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FLYNN v. OHIO BUILDING RESTORATION

May 2, 2003

JOHN FLYNN, ET AL., PLAINTIFFS,
v.
OHIO BUILDING RESTORATION, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Reggie B. Walton, United States District Judge

MEMORANDUM OPINION

Currently before the Court is the Defendants' Joint Motion to Dismiss or Alternative Motion for Summary Judgment [#5]. For the reasons stated below, defendants' motion will be denied.

I. Factual Background

Plaintiffs are Trustees of the Bricklayers & Trowel Trades International Pension Fund ("IPF" or "the Fund"). Compl. ¶¶ 1, 3.*fn1 The IPF "is an `employee benefit plan' within the meaning of Section 3(3) of [the Employee Retirement Income Security Act of 1974 ("ERISA")], 29 U.S.C. § 1002(3), and is a `multi-employer plan' within the meaning of Section 3(37) of ERISA, 29 U.S.C. § 1002(37)." Id. ¶ 3. The Fund "is administered in the District of Columbia." Id. ¶ 2. Defendant Ohio Building Restoration, Inc. ("Ohio Building") is a company that "maintain[s] offices and conduct[s] business in the state of Ohio[,]" and "employs or ha[s] employed members of the International Union of Bricklayers and Allied Craftworkers and its affiliated local unions ("Unions")." Id. ¶¶ 5, 7. Defendant Exact Construction Services, Inc. ("Exact Construction") is, based upon plaintiffs' information and belief, "an alter ego of Ohio Building Restoration, Inc.,[because, among other things, the two entities have] interlocking directors, common control, common type of work and the same or similar employees." Id. ¶ 9.

Plaintiffs bring this action on behalf of the IPF in their role as trustees or fiduciaries. Id. ¶¶ 1, 3. Pursuant to the "Collection Procedures of the Central Collection Unit of the Bricklayers and Allied Craftworkes ("CCU"), the IPF is authorized to effect [employer] collections on behalf of the International Masonry Institute ("IMI") and the Bricklayers and Allied Craftworkers International Union ("BAC") [and is] authorized to file suit on behalf of the BAC Local 1 Michigan Joint Delinquency Committee . . ." Id. ¶ 4. Plaintiffs allege that the defendants have failed to make contributions to the Fund as required by the Collective Bargaining Agreement ("CBA") that defendant Ohio Building executed with the Unions. Id. ¶¶ 8, 11. In addition, plaintiffs allege that defendant Exact Construction "was obligated to make certain payments to the IPF, IMI, BAC and Local Funds on behalf of employees covered by the Agreement[,]" and has failed to make those payments in addition to failing to submit the required reports thus making "the amount owed [to] the IPF, IMI, BAC and Local Funds by Exact Construction . . . undetermined, pending discovery." Id. ¶¶ 9-10. Based on the allegation that Exact Construction is an alter ego of defendant Ohio Building, plaintiffs seek an order declaring that both defendants "are jointly and severally liable for all amounts owed the IPF, IMI, BAC and Local Funds." Id. ¶ 1, at 5.

Defendants have filed a motion to dismiss plaintiffs' complaint, which is based on two grounds. First, defendants argue that this Court does not have subject matter jurisdiction over this matter because the plaintiffs are subject to the terms of the CBA and have failed to adhere to the grievance or arbitration procedures set forth in the CBA. Memorandum in Support of Defendants' Joint Motion to Dismiss or Alternative Motion for Summary Judgment ("Defs.' Mem.") at 4.*fn2 Second, defendants argue that this Court lacks personal jurisdiction over them under the "minimum contacts" analysis of International Shoe Co. v. Washington, 326 U.S. 310 (1945), because they are Ohio corporations, are not conducting business in the District of Columbia, and according to plaintiffs' allegations, failed to make contributions on behalf of employees who reside in Ohio and worked on construction projects that were also located in Ohio or Michigan. Defs.' Mem. at 14-15.

In opposition, plaintiffs argue that they are not bound by the terms of the CBA because they were not a party to the agreement and compelling them to arbitrate pursuant to the terms of the CBA would violate their right to institute legal proceedings pursuant to their Trust Agreement, to which the defendants agreed they would be bound, and would contravene the purposes which underlie the ERISA. Plaintiffs' Memorandum in Opposition to Defendants' Joint Motion to Dismiss or Alternative Motion for Summary Judgment ("Pls.' Opp'n") at 6, 10-17. Next, plaintiffs argue that the defendants' "minimum contacts" argument is not tenable because the District of Columbia Circuit has "held that agreeing to pay and then paying money into a pension fund located in the District of Columbia, and then failing to make those payments, subjects the contributing employers to personal jurisdiction in the District of Columbia for causes of action for collection of delinquent contributions under ERISA." Id. at 18-19 (citing I.A.M. Nat'l Pension Fund v. Wakefield Indus., Inc., 699 F.2d 1254, 1259 (D.C. Cir. 1983)).

In its reply, defendant Ohio Construction argues that the collective bargaining agreement at issue in this case is distinguishable from the agreements in cases where courts have held that trustees have not been bound by grievance procedures set forth in those agreements. Defendant Ohio Building Restoration, Inc.'s Reply in Support of Defendants' Motion to Dismiss ("Ohio Reply") at 2-4. In addition, Ohio Building notes that plaintiffs are arguing that defendant Exact Construction is liable to them for contribution payments, an argument that "is expressly predicated upon the CBA in effect between [Ohio Building] and the Union[s,]" and thus, plaintiffs "are allegedly seeking to enforce the terms of the CBA, on the one hand, yet on the other seek to avoid the mandatory arbitration procedure also contained in the CBA." Id. at 6-7. And, in defendant Exact Construction's reply, it argues that although the Court "may arguably have jurisdiction over Defendant Ohio Building . . . under the holding of I.A.M. . . . the same cannot be said for Defendant [Exact Construction]." Defendant Exact Construction Service's Inc.'s Reply in Support of Defendants' Motion to Dismiss ("Exact Constr.'s Reply") at 1. This result is called for, Exact Construction argues, because it "has never conducted or transacted any business in the District of Columbia, has never entered into any agreement with any of the [p]laintiffs or any union, and has never made any pension contributions to any fund in the District of Columbia . . ." Accordingly, Exact Construction contends that the Court should not exercise personal jurisdiction over it based "solely upon [plaintiffs'] conclusory allegation that [Exact Construction] is an alter ego of [Ohio Building]." Id. at 2.

II. Analysis

A. Standard of Review

As indicated, defendants seek dismissal on two grounds: (1) plaintiffs' failure to exhaust the grievance procedures set forth in the CBA and (2) this Court's lack of personal jurisdiction over the defendants.*fn3 Defendants styled their motion as one seeking dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6). Defendants' Joint Motion to Dismiss or Alternative Motion for Summary Judgment ("Defs.' Mot.") at 1. However, the motion should have been more appropriately entitled as a motion for dismissal pursuant to Federal Rules of Civil Procedure 12(b)(1) ("lack of jurisdiction over the subject matter" of the complaint) and 12(b)(2) ("lack of jurisdiction over the person").*fn4

"The distinctions between 12(b)(1) [,12(b)(2)], and 12(b)(6) are important and well understood. Rule[s] 12(b)(1) [and 12(b)(2)] present[] . . . threshold challenge[s] to the court's jurisdiction, whereas 12(b)(6) presents a ruling on the merits with res judicata effect." Haase v. Sessions, 835 F.2d 902, 906 (D.C. Cir. 1987) (citation omitted). When reviewing a challenge pursuant to Rule 12(b)(1) or 12(b)(2), the Court may consider documents outside the pleadings to assure itself that it has jurisdiction. See Land v. Dollar, 330 U.S. 731, 735 n. 4 (1947) ("when a question of the District Court's jurisdiction is raised, either by a party or by the court on its own motion . . . the court may inquire by affidavits or otherwise, into the facts as they exist.") (citations omitted); Haase, 835 F.2d at 906 ("In 12(b)(1) proceedings, it has been long accepted that the judiciary may make `appropriate inquiry' beyond the pleadings to `satisfy itself on authority to entertain the case.'") (citations omitted); Artis v. Greenspan, 223 F. Supp.2d 149, 152 (D.D.C. 2002) ("A court may consider material outside of the pleadings in ruling on a motion to dismiss for lack of venue, personal jurisdiction, or subject-matter jurisdiction.") (citation omitted). By considering documents outside the pleadings on a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(2), the Court does not convert the motion into one for summary judgment; "the plain language of Rule 12(b) permits only a 12(b)(6) motion to be converted into a motion for summary judgment." Haase, 835 F.2d at 905 (emphasis in original).

B. Whether Plaintiffs are Bound by the Grievance Procedures Contained in the CBA

Defendants argue that this Court does not have subject matter jurisdiction over the plaintiffs' claims because plaintiffs have failed to exhaust their administrative remedies under the CBA. This argument raises a challenge to the Court's subject matter jurisdiction pursuant to Rule 12(b)(1). See Artis, 223 F. Supp.2d at 152 ("Failure to exhaust administrative remedies deprives a district court of subject matter jurisdiction.") (citation omitted). A challenge to the Court's subject matter jurisdiction can be either "facial" or "factual." Loughlin v. United States, 230 F. Supp.2d 26, 35 (D.D.C. 2002) (citations omitted). A facial challenge challenges "the factual allegations of the complaint" contained on "the face of the complaint" while in a factual challenge, the contest is addressed to the underlying facts contained in the complaint. Id. at 36. In analyzing a facial challenge to its subject matter jurisdiction, "the Court considers the factual allegations of the complaint in the light most favorable to the non-moving party." Id. at 35 (citation omitted). However, in a factual challenge, such as the one before the Court where the defendants do not challenge the allegations on the face of the complaint, but the facts underlying those allegations, "[g]enerally, . . . allegations in the complaint are not controlling [and] [t]he Court must weight the allegations of the complaint and evidence outside the pleadings in order to `satisfy itself as to the existence of its power to hear the case.'" Id. at 36 (quoting Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977) (citation omitted)). Further, "`[t]he existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of the jurisdictional claims.'" Id. (quoting Mortensen, 549 F.2d at 891) (citation omitted).

Defendants base their jurisdictional argument on the ground that plaintiffs must exhaust the grievance procedure contained in Article XII of the CBA before ...


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