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Mendoza v. Amalgamated Transit Union International

United States District Court, D. Nevada

September 5, 2019

JOSE MENDOZA, JR., et al., Plaintiffs,
v.
AMALGAMATED TRANSIT UNION INTERNATIONAL, et al., Defendants.

          ORDER

          JAMES C. MAHAN, UNITED STATES DISTRICT JUDGE

         Presently before the court are three separate motions to dismiss filed by defendants Miller Kaplan Arase, LLP, Anne Salvador, and Alexandra Chernyak (“MKA defendants”) (ECF No. 31); Amalgamated Transit Union International, James Lindsay III, Lawrence J. Hanley, Antonette Bryant, Richie Murphy, Keira McNett, Daniel Smith, and Tyler Home (“ATU defendants”) (ECF No. 33); and Keolis Transit America, Inc. and Kelvin Manzanares (“KTA defendants”) (ECF No. 51). Plaintiffs filed a response to each motion to dismiss (ECF Nos. 43, 44, 56), to which the MKA, ATU, and KTA defendants replied (ECF Nos. 53, 54, 59).

         Also before the court is the ATU defendants' motion for leave to file excess pages. (ECF No. 28).

         Oral argument has been requested, but it is not necessary in order for the court to resolve these motions.

         I. Background

         This action arises from the investigation into, and subsequent imposition of trusteeship over, Amalgamated Transit Union Local 1637 (“Local 1637”). The complaint contains the following allegations:

         Plaintiff Jose Mendoza was the president of Local 1637, which is a local union that is affiliated with Amalgamated Transit Union International (“ATU International”). (ECF No. 8). The remaining plaintiffs in this action consist of Robbie Harris, Robert Naylor, Myeko Easley, Dennis Hennessey, Gary Sanders, Linda Johnson-Sanders, and Ceasar Jimenez. Id. These plaintiffs held various positions on the former Local 1637 executive board. Id.

         Between 2010 and 2016, Mendoza had multiple disputes with ATU International, many of which revolved around the appropriate way to read Local 1637's bylaws. Id. Two primary disagreements between Mendoza and ATU International concerned the appropriate rate of pay for the president of Local 1637 and whether the president could designate the secretary-treasurer position as less than full-time. Id.

         In August 2016, Local 1637 entered into an agreement with Miller Kaplan Arase, LLP (“Miller Kaplan Arase”), a certified public accounting firm, to conduct an audit of Local 1637. Id. The individual auditors, Chernyak and Salvador, engaged in communications with plaintiffs Home and Lindsay (without informing Local 1637) to produce the audit report. Id. The audit report was used by the ATU defendants to support ATU's own audit, discussed below. Id.

         On March 10, 2017, Home, an internal auditor, and Lindsay, international vice president of ATU International, produced an internal audit report of Local 1637. Id. The report found that Mendoza was overpaid and had committed financial malfeasance. Id. On April 10, 2017, Hanley, the international president of ATU International, removed plaintiffs from their positions by imposing a trusteeship over Local 1637. Id. On June 24, 2017, the ATU International general executive board ratified the trusteeship. Id.

         Mendoza had been previously employed as a coach operator before assuming full-time employment as president of Local 1637. Id. After imposition of the trusteeship, Mendoza was directed to present for work as a coach operator with Keolis Transit America, Inc. (“Keolis Transit”), a company with which Local 1637 had previously contracted. Id. At this time, Mendoza did not have an active commercial driver's license (“CDL”), a requirement for this type of work, and was thus unable to commence employment. Id. Five days after the trusteeship was ratified, Keolis Transit terminated Mendoza “for job abandonment.” Id. Mendoza filed a grievance with Local 1637, which was forwarded to Keolis Transit. Id.

         ATU International and Keolis Transit ultimately negotiated a settlement on Mendoza's behalf that allowed for his reinstatement with Keolis Transit provided that he recertify his CDL “within five (5) business days of the ATU's receipt of this notice.” Id. Mendoza did not accept the settlement. Id. At the grievance hearing that followed, defendant Lindsay accepted the settlement on Mendoza's behalf and without Mendoza's consent. Id. Mendoza's termination was finalized after he did not recertify his CDL within the time limit set by the settlement. Id.

         On September 22, 2017, Mendoza initiated the first iteration of this action in state court, which was removed to federal court on September 25, 2017. See Mendoza, Jr. v. Amalgamated Transit Union International, et al., No. 2:17-cv-2485-JCM-CWH, ECF No. 1 (“Mendoza I”). In Mendoza I, Mendoza's complaint set forth ten separate causes of action on behalf of himself as an individual, and on behalf of Local 1637, against the ATU defendants (excluding Murphy): (1) breach of contract regarding defendants' alleged amending of Article 4 of the Local 1637 Constitution and failure to follow procedure in charging Mendoza; (2) breach of contract regarding defendants' alleged fraudulent contravention of the ATU International Constitution and Bylaws in implementing the trusteeship; (3) breach of implied covenant of good faith and fair dealing; (4) fraudulent misrepresentation; (5) negligent misrepresentation; (6) legal malpractice as to defendants Keira McNett and Daniel Smith; (7) breach of fiduciary duty; (8) constructive fraud; (9) malicious prosecution; and (10) civil conspiracy. Id.

         On May 25, 2018, plaintiffs filed the present action. (ECF No. 1). Plaintiffs initially named as defendants ATU International, Lindsay, Hanley, Bryant, Murphy, McNett, Smith, and Home. Id. On July 13, 2018, plaintiffs filed an amended complaint, adding thirteen (13) new causes of action and naming as defendants the MKA and KTA defendants. (ECF No. 8). Plaintiffs' amended complaint asserts twenty-seven (27) causes of action in total. Id. These claims are based on various federal and state statutes, including the Labor Management Relations Act (“LMRA”), the Labor-Management Reporting and Disclosure Act (“LMRDA”), and the Racketeer Influenced and Corrupt Organizations Act (“RICO”), among others. Id.

         Now, the MKA defendants move to dismiss the ninth, tenth, thirteenth, nineteenth, twenty-third, twenty-fourth, and twenty-fifth causes of action pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 31). The ATU defendants move to dismiss all but the twenty-fifth cause of action pursuant to the same. (ECF No. 33). The KTA defendants move to dismiss the sixth, eighth, ninth, and tenth causes of action pursuant to the same. (ECF No. 51).

         II. Legal Standard

         a. Motion to dismiss

         A court may dismiss a plaintiff's complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). A properly pled complaint must provide “[a] short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). While Rule 8 does not require detailed factual allegations, it demands “more than labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted).

         “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 (citation omitted).

         In Iqbal, the Supreme Court clarified the two-step approach district courts are to apply when considering a motion to dismiss. First, the court must accept as true all well-pled factual allegations in the complaint; however, legal conclusions are not entitled to the assumption of truth. Id. at 678-79. Mere recital of the elements of a cause of action, supported only by conclusory statements, does not suffice. Id.

         Second, the court must consider whether the factual allegations in the complaint allege a plausible claim for relief. Id. at 679. A claim is facially plausible when the plaintiff's complaint alleges facts that allow the court to draw a reasonable inference that the defendant is liable for the alleged misconduct. Id. at 678.

         Where the complaint does not permit the court to infer more than the mere possibility of misconduct, the complaint has “alleged - but it has not shown - that the pleader is entitled to relief.” Id. at 679. When the allegations in a complaint have not crossed the line from conceivable to plausible, plaintiff's claim must be dismissed. Twombly, 550 U.S. at 570.

         The Ninth Circuit addressed post-Iqbal pleading standards in Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). The Starr court held,

First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.

Id.

         b. FRCP 9(b) - claims alleging fraud

         Allegations of fraud are subject to a heightened pleading standard. See Fed. R. Civ. P. 9(b) (“[A] party must state with particularity the circumstances constituting fraud . . . .”). Rule 9(b) operates “to give defendants notice of the particular misconduct which is alleged, ” requiring plaintiffs to identify “the circumstances constituting fraud so that the defendant can prepare an adequate answer from the allegations.” Neubronner v. Milken, 6 F.3d 666, 671 (9th Cir. 1993) (citations omitted).

         “The complaint must specify such facts as the times, dates, places, benefits received, and other details of the alleged fraudulent activity.” Id. (citations omitted). Rule 9(b) provides that “[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally.” Id.

         III. Discussion

         Plaintiffs' amended complaint sets forth twenty-seven causes of action: (1) breach of ATU International's constitution and general laws in violation of LMRDA safeguards against improper disciplinary action; (2) violation of LMRDA equal rights (pursuant to LMRDA Title I § 101, 29 U.S.C. § 411 and 412); (3) violation of LMRDA free speech; (4) breach of ATU International's constitution and general laws in violation of LMRDA trusteeship provisions; (5) violation of LMRDA indirect election provisions; (6) breach of duty of fair representation; (7) violation of LMRDA equal rights (pursuant to LMRDA Title I § 101 and 29 U.S.C. § 411(a)(1)); (8) violation of LMRDA prohibition on receiving and accepting something of value from a union employer; (9) wire fraud and mail fraud; (10) federal RICO violation (pursuant to 18 U.S.C. § 1962); (11) LMRA breach of contract; (12) negligence; (13) defamation and defamation per se; (14) fraudulent misrepresentation; (15) legal malpractice; (16) breach of fiduciary duty; (17) constructive fraud; (18) malicious prosecution; (19) civil conspiracy; (20) false pretenses (pursuant to Nevada Revised Statutes § 205.380); (21) perjury; (22) offering false evidence; (23) false pretenses (pursuant to Nevada Revised Statutes § 205.377); (24) state RICO violation (pursuant to Nevada Revised Statutes § 207.470 et seq); (25) accounting malpractice and professional negligence as to the MKA defendants; (26) accounting malpractice and professional negligence as to defendant Tyler Home; and (27) breach of fiduciary duty.[1] (ECF No. 8).

         a. MKA defendants' motion to dismiss

         The MKA defendants argue in their motion to dismiss that plaintiffs' ninth, tenth, thirteenth, nineteenth, twenty-third, twenty-fourth, and twenty-fifth claims should be dismissed for failing to state a claim upon which relief can be granted. (ECF No. 31).

         1. Ninth cause of action as to MKA defendants

         Plaintiffs' ninth cause of action alleges that all defendants conspired to, and in fact did, use wire transmissions and mail services to defraud plaintiffs of their rights guaranteed by the LMRDA. (ECF No. 8). These statutes do not expressly confer a private right of action, and the weight of authority has concluded that no implied private right of action exists. E.g., Wisdom v. First Midwest Bank of Popular Bluff, 167 F.3d 402, 407-08 (8th Cir. 1999) (no implied private right of action under mail fraud or wire fraud statutes); Ryan v. Ohio Edison Co., 611 F.2d 1170, 1178 (6th Cir. 1979) (no implied private right of action under mail fraud statute); Napper v. Anderson, Henley, Shields, Bradford and Pritchard, 500 F.2d 634, 636 (5th Cir. 1974) (no implied private right of action under wire fraud statute), cert. denied, 423 U.S. 837 (1975).

         Accordingly, plaintiffs' ninth claim is dismissed with prejudice.

         2. Tenth cause of action as to MKA defendants

         Plaintiffs' tenth cause of action alleges a RICO violation pursuant to 18 U.S.C. § 1962. (ECF No. 8). Specifically, plaintiffs allege that the criminal offenses pleaded in the eighth and ninth causes of action serve as predicate offenses under the RICO statute. Id. The MKA defendants' motion to dismiss asserts that plaintiffs have not sufficiently established that the MKA defendants participated in the management of a RICO enterprise or engaged in a pattern of ...


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