before this Court. Both actions relate to the 2013 election for officers for Local 601. Plaintiffs were part of a slate of candidates (the Pimentel Slate) that challenged the incumbent principal officer's slate (the Alvarado Slate). Plaintiffs lost.
In the first lawsuit, No. C-18-0411 EMC, Plaintiffs sue the incumbent principal officer, Ashley Alvarado, and Local 601. They also sue Teamsters Joint Council No. 7 ("Joint Council") — a governing body above Local 601 but below the overarching organization, the International Brotherhood of Teamsters ("IBT") — and the Joint Council's President, Rome Aloise. In this action, Plaintiffs claim, for the most part, election-related misconduct on the part of Mr. Aloise (who endorsed Ms. Alvarado's candidacy) and Ms. Alvarado. Hereinafter, the defendants in the first lawsuit shall be referred to collectively as the Aloise Defendants.
In the second lawsuit, No. C-18-1958 EMC, Plaintiffs sue the law firm Beeson, Tayer, Bodine LLP and one of its shareholders, Robert Bonsall. The Beeson firm and Mr. Bonsall provide legal services to Local 601 and the Joint Council. According to Plaintiffs, the Beeson firm and Mr. Bonsall are closely aligned with Mr. Aloise, provided campaign assistance to Ms. Alvarado, and also engaged in election-related misconduct on behalf of Mr. Aloise and/or Ms. Alvarado. Hereinafter, the defendants in the second lawsuit shall be referred to collectively as the Bonsall Defendants.
Currently pending before the Court is a motion to dismiss in each case. In addition, Plaintiffs have moved for leave to amend to add new claims in the Aloise lawsuit. With respect to the motion to amend, the Aloise Defendants have opposed amendment but, in the alternative, have moved to dismiss the new claims (assuming amendment is permitted).
Having considered the parties' briefs and accompanying submissions, as well as the oral argument of counsel, the Court hereby
In their complaints, Plaintiffs allege as follows.
The IBT is an organization that represents workers throughout the United States. Through its affiliated local unions, the IBT has approximately 1.4 million members in a wide range of industries. See Aloise Compl. ¶ 13.
The Joint Council is "an intermediate body" within the IBT. "[T]hrough its affiliated local unions[,] [the Joint Council] represents approximately 100,000 members who work in a variety of industries throughout Northern California, including members working in the cannery and food processing industry. Its main office is in San Francisco, California." Aloise Compl. ¶ 5. During the relevant period of events, Mr. Aloise was the President of the Joint Council. He was also the principal officer for an IBT local union, Teamsters Local Union No. 853 ("Local 853"). See Aloise Compl. ¶ 7.
Local 601 is an IBT local union affiliated with the Joint Council. See Aloise Compl. ¶ 6. During the relevant period of events, Ms. Alvarado was the principal officer of Local 601. See Aloise Compl. ¶ 8.
During the relevant period of events, Mr. Pimentel and Mr. Salas were members of Local 601. See Aloise Compl. ¶¶ 3-4. (Currently, Ms. Salas is still a union member but not Mr. Pimentel, who resigned his union membership in October 2016. See Docket No. 38 (Mot. at 1).)
The Beeson law firm provides legal services to both the Joint Council and Local 601. See Aloise Compl. ¶ 10. Mr. Bonsall is a senior shareholder at the Beeson firm. He has served as counsel for both the Joint Council and Local 601. See Aloise Compl. ¶ 11.
In December 2013, there was a regularly scheduled election for officers for Local 601. Ms. Alvarado, the incumbent principal officer for Local 601, headed one slate of candidates (the Alvarado Slate), which was strongly supported by Mr. Aloise. See Aloise Compl. ¶¶ 8, 11, 47. Plaintiffs were part of a different slate of candidates, known as the Pimentel Slate See Aloise Compl. ¶¶ 3-4, 49. The Alvarado Slate defeated the Pimentel Slate, see Aloise Compl. ¶ 31, as well as another competing slate known as the Reyes Slate. See Docket No. 38 (IRO Op. at 21) (noting that the head of this slate was Juanlucio Reyes).
Shortly after the election, "Plaintiffs submitted a post-election protest[,] pursuant to the short time requirements of the IBT Constitution[,] based upon the limited information they had acquired regarding election improprieties committed by [Ms.] ALVARADO and her supporters, including [Mr.] ALOISE."
Mr. Aloise appointed a hearing panel to consider Plaintiffs' post-election protest. A hearing was held in February 2014. In June 2014, the Joint Council panel rejected Plaintiffs' protest and confirmed the election of Ms. Alvarado and her slate. The IBT subsequently confirmed the Joint Council's ruling. See Aloise Compl. ¶ 34.
After the IBT issued its decision, Mr. Pimentel submitted charges to the Independent Review Board ("IRB"), asserting election-related misconduct and other wrongdoing by both Mr. Aloise and Ms. Alvarado. See Aloise Compl. ¶ 35. The IRB is a three-member body that was established by a consent decree in 1989 after the IBT and officers were charged with violations of RICO. See Aloise Compl. ¶¶ 25-26. "The mandate of the IRB included the investigation of any allegations of . . . corruption, including bribery, embezzlement, extortion, loan sharking," and so forth. Aloise Compl. ¶ 27. After investigating, the IRB has the power "to issue a written report detailing its findings, charges and recommendations concerning the discipline of union officers, members, employees and representatives." Aloise Compl. ¶ 28. Any recommendations of discipline are submitted to the IBT, and the IBT is required to take whatever action is appropriate under the IBT Constitution. See Aloise Compl. ¶ 29. "If the IRB determines the IBT response is inadequate to remedy the defects found by the IRB it must convene a hearing on the matter before the Independent Review Officer (`IRO'). Following hearing, the IRO issues a final and binding determination of the findings and remedy to be taken," and "[s]uch decision is judicially enforceable." Aloise Compl. ¶ 30.
The IRB initiated an investigation based on Mr. Pimentel's charges. Throughout the course of the IRB investigation, Plaintiffs were contacted. See Aloise Compl. ¶ 36. In February 2016,
Aloise Compl. ¶¶ 37-38. (A copy of parts of the IRB report can be found at Docket No. 49-1 (Absalom Reply Decl., Ex. H). The IRB report indicates that "[Mr.] Aloise engaged in a pervasive pattern of violative conduct in connection with the Local 601 election in 2013" — e.g., he "us[ed] union resources and equipment to support [Ms.] Alvarado and to undermine her opponents in the Local 601 election"; he "used Joint Council letterhead in an attempt to stop [Mr.] Pimentel form circulating, as was his right to do, photographs of [Ms.] Alvarado in the campaign with the threat of a retaliatory bogus charge"; etc. Docket No. 49-1 (Absalom Reply Decl., Ex. H) (IRB Report at 108, 116).)
Although the IBT was supposed to conduct a hearing based on the IRB report, it failed to do so. See Aloise Compl. ¶¶ 39-40. "After repeated delays, the IBT sent a letter to the IRB advising that it would not convene a hearing on the charges against [Mr.] ALOISE and purporting to refer the matter back to the IRB." Aloise Compl. ¶ 40.
Thereafter, the IRO became involved and held a hearing in May 2017. In October 2017, the IRO (former District Judge Barbara Jones) found Mr. Aloise guilty of the charges made by the IRB, including those related to his conduct involving the Local 601 election. (A copy of the IRO opinion can be found at Docket No. 38. The IRO found, inter alia, that Mr. Aloise's "repeated use of Union resources in support of [Ms.] Alvarado's 2013 re-election campaign brought reproach upon the IBT." Docket No. 38 (IRO Op. at 52).) In December 2017, the IRO issued a supplemental decision under which Mr. Aloise was suspended and banned from all official positions he held within the Teamster organization for two years. See Aloise Compl. ¶¶ 41-43; see also Docket No. 51-4 (Palitz Reply Decl., Ex. D) (Supp. IRO Op. at 11).
According to Plaintiffs, they did not know everything about Mr. Aloise and Ms. Alvarado's misconduct — or for that matter the Bonsall Defendants' misconduct — until the IRB issued its report in February 2016. See Aloise Compl. ¶ 44. It appears that Plaintiffs' complaints in the related cases before the Court are largely based on the IRB report and/or IRO opinion that issued thereafter. Because Plaintiffs' complaints refer to the IRO opinion, see, e.g., Aloise Compl. ¶ 43, and because Plaintiffs have provided a copy of that opinion in support of their motion for leave to amend in the Aloise lawsuit, see Docket No. 38 (IRO opinion), the Court has relied on the opinion to better understand the allegations in Plaintiffs' complaints. See La. Mun. Police Emples. Ret. Sys. v. Wynn, 829 F.3d 1048, 1063 (9th Cir. 2016) (stating that "courts ruling on a motion to dismiss `must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions to dismiss, in particular, documents incorporated into the complaint by reference, and matters of which a court may take judicial notice'").
According to Plaintiffs, Mr. Aloise engaged in the following election-related misconduct.
According to Plaintiffs, Ms. Alvarado's election-related misconduct was as follows:
Finally, Plaintiffs charge the Beeson law firm and Mr. Bonsall with the following election-related misconduct:
Based on, inter alia, the above allegations, Plaintiffs initially brought three claims in the first lawsuit against the Aloise Defendants:
After the Aloise Defendants moved to dismiss, Plaintiffs dropped the second and third causes of action, thus leaving only the LMRDA claim. However as noted above, Plaintiffs are now moving for leave to add new LMRDA claims to this case. See 29 U.S.C. § 501(a).
As for the second lawsuit, Plaintiffs initially asserted three claims against the Bonsall Defendants:
After the Bonsall Defendants moved to dismiss, Plaintiffs dropped the third cause of action, thus leaving only the LMRDA aiding and abetting and conspiracy claims.
Levitt v. Yelp! Inc., 765 F.3d 1123, 1134-35 (9th Cir. 2014).
Iqbal, 556 U.S. at 678.
As noted above, LMRDA stands for the Labor Management Reporting and Disclosure Act of 1959. "The principal reason for the enactment of the LMRDA was to correct widespread abuses of power and instances of corruption by union officials, and to encourage democratic self-governance in unions." Franza v. Int'l Bhd. of Teamsters, Local 671, 869 F.2d 41, 44 (2d Cir. 1989). The Act is made up of seven titles. See Wirtz v. Hotel, Motel and Club Emps. Union, Local 6, 391 U.S. 492, 497 (1968).
For purposes of the pending motions, the Court need consider only two of the seven titles — namely, Title I and Title V. Currently, the only claims being asserted against the Aloise Defendants are based on Title I. Plaintiffs, however, ask for leave to amend to add Title V claims against the Aloise Defendants. No claims are being brought based on Title IV of the LMRDA because, even though that title deals with elections specifically,
Casumpang v. ILWU, Local 142, 269 F.3d 1042, 1056 (9th Cir. 2001) (emphasis in original). "[T]he operation of Title IV preemption in election-related tort actions turns on two factors: (1) whether the type of relief sought will interfere with the operation of a union pursuant to an already-conducted election, and (2) whether a plaintiff may obtain relief under Title IV for the type of injury he or she claims to have suffered."
"As originally introduced in the Senate, the LMRDA only contained what are now Titles II through VI, which establish disclosure requirements and rules governing union trusteeships and elections." Franza, 869 F.2d at 44. "Title I was hastily written on the floor to mollify fears that the bill before the Senate inadequately protected union members from abusive or coercive leadership practices." Id.
For purposes of the instant case, the relevant provisions in Title I are § 411(a)(1), (2), and (4). The exact text of each provision is provided below.
Section 411(a)(1) provides:
29 U.S.C. § 411(a)(1) (emphasis added).
Section 411(a)(2) provides:
Id. § 411(a)(2) (emphasis added).
Finally, § 411(a)(4) provides:
Id. § 411(a)(4) (emphasis added).
Kerr v. Shanks, 466 F.2d 1271, 1277 (9th Cir. 1972).
One of Title V's main provisions provides:
29 U.S.C. § 501(a).
Section 411(a)(1) protects the right of union members to, e.g., nominate candidates and to vote in elections. Plaintiffs have failed to address the Aloise Defendants' arguments on Plaintiffs' failure to adequately plead a § 411(a)(1) violation. See, e.g., Mot. at 10 (noting that "Plaintiffs did run for election and presumably voted") (emphasis in original). Therefore, Plaintiffs' § 411(a)(1) claim is dismissed with prejudice.
Section 411(a)(4) protects the right of union members "to institute an action in any court, . . . irrespective of whether or not the labor organization or its officers are named as defendants." 29 U.S.C. § 411(a)(4). It is clear from both the complaint and Plaintiffs' opposition that this claim is based solely on the letter Mr. Aloise wrote condemning Plaintiffs' attorney Mr. Absalom.
So understood, there are two problems with Plaintiffs' § 411(a)(4) claim. First, there is no indication that Plaintiffs sustained any injury as a result of the letter. See Cent. Delta Water Agency v. United States, 306 F.3d 938, 946-47 (9th Cir. 2002) (stating that, in order for a party to have standing to bring a lawsuit, a "plaintiff must have suffered an `injury in fact'" — i.e., "an invasion of a legally protectable interest which is both `concrete and particularized,' as well as `actual or imminent, not conjectural or hypothetical'"); see also In re Facebook Internet Tracking Litig., 140 F.Supp.3d 922, 928 (N.D. Cal. 2015) (noting that "[a] facial 12(b)(1) motion involves an inquiry confined to the allegations in the complaint, whereas a factual 12(b)(1) motion permits the court to look beyond the complaint to extrinsic evidence[;] [w]hen, as here, a defendant makes a facial challenge, all material allegations in the complaint are assumed true, and the court must determine whether lack of federal jurisdiction appears from the face of the complaint itself"). It does not appear, for example, that Plaintiffs were deterred from maintaining their defamation lawsuit against Mr. Ramirez. Nor is there any indication that the letter deterred Plaintiffs from initiating any other lawsuit. To the extent Plaintiffs argue that the letter would have deterred a reasonable union member from filing suit, that is beside the point: Plaintiffs still need to show some kind of impact on themselves in order to have standing. Plaintiffs have not shown that they may assert the rights of a third party. See Mills v. United States, 742 F.3d 400, 406-07 (9th Cir. 2014) (noting that "the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties," although "[i]t may be necessary to grant a third party standing to assert the rights of another when (1) the party asserting the right has a close relationship with the person who possesses the right and (2) there is a hindrance to the possessor's ability to protect his own interests") (internal quotation marks omitted). And in any event, Plaintiffs have not alleged that the letter actually impacted another union member.
Second, the § 411(a)(4) claim is clearly time barred. See In re Brocade Communs. Sys. Derivative Litig., 615 F.Supp.2d 1018, 1035 (N.D. Cal. 2009) (noting that, "[i]f the expiration of the applicable statute of limitations is apparent from the face of the complaint, the defendant may raise a statute of limitations defense in a Rule 12(b)(6) motion to dismiss[;] [t]his is true even though expiration of the limitations period is an affirmative defense"). The parties agree that all of the Title I claims are subject to a two-year limitations period. See Reed v. United Transportation Union, 488 U.S. 319, 326-27, 334 (1989) (holding that LMRDA claims based on § 411(a)(2) are subject to state general or residual personal injury statutes of limitations); Cal. Code Civ. Proc. § 335.1 (providing for a two-year limitations period for personal injury actions). The letter condemning Mr. Absalom was written and made public in late 2013. Plaintiffs, however, did not bring their § 411(a)(4) claim until 2018, i.e., five years later. Thus, it is barred by the two-year statute of limitations.
Plaintiffs contend still that their § 411(a)(4) claim is not time barred because of (1) the delayed discovery rule and (2) equitable tolling. Neither contention is persuasive.
Under California law, "a cause of action accrues at `the time when the cause of action is complete with all of its elements,'" but the delayed discovery rule provides for an exception — more specifically, "postpon[ing] accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action." Fox v. Ethicon Endo-Surgery, Inc., 35 Cal.4th 797, 806-07 (2005). In the instant case, Plaintiffs claim that, although the letter was made public in late 2013, they did not actually learn about the letter condemning Mr. Absalom until the IRB report was issued in February 2016. But, as indicated above, a cause of action also accrues when a plaintiff has reason to discover the cause of action.
"A plaintiff has reason to discover a cause of action when he or she `has reason at least to suspect a factual basis for its elements.'" Id. at 807. The California Supreme Court has noted that "we do not take a hypertechnical approach to the application of the discovery rule. Rather than examining whether the plaintiffs suspect facts supporting each specific legal element of a particular cause of action, we look to whether the plaintiffs have reason to at least suspect that a type of wrongdoing has injured them." Id. (emphasis added); see Stella v. Asset Mgmt. Consultants, Inc., 8 Cal. App. 5th 181, 192 (2017) (stating that "`[a] plaintiff need not be aware of the specific "facts" necessary to establish the claim; that is a process contemplated by pretrial discovery [but] [o]nce the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights'"). "`So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her.'" Id. Indeed, "plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation." Fox, 35 Cal. 4th at 808 (discussing inquiry notice). In short, "under the delayed discovery rule, a cause of action accrues and the statute of limitations begins to run when the plaintiff has reason to suspect an injury and some wrongful cause, unless the plaintiff pleads and proves that a reasonable investigation at that time would not have revealed a factual basis for that particular cause of action." Id. at 803.
In the instant case, Plaintiffs admit that they knew Mr. Aloise was engaging in wrongdoing against them as early as October 2013, i.e., when Mr. Aloise warned Plaintiffs about taking photographs at a Joint Council hearing. Moreover, Plaintiffs clearly suspected broader wrongdoing by Mr. Aloise at the time when they submitted charges to the IRB in or about 2014. Given Plaintiffs' suspicions, they had a duty to conduct a reasonable investigation and, given that the letter condemning Mr. Absalom was publicly distributed and announced, a reasonable investigation would have revealed the existence of the letter. Thus, Plaintiffs are charged with knowledge of the letter. There is also a fair argument that a person with a reasonable degree of awareness should have known about the letter in the first place given that it was publicly distributed. Cf. Avila v. Willits Envtl. Remediation Trust, 633 F.3d 828, 841, 843 (9th Cir. 2011) (in CERCLA case, noting that "a limitations period does not begin until the date `that [a plaintiff] knows or reasonably should have known' of both the existence and the cause of the injury"; stating that "[t]he ever-increasing interest in health issues associated with the Remco contamination . . . demonstrates that by August 24, 2000, people with a reasonable degree of awareness should have known that contamination from Remco was a serious health concern and made further inquiry").
Plaintiffs maintain that, even if they are not entitled to claim of the benefit of the delayed discovery rule, they are still entitled to equitable tolling. The Court does not agree.
Cal. Rest. Mgmt. Sys. v. City of San Diego, 195 Cal.App.4th 1581, 1593-94 (2011) (internal quotation marks omitted).
According to Plaintiffs, the running of the clock should be equitably tolled from the time that they filed a complaint with the IRB (this appears to have been some time in 2014) until December 2017, when those proceedings were completed with the issuance of the IRO opinion that sanctioned Mr. Aloise. But the IRB and related proceedings cannot count as the "first claim" filed by Plaintiffs because, even though Plaintiffs basically lodged a complaint with the IRB, Plaintiffs were not themselves parties to those proceedings. Notably, in Hahn v. City of Carlsbad, No. 15-cv-2007 DMS (BGS), 2016 U.S. Dist. LEXIS 79950 (S.D. Cal. Apr. 12, 2016), the district court pointed out that "equitable tolling is premised on the same plaintiff filing two separate claims (involving the same wrong and arising from the same events) in two different fora." Id. at *9-10. Thus, the court refused to deem a criminal prosecution as a claim brought by plaintiffs: a prosecution "can in no way be characterized as `a good faith pursuit [by plaintiff] of a legal remedy designed to lessen the extent of [that] plaintiff's damages.'" Likewise lodging a complaint with the IRB does not constitute a claim for tolling purposes. In any event, even if the IRB complaint could provide a predicate for tolling, equitable tolling would not apply as of 2014, because there is no indication that Mr. Aloise was given timely notice of the IRB complaint against him. Indeed, equitable tolling is generally applied where the defendant was, by virtue of the first claim, given notice of plaintiff's intent to sue, thus alerting the defendant of the need, e.g., to marshal and preserve evidence. Plaintiffs' complaint to the IRB did not provide such notice.
Accordingly, the Court dismisses the § 411(a)(4) claim. The claim is dismissed with prejudice because amendment would be futile, particularly in light of the time bar.
Section 411(a)(2) protects the right of union members to, inter alia, express any views, arguments, or opinion. Congress essentially intended this section "to restate a principal First Amendment value — the right to speak one's mind without fear of reprisal." United Steelworkers of Am. v. Sadlowski, 457 U.S. 102, 111 (1982) (but adding that "there is absolutely no indication that Congress intended the scope of § 101(a)(2) to be identical to the scope of the First Amendment[;] [r]ather, Congress' decision to include a proviso covering `reasonable' rules refutes that proposition"). In the instant case, Plaintiffs' § 411(a)(2) claim suffers from multiple problems.
First, parts of the claim are clearly time barred. For example, Plaintiffs suggest that their § 411(a)(2) rights were impacted when, in October 2013, Mr. Aloise warned Plaintiffs about taking photographs at a Joint Council hearing. But clearly, Plaintiffs knew about this alleged misconduct when it took place in October 2013. Plaintiffs have no justification for waiting until 2018 to file suit based on this action by Mr. Aloise.
Second, similar to above, there is no indication that any of the Aloise Defendants' conduct injured Plaintiffs, such as chilling them from engaging in speech. Indeed, at the hearing, Plaintiffs conceded that their speech was not chilled as a result of the Aloise Defendants' actions. Plaintiffs protest that they need only show that the Aloise Defendants' conduct would chill a reasonable union member's speech and that Defendants' campaign of attempted intimidation would likely have such a broader effect. But Plaintiffs must still show some kind of impact on themselves in order to have standing to sue.
At the hearing, Plaintiffs took the position that a § 411(a)(2) claim is viable so long as the defendant has simply engaged in a scheme to suppress dissent. In support, Plaintiffs cited Johnson v. Kay, 860 F.2d 529 (2d Cir. 1989), where the Second Circuit noted that there were "organized attempts by the defendants to prevent union members sympathetic to [the plaintiff-union officer] from expressing their views" and that the LMRDA protects against "`a deliberate attempt by union officials to suppress dissent within the union.'" Id. at 536-37. But Johnson is easily distinguishable from the instant case because, there, the plaintiffs in that case included not only the union officer but also five union members themselves whose dissent was suppressed. See id. at 532. Thus, there were no issues with standing.
Moreover, there is a fundamental problem with Plaintiffs' position as to much of the alleged misconduct in that it is not clear how the Aloise Defendants' conduct could chill a reasonable union member's speech given that, as argued by Plaintiffs in opposing a time bar, most of the Aloise Defendants' conduct was not publicly known.
Accordingly, the Court dismisses Plaintiffs' § 411(a)(2) claim. As above, the dismissal is with prejudice. Plaintiffs failed at the hearing to articulate any basis by which they could cure the deficiencies described above.
Although the Court is dismissing the Title I claims against the Aloise Defendants with prejudice, that does not resolve the Aloise case because Plaintiffs have moved for leave to amend to add Title V claims. The Aloise Defendants oppose the motion to amend and, in the alternative, move to dismiss the claims.
The relevant provision of Title V — which covers a breach of a fiduciary duty — is as follows:
29 U.S.C. § 501(a). A union member may bring an action based on a violation of § 501(a) only "to recover damages or secure an accounting or other appropriate relief for the benefit of the labor organization." Id. § 501(b).
In the proposed fourth cause of action, Plaintiffs claim a violation of § 501(a) by Mr. Aloise and, in the fifth cause of action, a violation of the same statute by Ms. Alvarado.
According to Plaintiffs, Mr. Aloise breached his fiduciary duties by, inter alia:
In terms of relief, Plaintiffs ask for, inter alia, "restitution to Local 601 and Joint Council 7 of all expenditures incurred as a result of Aloise's wrongful use of their assets, including attorney fees paid to the individual defendants' attorneys to defend this action and/or to provide assistance during the [2013] union election." Prop. FAC ¶ 117. Plaintiffs further ask for an injunction requiring Mr. Aloise to stop using union assets for his own personal benefit or advancement.
With respect to Ms. Alvarado, Plaintiffs make similar election misconduct allegations and similarly ask for a comparable injunction and "restitution . . . of all expenditures . . . incurred as a result of ALVARADO's wrongful use of their assets, including attorney fees expended to support her candidacy and to defend this action."
The Aloise Defendants argue first that Plaintiffs should not be allowed to amend because there is no "good cause" for them to bring any § 501(a) claims. The Aloise Defendants' argument is predicated not on the Federal Rules of Civil Procedure (e.g., Rule 15 or 16) but rather on § 501(b) which provides that no § 501(a) "proceeding shall be brought except upon leave of the court obtained upon verified application and for good cause shown." 29 U.S.C. § 501(b).
The Ninth Circuit has noted that the good cause requirement "is intended as a safeguard to the affected union against harassing and vexatious litigation brought without merit or good faith." Horner v. Ferron, 362 F.2d 224, 228 (9th Cir. 1966); see also Cowger v. Rohrbach, 868 F.2d 1064, 1068 (9th Cir. 1989) (stating that the good cause "showing protects union officials from harassing and vexatious litigation which has no merit and from unwarranted judicial intrusion in the processes of union democracy"). Therefore, a court does consider, to a certain extent, the merits of a case in determining whether there is good cause to support a § 501(a) claim.
However, the Ninth Circuit has not gone so far as to adopt the Second Circuit's approach to good cause — i.e. construing the term "to mean that [a] plaintiff must show a reasonable likelihood of success and, with regard to any material facts he alleges, . . . a reasonable ground for belief in their existence." Dinko v. Wall, 531 F.2d 68, 75 (2d Cir. 1975). In fact, no circuit court appears to have adopted the Second Circuit's approach, see Hoffman v. Kramer, 362 F.3d 308, 315 (5th Cir. 2004) (noting such), and several circuit courts have been explicitly critical of that approach. See, e.g., Loretangeli v. Critelli, 853 F.2d 186, 191-92 (3d Cir. 1988) (noting, inter alia, that "[t]he statutory permission for plaintiffs to file an ex parte application for leave to sue, 29 U.S.C. § 501(b), suggests a low level of judicial scrutiny at this point[;] [t]he language of the statute certainly does not require that the district court then make a searching inquiry into the 2merits of the suit"); George v. Local Union No. 639, 98 F.3d 1419, 1422 (D.C. Cir. 1996) (stating that "[i]t would . . . be illogical to impose a heightened pleading standard, requiring a plaintiff to show a high likelihood of success on the merits").
Accordingly, the Court rejects the Aloise Defendants' position that the Second Circuit approach should be followed here in evaluating whether there is good cause for Plaintiffs' § 501(a) claims. Under the current Ninth Circuit approach, review is limited and designed simply to ensure that a suit is not frivolous or undertaken for the purpose of harassment. The Court finds that Plaintiffs have established good cause to amend. The allegations in the proposed amended complaint fairly put into question whether the Aloise Defendants breached their fiduciary duties by, e.g., using union resources for their own personal purposes.
The Court also rejects the Aloise Defendants' argument that, as part of the good cause inquiry, the Court should consider whether the remedies sought by Plaintiffs "would realistically benefit the union and/or its membership." Hoffman, 362 F.3d at 316. According to the Aloise Defendants, there is no good cause for the § 501(a) claims in the instant case because the alleged breaches of fiduciary duty at best involve a "de minimis expenditure [of union resources by Mr. Aloise and/or Ms. Alvarado] that does not justify a federal lawsuit." Id. at 322 n.14.
The Aloise Defendants correctly point out that the Fifth Circuit — in Hoffman — expressly endorsed the above consideration as part of the good cause inquiry. Nevertheless, the Ninth Circuit has never adopted the Fifth Circuit's approach in Hoffman, and this Court is wary of doing so in the first instance absent Ninth Circuit authority. Moreover, even if Hoffman has some appeal, its application should be limited to cases in which it is fairly obvious that a suit would not be of any benefit to the union and/or its membership.
At this early stage of the proceedings, the Court cannot say that the instant action is such a case. For example, it is not clear that the instant case involves de minimis expenses only, as claimed by the Aloise Defendants. This is especially true in light of Plaintiffs' contention that the Aloise Defendants used union attorneys to do personal, non-union work, with the union paying for the attorneys' fees. The Aloise Defendants point out that, as pled in the complaint, the Beeson law firm was paid on a monthly retainer; therefore, the firm was not charging the union more money than usual even if it was allegedly doing non-union work. But the fact that the union paid the attorneys on a monthly retainer does not insulate the class for restitution for misuse of a union asset. Under the Aloise Defendants' theory, union officers can appropriate legal services otherwise owed to the union simply because there is a fixed fee retainer; the union would be without any remedy against the misappropriation. Such a result would be at war with the fundamental purpose of Title V. Defendants cite no case law supporting their argument.
To the extent the Aloise Defendants express concern that Plaintiffs may ultimately obtain a victory, but only a small one that would be dwarfed by the attorney's fees that the union might have to pay for Plaintiffs' efforts on the union's behalf, the Court is not unsympathetic. However, a court has discretion to award fees under 29 U.S.C. § 501(b) (providing that "[t]he trial judge may allot a reasonable part of the recovery in any action under this subsection to pay for fees of counsel prosecuting the suit at the instance of the member of the labor organization and to compensate such member for any expenses necessarily paid or incurred by him in connection with the litigation") (emphasis added), and the achievement of only limited success or a limited benefit might well weigh against any significant fee award payable by the union. Cf. Reyes v. Laborers' Int'l Union, 464 F.2d 595, 597 (10th Cir. 1972) ("Recovery under the statute has not been restricted to a limited monetary recovery by the Union, but rather has included any benefit realized by the Union. The record does not reflect any benefit conferred on the Union by the institution of the action by Reyes."); Monzillo v. Biller, 735 F.2d 1456, 1463 (D.C. Cir. 1984) ("It is true that attorneys' fees can be awarded under this provision even where there has been no monetary recovery. But the courts have always insisted that, to justify such an award, the plaintiff must have `rendered a substantial service to his union as an institution and to all of its members.'").
The Court therefore holds that the "good cause" requirement has been satisfied and turns to the Aloise Defendants' motion to dismiss the Title V claims.
As an initial matter, the Court takes into account the Aloise Defendants' concession that the scope of § 501 is not limited to breaches of fiduciary duty involving the money and property of the union. As Plaintiffs note, in Stelling v. International Brotherhood of Electrical Workers, 587 F.2d 1379 (9th Cir. 1978), the Ninth Circuit rejected the narrower view of § 501, see Gurton v. Arons, 339 F.2d 371 (2d Cir. 1964), and held that union officials have fiduciary duties even when no monetary interest of the union is involved. The court added, however, that its decision did "not mean that courts have power to intervene in intra-union affairs at slight provocation or on any invitation. Rather, we confirm the principles expressed in Phillips v. Osborne, 403 F.2d 826 (9th Cir. 1968), the judicial interference should be undertaken only with great reluctance." Stelling, 587 F.2d at 1387. In Stelling itself, the court permitted a claim under § 501(a) which alleged that the union officers had failed "to submit a collective bargaining agreement to general membership vote in derogation of the union constitution." Id.; see also Lodge 1380, Bhd. of Ry., Airline & S.S. Clerks v. Dennis, 625 F.2d 819, 828-29 (9th Cir. 1980) (affirming holding in Stelling; "conclud[ing] that Lodge's allegation that Dennis wrongfully refused access to the membership lists and wrongfully denied the referendum vote does state a breach of fiduciary duty within LMRDA § 501").
Because the scope of § 501 is broad, the Court finds the bulk of the motion to dismiss without merit. Plaintiffs can assert a breach of fiduciary duty even when no union money or property is at issue. See, e.g., FAC ¶ 113 (alleging that Mr. Aloise obtained and solicited contributions by employers to assist Ms. Alvarado's campaign for office, tried to attack Mr. Pimentel's campaign manager, and solicited and accepted things of value from employers). That being said, the Court acknowledges that, even though the § 501 claim as pled implicates more than just union money of property, much of the relief sought by Plaintiffs for the § 501 claim is related to the misuse of union money or property. As noted above, Plaintiffs ask for "restitution to Local 601 and Joint Council 7 of all expenditures incurred as a result of" the Aloise Defendants' wrongful use of union assets, Prop. FAC ¶ 117, and an injunction requiring the Aloise Defendants to stop using union assets for their own personal benefit of advancement. See Prop. FAC, Prayer for Relief ¶ 3.
Although a claim for restitution may lie, Plaintiffs' claim for injunctive relief is not warranted under the circumstances. Plaintiffs' only allegation is that the Aloise Defendants used union assets to support Ms. Alvarado's candidacy in the 2013 election, but there is no indication that, since the 2013 election, either Mr. Aloise or Ms. Alvarado has engaged in any such misconduct. Indeed, after the 2013 election, there was another election in 2016 and no challenge was made, either by Plaintiffs or other union members, that the Aloise Defendants engaged in any improper conduct, including misuse of union resources. Moreover, the IRO opinion issued relief as to Mr. Aloise at least. Therefore, Plaintiffs have not shown a likelihood they will be injured in the future and thus lack standing to bring their claim for injunctive relief. See Gratz v. Bollinger, 539 U.S. 244, 284 (2003) (noting that, in Los Angeles v. Lyons, 461 U.S. 95, 75 L. Ed. 2d 675, 103 S.Ct. 1660 (1983), the plaintiff "had standing to recover damages caused by `chokeholds' administered by the police in the past but had no standing to seek injunctive relief preventing future chokeholds[;] petitioners' past injuries do not give them standing to obtain injunctive relief to protect third parties from similar harms").
To the extent the Aloise Defendants argue the Title V claims should be entirely dismissed based on the statute of limitations, the Court is not persuaded. The alleged misconduct underlying the Title V claims largely involves nonpublic information (e.g., using union resources for personal benefit). That being the case, it is not clear that Plaintiffs reasonably should have uncovered the alleged misconduct even if they knew — as early as December 2013, when the election took place — that the Aloise Defendants were engaged in some kind of wrongdoing and Plaintiffs investigated such. "When a plaintiff reasonably should have discovered facts for purposes of the accrual of a cause of action or application of the delayed discovery rule is generally a question of fact, properly decided as a matter of law only if the evidence (or, in this case, the allegations in the complaint and facts properly subject to judicial notice) can support only one reasonable conclusion."
For the foregoing reasons, the Court grants in part and denies in part the Aloise Defendants' motion to dismiss the Title V claims. The motion is granted to the extent Plaintiffs seek injunctive relief for the Title V claims. The motion is otherwise denied.
Thus, for purposes of the Aloise case, only Title V claims remain in the action.
With respect to the Bonsall Defendants, Plaintiffs contend that they aided and abetted the Aloise Defendants, and conspired with the Aloise Defendants, both in violation of the LMRDA.
The Bonsall Defendants argue first that the LMRDA creates liability against certain enumerated actors only and that they do not qualify as any such actors. The Court agrees.
As an initial matter, the Court notes that Congress stated as follows in its declaration of findings, purposes, and policies for the act:
29 U.S.C. § 401(c) (emphasis added); see also id. §§ 401(a), (b) (declaring it "essential that labor organizations, employers, and their officials adhere to the highest standards of responsibility and ethical conduct in administering the affairs of their organizations" and that legislation will afford protection for employees and the public vis-à-vis "activities of labor organizations, employers, labor relations consultants, and their officers and representatives") (emphasis added). Because Congress identified these persons and entities specifically, and not others, it is questionable that the LMRDA is intended to impact additional persons or entities. Indeed,
Wheeler v. City of Santa Clara, 894 F.3d 1046, 1054 (9th Cir. 2018).
In the instant case, the Bonsall Defendants clearly are not labor organizations, employers, or their officers or representatives. Moreover, Plaintiffs have never claimed that the Bonsall Defendants should be considered labor relations consultants and, even if they had, that position would have dubious merit given the definition of the term in the LMRDA: "`Labor relations consultant' means any person who, for compensation, advises or represents an employer, employer organization, or labor organization concerning employee organizing, concerted activities, or collective bargaining activities." 29 U.S.C. § 402(m) (emphasis added). Though the Bonsall Defendants might have advised or represented the unions at issue for compensation, there is no indication that their work as relevant in the instant case concerned "employee organizing, concerted activities, or collective bargaining activities."
Beyond the Congressional declaration discussed above, the text of the LMRDA indicates that the persons or entities who may be sued as defendants under the statute are limited. For example, Plaintiffs allege that the Bonsall Defendants assisted the Aloise Defendants in violating Title V. For Title V, Congress was explicit as to whom may be sued. The enforcement provision for Title V provides:
29 U.S.C. § 501(b) (emphasis added). Another provision in the LMRDA explains that
29 U.S.C. § 402(q) (emphasis added).
In the instant case, the Bonsall Defendants clearly are not union officers, shop stewards, or representatives. Although Title V also refers to union agents, Plaintiffs have not cited to any authority indicating that "agents" should apply to any person or entity who is hired by or works for a union, including but not limited to union attorneys. Indeed, the text of § 402(q) indicates that Title V is directed at high-level union agents (e.g., business agents) — i.e., those who play such a significant role for the union that a fiduciary duty is fairly imposed on them vis-à-vis the union. Here, while the Bonsall Defendants may have had a fiduciary duty to the unions at issue because of the attorney-client relationship, that does not mean that there was a fiduciary duty for purposes of the LMRDA. Indeed, it is doubtful that union attorneys can fairly be said to exercise something akin to "substantial independent authority" when they must follow the directions of union officers. Morrissey v. Curran, 423 F.2d 393 (2d Cir. 1970), one of the main cases on which Plaintiffs rely, is not to the contrary. Although Morrissey did involve a defendant that happened to be an attorney sued for breach of fiduciary duty under LMRDA, Title V, he was a proper defendant because he was sued in his capacity as a trustee for a union fund. See id. at 385. And to the extent that Plaintiffs argue that the Bonsall Defendants were acting — at least at times — as campaign advisors for Ms. Alvarado, and not as attorneys, they fare no better. A campaign manager, at bottom, represents an individual union member, and does not hold authority in the context of the union generally.
Plaintiffs assert that the Bonsall Defendants assisted the Aloise Defendants in violating Title I, and not just Title V. The enforcement provision for Title I is different from the enforcement provision for Title V in that the former does not clearly spell out who a proper defendant is. The Title I enforcement provision states:
29 U.S.C. § 412. It is unclear from the above provision whether the reference to "labor organization" limits the actors against whom suit may be brought, or merely instructs on proper venue when the defendant happens to be a labor organization.
Assuming the latter (in Plaintiffs' favor), Plaintiffs have still failed to establish that the Bonsall Defendants fall within the proper scope of defendants under Title I of the LMRDA. The legislative history for Title I indicates that non-union actors are not contemplated as defendants at all. The first version of the LMRDA was known as the Kennedy-Erwin Bill and did not contain Title I. See S. 1555, 86th Cong. (1959). Title I came about via an amendment to the bill proposed by Senator John L. McClellan and, as noted above, was intended "to mollify fears that the bill before the Senate inadequately protected union members from abuse or coercive leadership practices." Franza, 869 F.2d at 44; see also 105 Cong. Rec. 6472 (1959) (Senator McClellan describing his proposal as one in the interest "of union members and for their protection" "to insure greater integrity in the administration and management of union affairs"). Thus, Title I became known as a "Bill of Rights" for union members. See Franza, 869 F.2d at 44; see also Local No. 82, Furniture & Piano Moving v. Crowley, 467 U.S. 526, 528 (1984). In other words, Title I was enacted to govern the relationship between union members and union officials; non-union actors were not the concern of the legislation.
Notably, courts have assumed that the purpose underlying Title I was to govern the union member-union official relationship, and have not indicated outside relationships were covered. See, e.g., United Steelworkers of Am., AFL-CIO-CLC v. Sadlowski, 457 U.S. 102, 109 (1982) (explaining that the McClellan amendment was proposed "because [the original bill] did not provide general protection to union members who spoke out against the union leadership") (emphasis added); Finnegan v. Leu, 456 U.S. 431, 435-36 (1982) (observing that the amendments resulting in Title I "placed emphasis on the rights of union members to freedom of expression without fear of sanctions by the union" to ensure that the unions were "democratically governed and responsive to the will of their memberships") (emphasis added) (emphasis added); United Steel Workers Local 12-369 v. United Steel Workers Int'l, 728 F.3d 1107, 1115 (9th Cir. 2013) (discussing a "congressional concern with widespread abuses of power by union leadership") (emphasis added); see also Tomko v. Hilbert, 288 F.2d 625, 628 (3d Cir. 1961) (examining with favor district court interpretations of Title I as governing "the union-member relationship" and intending to protect a union member "from the violation of his rights as against the [u]nion only") (emphasis added); Dilacio v. New York City Dist. Council of the United Broth. of Carpenters & Joiners of Am., 593 F.Supp.2d 571, 576 (S.D.N.Y. 2008) (finding that the LMRDA confers jurisdiction against labor organizations and individual defendants acting under color of union authority for violations of Title I rights) (emphasis added).
And it is therefore not surprising that several courts have held that a proper defendant for purposes of Title I of the LMRDA is a union or a union officer or agent only — and not, e.g., a non-union actor such as an attorney hired by a union. See, e.g., Link v. Rhodes, No. C 06-0386 MHP, 2006 WL 1348424, at *6, 8 (N.D. Cal. May 17, 2006) (noting that, "[a]lthough the Ninth Circuit has not squarely addressed the issue, courts in other circuits have held that the LMRDA only governs labor organizations and their officers and agents when acting in their representative capacities"; dismissing LMRDA claims against law firm defendants because "an LMRDA claim may only be brought against a `labor organization' and its officers and agents"); Farrell v. Adams, No. 03 Civ. 4083(JCF), 2004 WL 433802, at *5-6 (S.D.N.Y. Mar. 10, 2004) (finding it "highly unlikely" that Congress "intended to extend LMRDA liability to persons functioning as legal counsel"; noting that defendant acted in "the role of an attorney and not that of a union official with authority to act for [the local union]"). Moreover, Plaintiffs have failed to cite any authority to support their position that a non-union actor, such as an attorney, should be deemed a proper defendant for purposes of Title I.
Accordingly, the Court dismisses the LMDRA claims asserted against the Bonsall Defendants with prejudice. The Bonsall Defendants are not proper defendants for purposes of Title V or I.
For the reasons stated above, the LMRDA claims asserted against the Bonsall Defendants are dismissed with prejudice. However, the Court notes that, even if the Bonsall Defendants could be proper defendants under Title V or Title I, there are independent grounds for dismissing the LMRDA claims. More specifically, Plaintiffs' claim against the Bonsall Defendants is predicated on secondary liability; however their assumption that secondary liability (aiding and abetting, as well as conspiring) obtains under the LMRDA is not well supported.
While Congress has enacted a general aiding and abetting statute applicable to all federal criminal offenses, see 18 U.S.C. § 2, it has not done so for civil offenses. Instead, it has provided (or not provided) for such civil liability on a statute-by-statute basis. As the Supreme Court explained in Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164 (1994), Congress's "statute-by-statute approach to civil aiding and abetting liability" speaks against a presumption of such liability for violations of civil statutes. Id. at 182. "[W]hen Congress enacts a statute under which a person may sue and recover damages from a private defendant for the defendant's violation of some statutory norm, there is no general presumption that the plaintiff may also sue aiders and abettors." Id. "The fact that Congress chose to impose some forms of secondary liability, but not others, indicates a deliberate congressional choice with which the courts should not interfere." Id. at 184. Thus, when a statute is precise about who can be liable, "courts should not implicitly read secondary liability into the statute." Freeman v. DirecTV, Inc., 457 F.3d 1001, 1006 (9th Cir. 2006) (internal quotation marks omitted). Courts have applied Central Bank's rationale beyond securities violations. See, e.g., Freeman, 457 F.3d at 1001 (Electronic Communications Privacy Act); In re Volkswagen "Clean Diesel" Mktg., Sales Practices, & Prod. Liab. Litig., No. MDL 2672 CRB (JSC), 2017 WL 4890594, at *12 (N.D. Cal. Oct. 30, 2017) (RICO).
Here, the LMRDA is silent on secondary liability. Based on this silence, and the lack of any other indication of Congressional intent to provide for secondary liability, the Court finds that, under Central Bank, secondary liability claims under the LMRDA are not viable. This conclusion is consistent with the Ninth Circuit's decision in Building Material & Dump Truck Drivers, Local 420 v. Traweek, 867 F.2d 500 (9th Cir. 1989), decided even before Central Bank. There, the Ninth Circuit rejected a district court's finding of conspiracy to violate rights protected under LMRDA, Title I, finding no statute or common law to provide jurisdiction over "civil conspiracy in the labor relations field." Id. at 512 (citing Abrams v. Carrier Corp., 434 F.2d 1234, 1253 (2d Cir. 1970)); see also Abrams, 434 F.2d at 1253 (stating that conspiracy to violate an individual's rights under the LMRDA does not suffice to vest a court with jurisdiction under the LMRDA). Traweek suggests that when "an action for conspiracy is not contemplated within the scope of federal labor laws," Traweek, 868 F.2d at 512 — i.e., when conspiracy is not expressly addressed as a cause of action — there is no valid claim.
Plaintiffs contend still that the Court should allow their secondary liability claims, relying primarily on a decision from Judge Alsup of this District and the corresponding appellate decision by the Ninth Circuit to support their position. See Serv. Employees Int'l Union v. Roselli, No. C 09-404 WHA, 2009 WL 3013501 (N.D. Cal. Sept. 17, 2009); Serv. Employees Int'l Union v. Nat'l Union of Healthcare Workers, 718 F.3d 1036 (9th Cir. 2013). More specifically, Plaintiffs assert that Judge Alsup found the LMRDA to provide a basis for secondary liability in Roselli, and that the Ninth Circuit indicated approval of this holding on appeal, when it affirmed the jury verdict awarding damages for aiding and abetting.
But Plaintiffs have mischaracterized Roselli and therefore the subsequent decision on appeal. The Court acknowledges that there is some language in Roselli that arguably could be read in Plaintiffs' favor, but a review of the Roselli complaint confirms that the plaintiff's claim for aiding and abetting was predicated on state law and not the LMRDA. See Roselli, No. C 09-404 WHA (N.D. Cal.) (Docket No. 344-1, at 46-49) (pleading causes of action for "Conspiracy to Commit Breach of Fiduciary Duty Under California Common Law" and "Aiding and Abetting, Participating in, and/or Knowingly Benefiting From Breach of Fiduciary Duty In Violation of California Civil Code §§ 2223, 2224 and California Common Law"). The LMRDA was referenced in the Roselli complaint not as a basis for imposing secondary liability but rather in mere recognition of a fiduciary duty within the union. See, e.g., Roselli, No. C 09-404 WHA (N.D. Cal.) (Docket No. 344-1 at ¶ 136) (describing breaches of "fiduciary duties owed to UHW under the LMRDA and California law" in allegations supporting the common law conspiracy claim). In the appeal of Roselli, the Ninth Circuit reviewed, inter alia, the scope of a fiduciary duty in the context of an inter-union dispute. Its affirmation of the district court's judgment, which included damages for aiding and abetting an LMRDA violation, resulted from this and additional analyses. The Ninth Circuit never addressed or otherwise discussed the availability of secondary liability under the LMRDA. In sum, Roselli and the appeal are not on point. This is underscored by the fact that neither Roselli nor the appeal addressed the viability of secondary liability in light of Central Bank or Traweek.
As for the remaining cases cited by Plaintiffs, they are similarly unpersuasive because, the courts dismissed the LMRDA secondary liability claims on other grounds, without ruling on whether secondary liability was, in fact, available under the statute. See Sampson v. Dist. Council of N.Y. City, No. 10 Civ. 8120(LAP), 2012 WL 4471535, at *7 (S.D.N.Y. Sept. 27, 2012) (dismissing the aiding and abetting claim in conjunction with the underlying LMRDA violation); Fox v. Bakery, Confectionary, Tobacco Workers & Grain Millers Int'l Union, Local No. 24, AFL-CIO, No. C08-05737 WHA, 2010 WL 682458, at *14 (N.D. Cal. Feb. 24, 2010) (dismissing the conspiracy claim for lack of evidence).
For the foregoing reasons, the Court dismisses with prejudice Plaintiffs' LMRDA claims against the Bonsall Defendants. The Bonsall Defendants are not proper defendants with respect to the Title V and Title I claims; moreover, even if they were, secondary liability is not permitted under the LMRDA. Because the LMRDA claims are the only claims remaining against the Bonsall Defendants, the Court would ordinarily direct the Clerk of the Court to enter a final judgment in the Bonsall case. At the hearing, however, Plaintiffs asked the Court for permission to amend their case to add a state law claim for aiding/abetting and conspiracy against the Bonsall Defendants (that is, assuming that the Court were to dismiss the LMRDA claims for aiding/abetting and conspiracy). Plaintiffs essentially conceded that the Court would not have original jurisdiction (i.e., diversity jurisdiction) over this state law claim but maintained that the Court could exercise supplemental jurisdiction given that the Court had original jurisdiction over the dismissed LMRDA claims. See 28 U.S.C. § 1367(a) (providing that, "in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States jurisdiction").
The Court acknowledges that, as a general matter, there is a liberal approach to amendment pursuant to Federal Rule of Civil Procedure 15. See Fed. R. Civ. P. 15(a)(2) (providing that a "court should freely give leave when justice so requires"); United States v. Gila Valley Irrigation Dist., 859 F.3d 789, 804 (9th Cir. 2017) (noting that, "under Rule 15, leave to amend should be granted unless amendment would cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue delay") (internal quotation marks omitted). Nevertheless, the Court sees little reason to permit amendment in the instant case when the Court would ultimately decline supplemental jurisdiction over any state law claim. Under § 1367(c), a district court may decline supplemental jurisdiction over a state law claim if "the district court has dismissed all claims over which it has original jurisdiction." Id. § 1367(c)(3). In fact, where "the federal head of jurisdiction has vanished from the case," and no substantial commitment of judicial resources has been made to the nonfederal claims, it is . . . akin to `making the tail wag the dog' for the District Court to retain jurisdiction." Murphy v. Kodz, 351 F.2d 163, 167-68 (9th Cir. 1965); see also Sanford v. MemberWorks, Inc., 625 F.3d 550, 561 (9th Cir. 2010) (citing Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988)) (explaining that, when all federal-law claims are eliminated before trial, the balance of factors considered under the doctrine of pendant jurisdiction leans against exercising jurisdiction over remaining state-law claims); Rojas v. Brinderson Constructors Inc., 567 F.Supp.2d 1205, 1207 (C.D. Cal. 2008) (declining exercise of supplemental jurisdiction over state law claims after dismissing sole claim invoking original jurisdiction). Here, the case is early in the proceedings, and thus the commitment of judicial resources at this point has been minimal.
The Court acknowledges that an argument could be made in favor of retention of jurisdiction because the Court will still before it the Aloise case. However, the fact that the Court will be expending resources on the Aloise case does not dictate that the Court should therefore expend additional resources on the Bonsall case, particularly where the sole claim at issue would be a state law claim. If Plaintiffs initiate a state law action against the Bonsall Defendants predicated on state law, the state court may decide how best to manage that case in light of the ongoing Aloise proceedings.
Accordingly, based on the specific circumstances before the Court, the Court denies Plaintiffs' request for leave to amend.
For the foregoing reasons, the Court rules as follows on the Aloise case: (1) the motion to dismiss the Title I claims is granted; (2) the motion to amend to add Title V claims is granted; and (3) the motion to dismiss the Title V claims is granted with respect to the request for injunctive relief but is otherwise denied. With respect to the Bonsall case, the motion to dismiss is granted with prejudice. For the Bonsall case only, the Clerk of the Court shall enter a final judgment in accordance with the above and close the file in the case.
This order terminates Docket Nos. 31, 38, and 44 in C-18-0411 (Aloise), and Docket No. 16 in C-18-1958 (Bonsall).
Docket No. 38 (IRO Op. at 27 n.15).
Local No. 82, Furniture & Piano Moving v. Crowley, 467 U.S. 526, 539 (1984).
Mr. Hailstone did so.
For convenience, the Court also continues to refer to the Aloise Defendants but recognizes that the Title V claims are being asserted against only the individual defendants, Mr. Aloise and Ms. Alvarado.