Ana M. Hanson et al v. Synflex Insulations, Llc et al

NOTICE OF MOTION AND MOTION to Dismiss First Amended Complaint or, in the Alternative, Stay Proceedings

C.D. Cal.October 11, 2016

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DEFENDANT MOJAVE SOLAR, LLC’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS LISA J. DEMSKY (State Bar No. 186006) lisa.demsky@mto.com SAMUEL T. BOYD (State Bar No. 297748) samuel.boyd@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, California 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 JEREMY A. LAWRENCE (State Bar No. 270866) jeremy.lawrence@mto.com MUNGER, TOLLES & OLSON LLP 560 Mission Street, Twenty-Seventh Floor San Francisco, California 94105-2907 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Attorneys for Defendant Mojave Solar, LLC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION ANA M. HANSON, for and on behalf of Southern California Painting & Drywall Industries Health & Welfare Fund, Southern California Painting and Decorating Labor Management Cooperation Committee Trust Fund, and Southern California Painting & Drywall Industries Apprenticeship Trust Fund; and CORINNE KOCH for and on behalf of International Painters and Allied Trades Industry Pension Fund (“IUPAT Industry Pension Fund”), Plaintiffs, v. SYNFLEX INSULATIONS, LLC; MOJAVE SOLAR, LLC.; ABEINSA EPC; RLI INSURANCE COMPANY; and DOES 1-10, Defendants. CASE NO. 2:16-cv-2116-DSF-ASx DEFENDANT MOJAVE SOLAR, LLC’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS [Memorandum of Points and Authorities and Request for Judicial Notice filed concurrently] Judge: Hon. Dale S. Fischer Ctrm.: 840 Date: November 14, 2016 Time: 1:30 p.m. Case 2:16-cv-02116-DSF-AS Document 27 Filed 10/11/16 Page 1 of 3 Page ID #:186 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- DEFENDANT MOJAVE SOLAR, LLC’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS TO ALL INTERESTED PARTIES AND TO THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that on November 14, 2016, at 1:30 p.m., or as soon thereafter as this matter may be heard in Courtroom 840 of the above-entitled court located at 255 East Temple Street, Los Angeles, CA 90012, Defendant Mojave Solar, LLC (“Mojave Solar”) will and hereby does move pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the First Amended Complaint filed by Plaintiffs in this action. In the alternative, Defendant will and hereby does move to stay this action pursuant to Colorado River Water Conservation District v. United States, 424 U.S. 800 (1976). This motion to dismiss is brought on the ground that Mojave Solar does not have any obligation, contractual or otherwise, to contribute to Plaintiffs’ employee benefit funds pursuant to Section 515 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1145, Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185, or any other federal law. In the alternative, this motion to stay is brought on the ground that Plaintiffs are currently pursuing identical relief in California Superior Court. This Motion is based on this Notice of Motion and Motion, the accompanying Memorandum of Points and Authorities, the Request for Judicial Notice, all pleadings and papers of record and on file in this case, and such additional authority and argument as may be presented at or before the time this Motion is submitted. This motion is made following the conference of counsel pursuant to L.R. 7- 3, which took place on October 4, 2016. Case 2:16-cv-02116-DSF-AS Document 27 Filed 10/11/16 Page 2 of 3 Page ID #:187 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- DEFENDANT MOJAVE SOLAR, LLC’S NOTICE OF MOTION AND MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS DATED: October 11, 2016 MUNGER, TOLLES & OLSON LLP LISA J. DEMSKY SAMUEL T. BOYD JEREMY A. LAWRENCE By: /s/ Jeremy A. Lawrence JEREMY A. LAWRENCE Attorneys for Defendant Mojave Solar, LLC Case 2:16-cv-02116-DSF-AS Document 27 Filed 10/11/16 Page 3 of 3 Page ID #:188 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS LISA J. DEMSKY (State Bar No. 186006) lisa.demsky@mto.com SAMUEL T. BOYD (State Bar No. 297748) samuel.boyd@mto.com MUNGER, TOLLES & OLSON LLP 355 South Grand Avenue, Thirty-Fifth Floor Los Angeles, California 90071-1560 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 JEREMY A. LAWRENCE (State Bar No. 270866) jeremy.lawrence@mto.com MUNGER, TOLLES & OLSON LLP 560 Mission Street, Twenty-Seventh Floor San Francisco, California 94105-2907 Telephone: (415) 512-4000 Facsimile: (415) 512-4077 Attorneys for Defendant Mojave Solar, LLC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION ANA M. HANSON, for and on behalf of Southern California Painting & Drywall Industries Health & Welfare Fund, Southern California Painting and Decorating Labor Management Cooperation Committee Trust Fund, and Southern California Painting & Drywall Industries Apprenticeship Trust Fund; and CORINNE KOCH for and on behalf of International Painters and Allied Trades Industry Pension Fund (“IUPAT Industry Pension Fund”), Plaintiffs, v. SYNFLEX INSULATIONS, LLC; MOJAVE SOLAR, LLC.; ABEINSA EPC; RLI INSURANCE COMPANY; and DOES 1-10, Defendants. CASE NO. 2:16-cv-2116-DSF-ASx MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS Judge: Hon. Dale S. Fischer Ctrm.: 840 Date: November 14, 2016 Time: 1:30 p.m. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 1 of 23 Page ID #:189 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF CONTENTS Page -i- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS I. INTRODUCTION ............................................................................................. 1 II. PLAINTIFFS’ ALLEGATIONS ....................................................................... 1 III. LEGAL STANDARD ....................................................................................... 3 IV. ARGUMENT .................................................................................................... 3 A. In the Absence of Contractual Privity, Laborers and Subcontractors Have Limited Remedies Against Project Owners ......... 3 B. Mojave Solar Has No Obligation to Contribute to Plaintiffs’ Funds ....................................................................................................... 4 C. Liability Under ERISA § 515 Is Limited To Contracting Parties .......... 5 D. Liability Under LMRA § 301 Is Limited To Contracting Parties .......... 7 E. Mojave Solar Is Not Liable as Synflex’s Employer or Principal ........... 8 1. Plaintiffs’ Conclusory Agency Allegations Do Not Provide A Basis For Holding Mojave Solar Liable ...................... 9 2. The California Labor Code Does Not Apply to Plaintiffs’ Federal Claims ............................................................................ 10 3. Plaintiffs’ Theory Under Labor Code § 2750.5 Fails for the Additional Reason That § 2750.5 Would Not Create Liability For Mojave Solar ......................................................... 13 F. If The Court Does Not Dismiss The Complaint, It Should Stay The Action While Plaintiffs’ State Case Is Pending ............................. 14 1. Under the Colorado River Abstention Doctrine, Federal Courts May Stay Proceedings to Avoid Duplicative Parallel Litigation in State and Federal Courts ........................... 14 2. Plaintiffs Are Simultaneously Pursuing the Same Relief in State and Federal Court .............................................................. 15 3. The Court Should Stay This Action Until the State Court Action is Resolved ...................................................................... 16 V. CONCLUSION ............................................................................................... 17 Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 2 of 23 Page ID #:190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) -ii- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS FEDERAL CASES Advanced Cleanup Techs., Inc. v. BP Am. Inc., No. CV14-9033-CAS(AJWx), 2016 WL 67671 (C.D. Cal. Jan. 4, 2016) ....................................................................................................................... 9 Allis–Chalmers Corp. v. Lueck, 471 U.S. 202 (1985) ............................................................................................. 10 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................................................... 3 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696 (9th Cir. 1988) .................................................................................. 3 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ............................................................................................... 3 Cariaga v. Local No. 1184 Laborers International Union of North America, 154 F.3d 1072 (9th Cir. 1998) ................................................................................ 7 Carpenters Southern California Administrative Corp. v. Russell, 726 F.2d 1410 (9th Cir. 1984) ................................................................................ 6 Colo. River Water Conservation Dist. v. U.S., 424 U.S. 800 (1976) ....................................................................................... 14, 16 Community for Creative Non–Violence v. Reid, 490 U.S. 730 (1989) ............................................................................................. 11 Conservation Force v. Salazar, 646 F.3d 1240 (9th Cir. 2011) ................................................................................ 3 Cramer v. Consol. Freightways Inc., 255 F.3d 683 (9th Cir. 2001) (en banc) ................................................................ 10 Fireman’s Fund Ins. Co. v. Quackenbush, 87 F.3d 290 (9th Cir. 1996) ............................................................................ 14, 16 Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) ............................................................................................. 11 Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 3 of 23 Page ID #:191 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page(s) -iii- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS Local 159, 342, 343 & 444 v. Nor-Cal Plumbing, Inc., 185 F.3d 978 (9th Cir. 1999) ................................................................................ 12 Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859 (7th Cir. 1998) ................................................................................ 11 N.L.R.B. v. Advanced Stretchforming Int’l, Inc., 233 F.3d 1176 (9th Cir. 2000) ................................................................................ 8 N.L.R.B. v. Friendly Cab Co., 512 F.3d 1090 (9th Cir. 2008) .............................................................................. 12 Nakash v. Marciano, 882 F.2d 1411 (9th Cir. 1989) .............................................................................. 15 Nationwide Mut. Ins. Co. v. Darden, 503 U.S. 318 (1992) ............................................................................................. 11 Navarro v. Block, 250 F.3d 729 (9th Cir. 2001) .................................................................................. 3 Neilson v. Union Bank of California, N.A., 209 F. Supp. 2d 1101 (C.D. Cal. 2003) ................................................................ 10 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) ............................................................................................... 11 Sec. Life Ins. Co. of Am. v. Meyling, 146 F.3d 1184 (9th Cir. 1998) .............................................................................. 11 Seymour v. Hull & Moreland Eng’g, 605 F.2d 1105 (9th Cir. 1979) .............................................................................. 11 Sheet Metal Workers International Association, Local No. 359, AFL- CIO v. Arizona Mechanical & Stainless, Inc., 863 F.2d 647 (9th Cir. 1988) .................................................................................. 8 In re Toyota Motor Corp., 785 F. Supp. 2d 883 (C.D. Cal. 2011) .................................................................... 9 Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 4 of 23 Page ID #:192 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page(s) -iv- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS Trustees of Screen Actors Guild-Producers Pension & Health Plans v. NYCA, Inc., 572 F.3d 771 (9th Cir. 2009) .............................................................................. 5, 6 UA Local 343 United Association of Journeymen & Apprentices of Plumbing & Pipefitting Industries of U.S. & Canada, AFL-CIO v. Nor-Cal Plumbing, Inc., 48 F.3d 1465 (9th Cir. 1994) .............................................................................. 7, 8 United States v. Bonds, 608 F.3d 495 (9th Cir. 2010) ................................................................................ 12 Writers Guild of Am. v. BTG Prods., LLC, No. CV 14-05828 RSWL (AJWx), 2016 WL 552649 (C.D. Cal. Feb. 9, 2016) ........................................................................................................... 9 STATE CASES Golden Gate Bldg. Materials Co. v. Fireman, 205 Cal. 174 (1928) ................................................................................................ 4 Heiman v. Workers’ Compensation Appeals Board, 149 Cal. App. 4th 724 (2007) ......................................................................... 13, 14 Neighbours v. Buzz Oates Enters., 217 Cal. App. 3d 325 (1990) ................................................................................ 13 R. D. Reeder Lathing Co. v. Allen, 66 Cal. 2d 373 (1967) ............................................................................................. 4 Sanders Constr. Co., Inc. v. Cerda, 175 Cal. App. 4th 430 (2009) ............................................................................... 13 State Compensation Ins. Fund v. Workers’ Comp. Appeals Bd., 40 Cal. 3d 5 (1985) ............................................................................................... 12 FEDERAL STATUTES 29 U.S.C. § 185 ............................................................................................... 2, passim Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 5 of 23 Page ID #:193 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES (continued) Page(s) -v- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS 29 U.S.C. § 1132(g)(1) ................................................................................................ 6 29 U.S.C. § 1145 ............................................................................................. 2, passim FEDERAL RULES Rule 8 ........................................................................................................................... 9 Rule 12(b)(6) ................................................................................................................ 3 STATE STATUTES Cal. Labor Code § 2750.5 ............................................................................... 8, passim TREATISES AND OTHER AUTHORITIES 9 Miller & Starr, California Real Estate § 32:5 (4th ed. 2016 Supp.) ........................ 4 9 Miller & Starr, supra, California Real Estate § 32:68 ........................................... 16 Marc M. Schneier, Professional Property Manager of Condominium Association, that Hired an Unlicensed and Uninsured Contractor, Was a Co-Employer of the Contractor’s Injured Employee for Purposes of Workers’ Compensation Liability, 28 NO. 6 Construction Litigation Reporter 15 (June 2007) ................................................ 12 Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 6 of 23 Page ID #:194 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -1- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS I. INTRODUCTION Plaintiffs Ana M. Hanson and Corinne Koch (“Plaintiffs”) are representatives of four multiemployer trust funds (the “Funds”)1 seeking to recover contributions that their beneficiaries’ employer allegedly owes to the Funds. In doing so, they reach too far. Defendant Mojave Solar, LLC (“Mojave Solar”) – which is not the beneficiaries’ employer – is not, and is not alleged to be, legally responsible for any of the contributions that are the subject of this lawsuit. Plaintiffs’ claims are based solely on the alleged failure of a different defendant to perform its obligations under a contract to which Mojave Solar is not even a party. Plaintiffs therefore cannot state a viable claim against Mojave Solar, and the Court should grant Mojave Solar’s Motion to Dismiss with prejudice and without leave to amend. Alternatively, if the Court does not dismiss Plaintiffs’ claims against Mojave Solar, the Court should stay this action. Prior to filing their complaint in this case, Plaintiffs filed a complaint in state Superior Court seeking to recover the same allegedly unpaid contributions. That case is currently scheduled for trial on January 9, 2017. At a minimum, the Court should stay this action until the state case is resolved, to avoid duplicative parallel litigation involving the same issues. II. PLAINTIFFS’ ALLEGATIONS Plaintiffs filed this lawsuit against four defendants: Synflex Insulations, LLC (“Synflex”), Abeinsa EPC, Mojave Solar, and RLI Insurance Company.2 Plaintiffs allege that Synflex “was engaged in the business of building insulation” and 1 Hanson represents the Southern California Painting & Drywall Industries Health & Welfare Fund, the Southern California Painting and Decorating Labor Management Cooperation Committee Trust Fund, and the Southern California Painting & Drywall Industries Apprenticeship Trust Fund. Koch represents the International Painters and Allied Trades Industry Pension Fund. 2 The Court dismissed Synflex from this action because of Plaintiffs’ failure to timely serve Synflex with the Complaint. ECF No. 19. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 7 of 23 Page ID #:195 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS “performed work on the Abengoa Mojave Solar Project,” which is a solar power plant in the Mojave Desert. First Amended Complaint (“FAC”), ECF No. 23, ¶¶ 7, 16. They allege that Abeinsa EPC is the “general contractor” on the project. Id. ¶ 9. They also allege that Mojave Solar is the “developer and owner” of the project, and that RLI Insurance Company issued a bond “in reference to” Mojave Solar. Id. ¶¶ 8, 12. Plaintiffs’ claims are all based on Synflex’s alleged failure to perform its contractual obligations. They allege that Synflex signed a “participation agreement” with a local union, the Painters and Allied Trades, District Council 36, relating to the work that Synflex performed on the project. Id. ¶ 14. This participation agreement “bound Synflex to” certain trust agreements identified in the participation agreement, and Plaintiffs allege that those agreements in turn “required Synflex to make contributions to … various trust funds” that include Plaintiffs’ Funds. Id. ¶ 14; see also id. ¶ 15 & Ex. A. Plaintiffs allege that Synflex “was required to make [$166,049.23 in] trust fund contributions” for work performed by Plaintiffs’ beneficiaries on the Mojave Solar project from March 2014 to November 2014, but Synflex failed to do so. Id. ¶¶ 16, 20. Plaintiffs now seek these unpaid contributions as well as liquidated damages, audit fees, attorneys’ fees, and interest under Section 515 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §1145, and Section 301 of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 185. Id. ¶¶ 22-26. Plaintiffs assert these claims not only against Synflex, but also against all of the other defendants – Abeinsa EPC, Mojave Solar, and RLI Insurance Company. Plaintiffs do not, however, identify any basis for holding Mojave Solar liable for the contributions owed by Synflex. Plaintiffs do not allege that Mojave Solar reneged on any of its obligations, or that Mojave Solar failed to pay its general contractor (nor could Plaintiffs allege this, as Mojave Solar paid the full amount owed to the general contractor). Instead, Plaintiffs are attempting to hold Mojave Solar liable Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 8 of 23 Page ID #:196 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -3- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS for Synflex’s debts solely because Mojave Solar owns the facility where Synflex performed its work. III. LEGAL STANDARD A Rule 12(b)(6) motion “tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). A complaint “must contain sufficient factual matter … to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Although for the purposes of a motion to dismiss [the Court] must take all of the factual allegations in the complaint as true,” the Court is “‘not bound to accept as true a legal conclusion couched as a factual allegation.’” Id. at 678-79 (quoting Twombly, 550 U.S. at 555). A complaint is insufficient if it contains mere “labels and conclusions” or a “formulaic recitation of the elements of a cause of action.” Id. at 678 (internal quotation marks omitted). A complaint may be dismissed either because it lacks a cognizable legal theory or because it does not allege sufficient facts to support a cognizable legal theory. Conservation Force v. Salazar, 646 F.3d 1240, 1242 (9th Cir. 2011) (quoting Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988)). IV. ARGUMENT A. In the Absence of Contractual Privity, Laborers and Subcontractors Have Limited Remedies Against Project Owners Plaintiffs’ claim against Mojave Solar is an effort to side-step the remedies available to subcontractors against construction project owners like Mojave Solar: stop payment notices and mechanics liens. Because there is no contract between Plaintiffs and Mojave Solar, these are the only remedies potentially available to Plaintiffs. As explained in a leading treatise: [T]he owner does not become personally obligated to pay for the cost of the labor and/or materials furnished in absence of privity of contract with the owner or the owner’s voluntary assumption of liability …. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 9 of 23 Page ID #:197 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS The unpaid claimant’s only recourse is to pursue its mechanics lien remedy, or other construction remedies, such as the stop payment notice. 9 Miller & Starr, California Real Estate § 32:5 (4th ed. 2016 Supp.); see also R. D. Reeder Lathing Co. v. Allen, 66 Cal. 2d 373, 376 (1967) (“In the absence of a contract between a lien claimant and the property owner, the right to enforce a mechanic’s lien against real property does not give rise to personal liability of the owner.” (citing Golden Gate Bldg. Materials Co. v. Fireman, 205 Cal. 174, 177-78 (1928))).3 Disregarding these well-established principles, Plaintiffs purport to identify two legal bases for their claims: Section 515 of ERISA, 29 U.S.C. §1145, and Section 301 of the LMRA, 29 U.S.C. § 185. FAC ¶ 26. Neither of these statutes permits Plaintiffs to recover anything from Mojave Solar because the operative contractual documents do not bind Mojave Solar in any way. B. Mojave Solar Has No Obligation to Contribute to Plaintiffs’ Funds Plaintiffs do not, and cannot, allege that Mojave Solar has any contractual obligation to contribute to Plaintiffs’ Funds – or even, for that matter, that they or their beneficiaries had any relationship whatsoever with Mojave Solar. They allege only that “Synflex Insulations signed a participation agreement” relating to “work to be performed on the Abengoa Mojave Solar Project.” FAC ¶ 14 (emphasis added). They further allege that “[t]he participation agreement bound Synflex” to trust fund agreements that “required Synflex to make contributions” to the Funds. Id. (emphasis added). Moreover, the “participation agreement” attached to the 3 In fact, as discussed further below, Plaintiffs are already pursuing a claim against Mojave Solar in Los Angeles Superior Court to enforce a stop payment notice. Plaintiffs’ two lawsuits seek the same exact relief. The instant action is nothing more than an unauthorized additional hammer Plaintiffs seek to wield over Mojave Solar, a party who is not alleged to have failed to pay anyone to whom it had an obligation, and who is not alleged to have otherwise shirked any contractual obligations. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 10 of 23 Page ID #:198 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -5- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS complaint shows a signature only for Synflex, not Mojave Solar, and the agreements attached to the complaint do not purport to bind Mojave Solar. FAC Exs. A, D. Plaintiffs simply do not allege that Mojave Solar is obligated to make any contributions to the Funds. Accordingly, Plaintiff’s ERISA and LMRA claims fail as a matter of law. C. Liability Under ERISA § 515 Is Limited To Contracting Parties Under ERISA § 515, an employer is required to make contributions to an employee benefit plan only to the extent that the employer is obligated to do so “under the terms of the plan….” 29 U.S.C. § 1145 (emphasis added).4 Plaintiffs have not alleged, nor can they, that Mojave Solar is a party to the employee benefit plans they seek to enforce. Hence, they cannot recover under § 515. In Trustees of Screen Actors Guild-Producers Pension & Health Plans v. NYCA, Inc., 572 F.3d 771 (9th Cir. 2009), the Ninth Circuit examined and rejected the precise legal theory that Plaintiffs’ complaint advances, holding that § 515 does not “allow[] employee benefit plans to recover unpaid contributions from an employer who is not a party to the applicable collective bargaining agreement.” Id. at 773, 776. There, the plaintiff was an actors’ union. Id. at 773. The union’s collective bargaining agreement with various advertising agencies required the agencies to contribute to the union’s health and pension plans. Id. The union sued an advertiser, defendant TaylorMade-Adidas Golf Company (“TaylorMade”), for its alleged failure to make contributions under the collective bargaining agreement even though TaylorMade was not a party to that agreement. Id. at 773-74. The court held that ERISA § 515 “imposes no independent obligation upon employers; it 4 In full, the statute provides: “Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.” 29 U.S.C. § 1145. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 11 of 23 Page ID #:199 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -6- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS merely provides a federal cause of action to enforce pre-existing obligations created by collective bargaining agreements.” Id. at 776. “Because TaylorMade has not signed the [collective bargaining agreement with the union], it follows that it has not incurred any such pre-existing obligations” that are enforceable under § 515. Id. Accordingly, the court affirmed the District Court’s dismissal of the plaintiff’s complaint against TaylorMade. Id. at 777. Similarly, in Carpenters Southern California Administrative Corp. v. Russell, 726 F.2d 1410 (9th Cir. 1984), the administrator for a construction worker employee benefits plan sued an individual for his alleged failure to make contributions to the plan on behalf of laborers who worked for his current business, Russell Construction. Id. at 1411-12. The defendant had previously operated a business called Larry Russell Construction, and had entered an agreement to make contributions on behalf of that company’s employees to the plaintiff’s fund. Id. at 1412. The court affirmed the District Court’s ruling on summary judgment that the defendant’s new company was not bound by the defendant’s agreement to contribute funds on behalf of his prior company. Id. at 1414. The court explained that “[f]or [the defendant] to be obligated to make benefit contributions for the employees of his present business, Russell Construction, there must exist a binding labor agreement between the Union and [the defendant] that extends to the business being conducted under the name of Russell Construction.” Id. at 1413. Because no such agreement existed, and because Russell Construction was not the alter ego or successor to Larry Russell Construction, the defendant was not obligated to make any contributions to Russell Construction’s employees. Id. at 1414. (The court also held that “[d]efendant employers may be awarded attorney’s fees under” ERISA’s fee-shifting provision, 29 U.S.C. § 1132(g)(1). Id. at 1416.) Here, Plaintiffs admit that Synflex, not Mojave Solar, entered an agreement requiring it to make contributions to Plaintiffs’ Funds. FAC ¶ 14. Plaintiffs have not alleged, and cannot allege, that Mojave Solar entered into any benefit plans with Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 12 of 23 Page ID #:200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS (or for the benefit of) Plaintiffs and their beneficiaries. Accordingly, Plaintiffs’ ERISA claim fails as a matter of law. D. Liability Under LMRA § 301 Is Limited To Contracting Parties Plaintiff’s claim under LMRA § 301 fails for the same reason as their claim under ERISA § 515. LMRA § 301 provides federal jurisdiction for “[s]uits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce ….” 29 U.S.C. § 185(a) (emphasis added). Mojave Solar is not a party to any contract with Plaintiffs and therefore LMRA § 301 does not apply to Plaintiffs’ claims. In Cariaga v. Local No. 1184 Laborers International Union of North America, 154 F.3d 1072 (9th Cir. 1998), a group of labor organizations sued a subcontractor under LMRA § 301 to recover “delinquent contributions to the union trust funds.” Id. at 1075. The subcontractor, however, was not a party to the collective bargaining agreement between the unions and the project’s general contractor. Id. at 1073. The court held that the subcontractor was not liable for the unpaid contributions. “Because [the subcontractor] is not a signatory to the [collective bargaining agreement], it is not an ‘employer’ for purposes of … LMRA § 301.” Id. at 1075. Numerous other cases support the common-sense conclusion that plaintiffs cannot pursue claims under LMRA § 301 against defendants who are not parties to the labor agreement that the plaintiffs are seeking to enforce. In UA Local 343 United Association of Journeymen & Apprentices of Plumbing & Pipefitting Industries of U.S. & Canada, AFL-CIO v. Nor-Cal Plumbing, Inc., 48 F.3d 1465 (9th Cir. 1994), the court explained that where a contractor “owns both union and non-union companies … the collective bargaining agreement of the union firm does not ordinarily apply to the non-union firm.” Id. at 1469 (emphasis added). The court explained that the only exception to this general rule is if “the two firms are a single employer” based on “the degree of common ownership, management, Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 13 of 23 Page ID #:201 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -8- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS operations, and labor relations” between the two companies (under either an “alter ego” or “single employer” theory). Id. at 1470. Similarly, Sheet Metal Workers International Association, Local No. 359, AFL-CIO v. Arizona Mechanical & Stainless, Inc., 863 F.2d 647 (9th Cir. 1988), explained that “a ‘successor’ employer … is not bound by the substantive terms of its predecessor’s [collective bargaining agreement] unless it assumes or adopts those obligations,” or is otherwise liable for the predecessor’s conduct under the alter ego and single employer doctrines. Id. at 651; see also N.L.R.B. v. Advanced Stretchforming Int’l, Inc., 233 F.3d 1176, 1180 (9th Cir. 2000) (“Ordinarily, … a successor is not bound by its predecessor’s collective bargaining agreement....”). These cases confirm that a non-signatory to a labor agreement cannot be held liable for obligations allegedly owed under that agreement, except in unusual circumstances that are not alleged here. As with Plaintiffs’ ERISA claim, their LMRA claim fails as a matter of law because they have not alleged that Mojave Solar had any obligation to contribute to Plaintiffs’ Funds. Synflex, not Mojave Solar, is the party that is contractually required to make those contributions. FAC ¶ 14. E. Mojave Solar Is Not Liable as Synflex’s Employer or Principal Plaintiffs apparently seek to impose liability on Mojave Solar based on their allegation that Mojave Solar was Synflex’s employer and/or principal. These arguments improperly attempt to saddle Mojave Solar with liability solely because a subcontractor – which was hired by the general contractor Abeinsa EPC, not the project owner Mojave Solar – failed to live up to its promises. Plaintiffs make a conclusory assertion, devoid of any supporting factual allegations, that Synflex is Mojave Solar’s agent. FAC ¶ 13. This type of bare assertion is not sufficient to state a claim under the Federal Rules. Plaintiffs also argue that, under the California Labor Code, Mojave Solar is liable as Synflex’s employer because Synflex was unlicensed and thus cannot be considered an independent contractor. FAC ¶ 17. But the California Labor Code does not apply to Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 14 of 23 Page ID #:202 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS Plaintiffs’ federal causes of action and, even if it did, it would allow Plaintiffs to recover only against Abeinsa EPC, the party that hired Synflex, not Mojave Solar, which had no contract with Synflex. 1. Plaintiffs’ Conclusory Agency Allegations Do Not Provide A Basis For Holding Mojave Solar Liable Plaintiffs apparently seek to impose liability on Mojave Solar on the basis of their boilerplate allegation that “each of the defendants was the agent and/or employee of the remaining defendants ….” FAC ¶ 13.5 Plaintiffs fail to allege any plausible factual basis for this bare conclusion. Courts routinely hold that such conclusory allegations of agency fail to satisfy the pleading standard of Rule 8. See, e.g., Advanced Cleanup Techs., Inc. v. BP Am. Inc., No. CV14-9033-CAS(AJWx), 2016 WL 67671, at *6 (C.D. Cal. Jan. 4, 2016) (dismissing breach of contract claim based on conduct by the defendant’s alleged agent because “the FAC contains little more than conclusory allegations that [the third party] was [the defendant’s] agent….. While, a court must accept all factual allegations in a complaint as true, mere legal conclusions, such as these, are not entitled to the presumption of truth.” (citations omitted)) (Snyder, J.); In re Toyota Motor Corp., 785 F. Supp. 2d 883, 911 (C.D. Cal. 2011) (striking allegations of agency because “Plaintiffs may not rest on legal conclusions regarding agency that are cast as factual allegations[,]” and “boilerplate cross-authority/cross-agency/ratification allegations run afoul of Twombly and Iqbal”) (Selna, J.); see also Writers Guild of Am. v. BTG Prods., LLC, No. CV 14-05828 RSWL (AJWx), 2016 WL 552649, at *5 (C.D. Cal. Feb. 9, 2016) (“Conclusory allegations of ‘alter ego’ status are insufficient to state a claim. A 5 In full, this paragraph alleges: “Plaintiffs are informed and believe, and thereon allege, that at all material times each of the defendants was the agent and/or employee of the remaining defendants and each was acting within the course and scope of such agency and/or employment. To the extent that the conduct and omissions alleged herein was perpetrated by one or more defendants, the remaining defendants confirmed and ratified such conduct and omissions.” FAC ¶ 13. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 15 of 23 Page ID #:203 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -10- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS plaintiff must allege specifically both of the elements of alter ego liability, as well as facts supporting each.” (quoting Neilson v. Union Bank of California, N.A., 209 F. Supp. 2d 1101, 1116 (C.D. Cal. 2003)) (Lew, J.). The same conclusion applies here: Plaintiffs’ bare assertion of agency fails as a matter of law. 2. The California Labor Code Does Not Apply to Plaintiffs’ Federal Claims Plaintiffs also argue that Mojave Solar should be deemed to be Synflex’s employer under California Labor Code § 2750.5 because Synflex allegedly was not licensed to perform the work it performed. FAC ¶ 17. Because Synflex allegedly was not licensed, Plaintiffs contend that it cannot be deemed an independent contractor. See Cal. Labor Code § 2750.5 (“any person performing any function or activity for which a license is required pursuant to Chapter 9 (commencing with Section 7000) of Division 3 of the Business and Professions Code shall hold a valid contractors’ license as a condition of having independent contractor status.”). Plaintiffs accordingly contend that Mojave Solar is Synflex’s employer and that Mojave Solar is responsible for Synflex’s contractual liabilities under a respondeat superior theory. FAC ¶ 17. Plaintiffs improperly attempt to use state law to blur the distinctions between a project owner and a subcontractor. Plaintiffs’ claims are based on federal statutes that must be interpreted and applied in accordance with federal law. LMRA § 301 “authorize[s] the federal courts to develop a federal common law of [collective bargaining agreement] interpretation.” Cramer v. Consol. Freightways Inc., 255 F.3d 683, 689 (9th Cir. 2001) (en banc). This federal common law applies to any claims that are “‘substantially dependent upon analysis of the terms of an agreement made between the parties in a labor contract,’” and “preempts the use of state contract law in [collective bargaining agreement] interpretation and enforcement.” Id. (quoting Allis–Chalmers Corp. v. Lueck, 471 U.S. 202, 220 (1985)). Likewise, “courts are to develop a ‘federal common law of rights and obligations under Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 16 of 23 Page ID #:204 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -11- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS ERISA-regulated plans.’” Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101, 110 (1989) (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 56 (1987)). The purpose of applying federal, rather than state, law in this context is to ensure national uniformity and avoid a patchwork of state-specific rules: It is clear from the case law that the paramount policy served by the remedy provided under 301(a) is consistency in the enforcement of labor contracts. The overriding federal policy of industrial peace and productivity is best effectuated if collective bargaining agreements are interpreted and enforced in a uniform manner. The Supreme Court has consistently emphasized the need for a unified national law of labor contracts. Seymour v. Hull & Moreland Eng’g, 605 F.2d 1105, 1109-10 (9th Cir. 1979); see also Sec. Life Ins. Co. of Am. v. Meyling, 146 F.3d 1184, 1191 (9th Cir. 1998) (federal common law under ERISA is intended to implement “policy of national uniformity”). This federal common law provides a uniform body of law for resolving employer/employee, principal/agent, and other vicarious liability issues under the LMRA and ERISA. See, e.g., Moriarty v. Glueckert Funeral Home, Ltd., 155 F.3d 859, 865 n. 15 (7th Cir. 1998) (“Because this case arises under ERISA and the LMRA, we look to the federal common law of agency to supply the governing principles of law.”). For example, in Nationwide Mutual Insurance Co. v. Darden, 503 U.S. 318, 323 (1992), the Supreme Court “adopt[ed] a common-law test for determining who qualifies as an ‘employee’ under ERISA ….” That test focuses above all on “‘the hiring party’s right to control the manner and means by which the product is accomplished.’” Id. (quoting Community for Creative Non–Violence v. Reid, 490 U.S. 730, 751-52 (1989)). And in Seymour, the Ninth Circuit identified a “generalized federal substantive law on disregard of corporate entity” for purposes of imposing vicarious liability under LMRA § 301. Seymour, 605 F.2d at 1111; Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 17 of 23 Page ID #:205 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -12- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS accord Local 159, 342, 343 & 444 v. Nor-Cal Plumbing, Inc., 185 F.3d 978, 985 (9th Cir. 1999) (“We have previously considered requests to pierce the corporate veil in the context of LMRA suits to recover unpaid contributions and have developed a substantial body of federal common law regarding veil-piercing in this context.”). The federal common law governing the LMRA and ERISA does not incorporate the unusual statutory rule stated in California Labor Code § 2750.5. Labor Code § 2750.5 is “sui generis….” Marc M. Schneier, Professional Property Manager of Condominium Association, that Hired an Unlicensed and Uninsured Contractor, Was a Co-Employer of the Contractor’s Injured Employee for Purposes of Workers’ Compensation Liability, 28 NO. 6 Construction Litigation Reporter 15 (June 2007). The statute modifies general principles of agency and employment law. See State Compensation Ins. Fund v. Workers’ Comp. Appeals Bd., 40 Cal. 3d 5, 15 (1985) (“by stating that a license is a condition of the status, the Legislature has unequivocally stated that the person lacking the requisite license may not be an independent contractor” (emphasis added)). In contrast to the bright-line rule stated in § 2750.5, to determine whether a person or entity is an employee or independent contractor under federal law, the “‘essential ingredient ... is the extent of control exercised by the employer.’” United States v. Bonds, 608 F.3d 495, 505 (9th Cir. 2010) (quoting N.L.R.B. v. Friendly Cab Co., 512 F.3d 1090, 1096 (9th Cir. 2008)). Labor Code § 2750.5’s mandatory statutory rule is inconsistent with the fact-specific analysis required under federal law. Accordingly, Plaintiffs cannot rely on Labor Code § 2750.5 to show that Mojave Solar is liable for Synflex’s debts under ERISA or the LMRA, and their attempt to manufacture liability for Mojave Solar under this theory fails. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 18 of 23 Page ID #:206 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -13- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS 3. Plaintiffs’ Theory Under Labor Code § 2750.5 Fails for the Additional Reason That § 2750.5 Would Not Create Liability For Mojave Solar In addition to being inapplicable to Plaintiffs’ federal claims, Labor Code § 2750.5 simply does not lead to the result that Plaintiffs seek. Labor Code § 2750.5 addresses the relationship between the unlicensed contractor, its employees, and the party that hired the unlicensed contractor.6 But in this case, Plaintiffs do not (and cannot) allege that Mojave Solar hired Synflex, because Synflex was hired by the general contractor, Abeinsa EPC, not the project owner, Mojave Solar. While Labor Code § 2750.5 might provide that Synflex is the employee and not an independent contractor of Abeinsa EPC, the statute does not change the independent contractor relationship between Abeinsa EPC and Mojave Solar, and therefore does impute Synflex’s liability to Mojave Solar. In Heiman v. Workers’ Compensation Appeals Board, 149 Cal. App. 4th 724 (2007), the court considered whether a homeowners’ association and its management company were liable for workers’ compensation payments owed to an injured laborer who worked for an unlicensed subcontractor. Id. at 729. The court explained that the management company, which directly contracted with the unlicensed subcontractor, was liable as the subcontractor’s employer under Labor Code § 2750.5. Id. at 737-38. The court did not, however, impose liability on the homeowners’ association under Labor Code § 2750.5. Instead, the court imposed liability on the homeowners’ association under general agency principles because the management company was acting as the homeowners’ association’s agent. Id. at 6 See Sanders Constr. Co., Inc. v. Cerda, 175 Cal. App. 4th 430, 434-35 (2009) (the statute “operates to conclusively determine that a general contractor is the employer of not only its unlicensed subcontractors but also those employed by the unlicensed subcontractors”); Neighbours v. Buzz Oates Enters., 217 Cal. App. 3d 325, 330 (1990) (“Under the plain meaning of section 2750.5, any unlicensed subcontractor is the employee of the general contractor; consequently, as a matter of law, the employee of an unlicensed subcontractor is the employee of the principal contractor.”). Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 19 of 23 Page ID #:207 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -14- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS 741-42. Unlike Plaintiffs here, the plaintiff in Heiman provided ample evidence establishing an agency relationship: the homeowners’ association had entered a written agreement allowing the management company to act on the association’s behalf and manage the property. Id. at 738-39. As discussed above, in contrast to the plaintiff in Heiman, Plaintiffs fail to provide any plausible allegation establishing an agency relationship between the property owner Mojave Solar and the subcontractor Synflex. Heiman confirms that in order to impute liability to parties other than the party that hired the unlicensed contractor, the court must look to general agency principles rather than Labor Code § 2750.5’s automatic rule. Accordingly, because Plaintiffs do not allege that Mojave Solar hired the unlicensed subcontractor, Labor Code § 2750.5 does not apply here. F. If The Court Does Not Dismiss The Complaint, It Should Stay The Action While Plaintiffs’ State Case Is Pending Finally, if Plaintiffs’ complaint against Mojave Solar is not dismissed, it should be stayed during the pendency of Plaintiffs’ earlier-filed lawsuit in state Superior Court. 1. Under the Colorado River Abstention Doctrine, Federal Courts May Stay Proceedings to Avoid Duplicative Parallel Litigation in State and Federal Courts Federal courts may stay a case involving a question of federal law where a pending state action raises identical issues. Colo. River Water Conservation Dist. v. U.S., 424 U.S. 800, 817-18 (1976). The Colorado River abstention doctrine is premised on “considerations of ‘wise judicial administration, the conservation of judicial resources and comprehensive disposition of litigation ….’” Fireman’s Fund Ins. Co. v. Quackenbush, 87 F.3d 290, 297 (9th Cir. 1996) (quoting Colo. River, 424 U.S. at 817 (alterations omitted)). To determine whether a stay is appropriate, the Supreme Court has listed six factors that should be analyzed “in a pragmatic and flexible way, as part of a Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 20 of 23 Page ID #:208 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -15- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS balancing process rather than as a mechanical checklist.” Nakash v. Marciano, 882 F.2d 1411, 1415 (9th Cir. 1989). The six factors are: (1) whether either court has assumed jurisdiction over a res; (2) the relative convenience of the forums; (3) the desirability of avoiding piecemeal litigation; … (4) the order in which the forums obtained jurisdiction[;] … (5) whether state or federal law controls[;] and (6) whether the state proceeding is adequate to protect the parties’ rights. Id. (internal quotation marks and citation omitted). 2. Plaintiffs Are Simultaneously Pursuing the Same Relief in State and Federal Court On September 30, 2015, Plaintiffs filed a complaint in Los Angeles Superior Court against Synflex, Abeinsa EPC, Mojave Solar, and Surety One, Inc. Request for Judicial Notice (“RJN”) (filed concurrently) Ex. A. Plaintiffs later dismissed Surety One, Inc. and added RLI Insurance Company as a defendant. Id.; RJN Ex. B. Plaintiffs are seeking to recover the same $204,049.29 in allegedly unpaid contributions that are at issue in the FAC in this action. See RJN Ex. B at ¶¶ 19, 22. Their state court complaint asserts causes of action for Breach of Contract, Enforcement of Stop Notice, and Recovery on Payment Bond. Id. at ¶¶ 17-27. As they do in their FAC in this case, Plaintiffs assert in state court that they are entitled to receive these contributions because of work their beneficiaries performed at the Mojave Solar facility. Id. at ¶ 15. Their Breach of Contract claim asserts that Synflex breached the participation agreement – the same participation agreement that forms the basis of Plaintiffs’ LMRA and ERISA causes of action. Id. at ¶¶ 17-20. Their Enforcement of Stop Notice claim asserts that they served a stop payment notice to Mojave Solar requesting payment of $204,049.29 for trust Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 21 of 23 Page ID #:209 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -16- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS fund contributions, interest, liquidated damages, and an audit fee. Id. at ¶¶ 21-23.7 Their Recovery on Payment Bond claim asserts that RLI Insurance Company issued a surety bond to release the Plaintiffs’ stop notice. Id. at ¶¶ 25-26, Prayer for Relief ¶ D. 3. The Court Should Stay This Action Until the State Court Action is Resolved Colorado River abstention applies here. The Superior Court took jurisdiction over the parties’ dispute months before Plaintiffs filed their federal complaint. The Superior Court action involves the same alleged unpaid contributions that are at issue in this case. Trial in the Superior Court action is currently scheduled to begin on January 9, 2017. RJN Ex. A. If Plaintiffs succeed in their Superior Court action, they will have no further claims to pursue in this Court. Alternatively, if Plaintiffs are unsuccessful in Superior Court, their federal claims in this case may be extinguished under the doctrines of res judicata or collateral estoppel. The central premises of the Colorado River doctrine – “‘wise judicial administration, the conservation of judicial resources and comprehensive disposition of litigation ….’” Fireman’s Fund, 87 F.3d at 297 (quoting Colo. River, 424 U.S. at 817 (alterations omitted)) – warrant staying this action until the Superior Court action is resolved. A short stay will avoid burdening the Court and the parties with duplicative and potentially unnecessary litigation. 7 “A stop payment notice (formerly referred to as a ‘stop notice’ or a notice to withhold) is a written demand by a claimant on the owner, construction lender, builder’s control, or other custodian of the construction funds to withhold the sums claimed by the claimant from the sums due the direct contractor or owner. When the stop payment notice is served, it constitutes an equitable garnishment or equitable assignment of the construction loan funds which gives the claimant a lien on the funds being held for the payment of the construction costs.” 9 Miller & Starr, supra, California Real Estate § 32:68. Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 22 of 23 Page ID #:210 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -17- MEM. OF POINTS AND AUTHORITIES IN SUPPORT OF DEF. MOJAVE SOLAR, LLC’S MOTION TO DISMISS FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, STAY PROCEEDINGS V. CONCLUSION In light of the well-established case law in the Ninth Circuit, Plaintiffs have not stated a viable claim for relief against Mojave Solar. Their allegations confirm that Synflex, not Mojave Solar, is the party responsible for making the contractual payments that Plaintiffs are seeking. The Court should grant this Motion to Dismiss with prejudice and without leave to amend. Alternatively, the Court should stay this action pending resolution of the pending Superior Court case involving the same parties and seeking the same relief. DATED: October 11, 2016 MUNGER, TOLLES & OLSON LLP LISA J. DEMSKY SAMUEL T. BOYD JEREMY A. LAWRENCE By: /s/ Jeremy A. Lawrence JEREMY A. LAWRENCE Attorneys for Defendant Mojave Solar, LLC Case 2:16-cv-02116-DSF-AS Document 27-1 Filed 10/11/16 Page 23 of 23 Page ID #:211