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Unite Here Health v. Gilbert

United States District Court, D. Nevada

June 4, 2014

Unite Here Health et al., Plaintiffs
Craig Gilbert et al., Defendants


JENNIFER A. DORSEY, District Judge.

Plaintiffs are Culinary Union-related employee-benefit trusts that bring this ERISA breach-of-fiduciary-duty action against the principals of Nuthin' Fancy, LLC, the bankrupt operator of the short-lived Lynyrd Skynyrd BBQ and Beer restaurant inside the Excalibur Hotel & Casino, for more than half a million dollars in unpaid benefits allegedly due under the terms of the collective bargaining agreement between the union and the hotel.[1] These corporate and individual principal-defendants ask the Court to dismiss this case under Federal Rule of Civil Procedure 12(b)(6), arguing that (1) they are not parties to the agreement and cannot be bound by it-and, in fact, their non-party status would have made their payments under the agreement's terms illegal; (2) the "threadbare" complaint fails to allege sufficient facts to state a breach of fiduciary duty claim under ERISA or an alter-ego theory; and (3) this action is barred by the automatic bankruptcy stay related to Nuthin' Fancy's Chapter 7 bankruptcy proceeding.[2] Having thoroughly considered the pleadings, briefing, and the parties' April 11, 2014, oral arguments, the Court is unpersuaded by the Defendants' arguments and denies both motions to dismiss for the reasons below.


Plaintiff Unite Here Health is a national union organization that affiliates with local unions Culinary Workers Union, Local 226 and Bartenders Union, Local 165 ("the Unions").[3] The Unions represent hospitality-industry employees in the hotels and casinos of Las Vegas, Nevada, and they maintain a pension trust known as Southern Nevada Culinary and Bartenders Pension Trust. Unite Here and the Southern Nevada Pension Trust ("the Trusts") are the plaintiffs in this action.

The Excalibur Hotel & Casino in Las Vegas is owned and operated by New Castle, which executed a collective bargaining agreement ("the CBA") with the Unions. Nuthin' Fancy is not a party to the CBA. Nuthin' Fancy did, however, execute a lease agreement with the Excalibur for the Lynyrd Skynyrd BBQ and Beer restaurant in which Nuthin' Fancy agreed to "comply with, adopt the applicable terms and conditions of, and, if required by the terms thereof, take and accept an assignment of and/or become a signature to" the CBA.[4] The restaurant also agreed that it would "fix the salary rate and provisions of employee benefits" "subject to" the CBA obligations.[5]

Plaintiffs allege that from September 2011 to September 2012, Lynyrd Skynyrd employed workers covered by the CBA and, by operation of the CBA and the lease, Nuthin' Fancy was obligated to (1) submit timely written reports showing employees' identities, hours worked, and compensation, and (2) pay monthly fringe benefits to the Trusts based on the hours worked by or paid to employees under the CBA. According to the pleadings, Nuthin' Fancy submitted no written reports and made no fringe-benefit payments and now owes the Trusts more than $500, 000.[6]

Unite Here Health (through its fiduciary Matthew Walker), and the Pension Trust (through its fiduciary Kim Gould) sue the corporate and individual principals of Nuthin' Fancy, [7] which is currently in Chapter 7 bankruptcy proceedings in the District of Nevada. New Castle, the Excalibur, and Nuthin' Fancy are not parties to this case. Instead, Plaintiffs essentially seek to reach through Nuthin' Fancy's limited-liability-company veil and sue its managers, members, principals, and key employees for breach of fiduciary duty, alleging that they are all "fiduciaries to the Trusts for purposes of ERISA" and breached their fiduciary duties by "failing to make required contributions to the Trusts."[8]


A. Legal Standard

Federal Rule of Civil Procedure 8(a)(2) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." The purpose is to afford defendants fair notice "of what the... claim is and the grounds upon which it rests."[9] Defending a complaint against a Rule 12(b)(6) motion to dismiss therefore "requires more than labels and conclusions"; it calls on plaintiffs to plead factual allegations that are "enough to raise a right to relief above the speculative level."[10] This requires a plaintiff to state claims raising a plausible likelihood that the defendant engaged in misconduct for which the law-and courts-can offer relief.

A plaintiff must state its claim with enough facts, which the court takes as true and construes in the light most favorable to the plaintiff, to be plausible on its face.[11] Pleading facts "merely consistent with a defendant's liability" may suggest possible legal liability.[12] It does not rise to the requisite level of plausibility.[13] Bare and unsubstantiated allegations will not suffice; there must be some substance on which courts might find defendants violating the law and thereby grant a legal or equitable remedy. Further, courts need not accept merely conclusory claims, unwarranted factual deductions, or unreasonable inferences.[14] Complaints are only dismissed under Rule 12(b)(6) if, beyond doubt, "the plaintiff can prove no set of facts in support of the claim that would entitle" him to relief.[15]

The general rule for 12(b)(6) motions is that courts may only consider material in the pleadings.[16] When a complaint specifically identifies documents, the authenticity of which is unquestioned by the parties, the court may consider the full text of those documents without converting the motion to dismiss into a motion for summary judgment.[17] The CBA and lease that plaintiffs attach to their opposition to the corporate defendants' motion to dismiss are specifically referenced in the complaint and are unchallenged by any party.[18] While the Court would reach the same decision based on the allegations in the complaint itself, the Court considers the CBA and lease exhibits. The remaining exhibits are not referenced in the complaint and are not considered here.[19]

B. Breach of Fiduciary Duty

1. Walker and Gould's fiduciary ...

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