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Board of Trustees of Glazing Health and Welfare Fund v. Aleut Facilities Support Services

United States District Court, D. Nevada

April 11, 2017




         Plaintiffs are the boards of trustees of various collectively bargained multi-employer employee benefit plans (the “Trusts”), which are subject to the Employee Retirement Income Security Act (ERISA). ECF No. 1 at 5. The Trusts previously filed a lawsuit in this court against Accuracy Glass & Mirror Company, Inc. under ERISA and the Labor Management Relations Act (LMRA). The Trusts alleged in that case that Accuracy had failed to make contributions to the Trusts as required under a collectively bargained agreement between the International Union of Painters and Allied Trades, District Council 15; Glaziers, Architectural Metal and Glassworkers' Local Union 2001; and the Glazing Contractors' Association of Nevada (of which Accuracy was a member). Id. at 11-12. The Trusts prevailed in that action, with the court entering judgment in their favor on May 27, 2016. Id. at 12.

         The Trusts then brought this action to recover from other parties contributions that Accuracy failed to pay for a different time period than reflected in the prior judgment. For example, defendant Western Surety had issued a bond to Accuracy. Id. at 12-13. The Trusts contend Western must pay on the bond for Accuracy's delinquencies. Id. at 13. The other defendants are either (1) companies who hired Accuracy to perform the work that gave rise to Accuracy's indebtedness or (2) companies who issued bonds to the companies who hired Accuracy. Id. at 13-14. Accuracy is not a defendant in this case. The Trusts assert state law claims against the defendants for payment of labor indebtedness under Nevada Revised Statutes § 608.150 and payment on the bonds under Nevada Revised Statutes § 624.273. Id. at 14-15.

         Defendants City Center Holdings, LLC and Mandarin Oriental Las Vegas, LLC move to dismiss the case for lack of subject matter jurisdiction. These defendants argue that although the complaint mentions ERISA and the LMRA as jurisdictional bases, it does not allege that any defendant has liability under ERISA or a labor contract with the plaintiffs. Rather, these defendants argue, the only claims asserted are state law claims. The defendants contend that subject matter jurisdiction in the complaint is thus predicated solely on supplemental jurisdiction based on the prior lawsuit against Accuracy. But, they contend, without at least one claim over which the court has subject matter jurisdiction in this case (as opposed to the prior action against Accuracy), the court cannot exercise supplemental jurisdiction.

         The Trusts respond by asserting that under § 608.150, the defendants are original promisors on the obligations giving rise to Accuracy's indebtedness. The Trusts also argue that supplemental jurisdiction is appropriate because this case is part of the same case or controversy as the Accuracy litigation. Finally, the Trusts contend that dismissal would not be fair or efficient because the case was filed against more than 50 defendants, only two of whom are moving to dismiss, and has proceeded as if the court had jurisdiction.

         Title 28 U.S.C. § 1331 provides for original jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” There are three potential grounds for federal question jurisdiction: (1) the plaintiff has asserted a federal claim in the complaint, meaning that federal law creates the cause of action; (2) under the artful pleading doctrine, one or more of the plaintiff's state law claims should be recharacterized as a federal claim; or (3) one or more of the plaintiff's state law claims “necessarily turn[s] on the construction of a substantial, disputed federal question.” Rains v. Criterion Sys., Inc., 80 F.3d 339, 343 (9th Cir. 1996).

         In the complaint, the Trusts assert jurisdiction in this court under ERISA and the LMRA, with supplemental jurisdiction over the state law claims under 28 U.S.C. § 1367(a). ECF No. 1 at 4. As the party seeking to invoke federal jurisdiction, the Trusts bear the burden of establishing it exists. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). In their response brief, the Trusts do not explain how jurisdiction is predicated on the LMRA, so they have not met their burden of showing I have jurisdiction on that basis. I address below the parties' arguments regarding § 608.150, ERISA, and supplemental jurisdiction.

         A. Section 608.150

         The Trusts argue that under § 608.150, an original contractor is liable for the indebtedness for labor incurred by its subcontractors.[1] It is unclear what impact the Trusts believe this has on subject matter jurisdiction. If they are asserting that the defendants are liable as ERISA fiduciaries as a result of the operation of § 608.150 so that their claim arises under ERISA, then I disagree. Section 608.150 creates a “state law obligation to answer for [Accuracy's] debts.” Trustees of Constr. Indus. & Laborers Health & Welfare Trust v. Desert Valley Landscape & Maint., Inc., 333 F.3d 923, 925 (9th Cir. 2003) (holding district court properly exercised supplemental jurisdiction over state law claim under § 608.150 where joined with an ERISA claim against the subcontractor that owed the ERISA contributions). The Trusts would have no means to collect from the defendants in this action but for Nevada state law. Accordingly, the Trusts' § 608.150 claim asserts a cause of action that was created by state law.

         The Trusts agree that § 608.150 claims are not preempted by ERISA. See ECF No. 42 at 6-7; see also United Ass'n of Journeymen & Apprentices of Plumbing & Pipefitting Indus. of U.S. & Canada AFL-CIO, Local No. 525 v. Grove Inc., 105 F.Supp.2d 1129, 1130 (D. Nev. 2000) (stating a cause of action under § 608.150 seeks to enforce an “independent obligation created under the statute, ” and thus is not preempted by ERISA). Thus, the Trusts' § 608.150 claim should not be recharacterized as a federal claim.

         Finally, the Trusts do not argue that their § 608.150 claim necessarily turns on the construction of a substantial, disputed federal question. Accordingly, the Trusts have not met their burden of showing that their § 608.150 claim gives rise to federal question subject matter jurisdiction.

         B. Supplemental Jurisdiction

         In their response, the Trusts appear to concede that they assert subject matter jurisdiction on the theory that I should exercise supplemental jurisdiction based on the prior, closed case against Accuracy. However, controlling authority precludes me from doing so.

         “Supplemental jurisdiction must be exercised in the same action that furnishes the basis for exercise of supplemental jurisdiction.” Ortolf v. Silver Bar Mines, Inc., 111 F.3d 85, 86 (9th Cir. 1997), as amended on denial of reh'g (June 10, 1997). As explained in Ortolf, the supplemental jurisdiction statute, 28 U.S.C. § 1367(a), extends a federal court's power to exercise supplemental jurisdiction to “‘all other claims that are so related to claims in the action' when a district court has original jurisdiction ‘in any civil action.'” Id. “The phrases ‘in any civil action' and ‘in the action' require that supplemental jurisdiction be exercised in the same case, not a separate or subsequent case.” Id. at 87; cf. Herklotz v. Parkinson, 848 F.3d 894, 898 (9th Cir. 2017) (holding that a ...

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