Opinion
Case No. 3:09-cv-493.
May 3, 2010
ENTRY AND NOTICE OF TELEPHONE CONFERENCE
The Amended Complaint in this matter is an alleged class action. (Doc. #8.) The named Plaintiffs are William Clendenning ("Clendenning"), Doug Allen ("Allen"), Robert Woods ("Woods") and United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO/CLC ("USW"). The Defendants named in the Amended Complaint are NewPage Corporation ("NewPage") and NewPage Corporation Welfare Benefit Plan (the "NewPage Plan"). Does 1 through 20 are also identified as Defendants but have not yet been further identified.
The original Complaint was filed on December 24, 2009, and was amended on February 2, 2010, as a matter of course. The class action allegations have not yet been addressed.
The Amended Complaint brings two Counts. Count I of the Amended Complaint is brought by all of the Plaintiffs against NewPage for violation of collective bargaining agreements ("CBAs") pursuant to § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Count 2 of the Amended Complaint is brought by the individual Plaintiffs only against NewPage and the NewPage Plan for violation of an employee benefit plan pursuant to § 502(a)(1) and (a)(3) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a)(1)(B) and (a)(3).
There are two motions now before the Court. One is a Revised Motion for Leave To File Second Amended Complaint (the "Proffered Complaint") filed by the Plaintiffs on February 8, 2010. (Doc. #13.) The other is a Motion To Dismiss the Amended Complaint filed by the Defendants on February 12, 2010. (Doc. #14.) The Motion for Leave To File an Amended Complaint is fully briefed. The Motion To Dismiss is not yet fully briefed. Thus, the Revised Motion for Leave To File Second Amended Complaint will be addressed herein.
The Defendants seek to dismiss the Amended Complaint in this matter pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6). They seek to dismiss on the grounds that NewPage is neither a party to, nor a successor to a party to, any union contract that the Amended Complaint alleges NewPage to have breached. Further, the NewPage Plan is not the ERISA plan that provides, or through a predecessor, has provided, benefits to the individual Plaintiffs.
The Plaintiffs seek to file the Proffered Complaint to add NewPage Wisconsin Systems, Inc. ("NPWSI") and NPWSI Retiree Health Plan (the "NPWSI Plan") as defendants "out of an abundance of caution." After Plaintiffs filed their Amended Complaint, they allegedly learned that NPWSI and the NPWSI Plan had filed a declaratory judgment action against the USW and three NewPage retirees alleging that NPWSI and the NPWSI Plan had the right to modify and eliminate retiree health benefits. This declaratory judgment action was filed in federal court in the Western District of Wisconsin. The relevant legal provisions will first be set forth followed by an analysis of the Motion for Leave To File Second Amended Complaint.
RELEVANT LEGAL PROVISIONS
Motions to amend complaints are considered under Fed.R.Civ.P. 15. Rule 15(a) provides that a party may amend its complaint as a matter of course if certain conditions are satisfied. Fed.R.Civ.P. 15(a). In this case, Plaintiffs have amended their Complaint once. Any further amendment requires the opposing party's written consent or leave of court. Id. Defendants have not given their written consent so Plaintiffs require leave of court to file the Proffered Complaint.
The purpose of Rule 15(a) is to reinforce the principle that cases should be tried on their merits. Moore v. City of Paducah, 790 F.2d 557, 559 (6th Cir. 1986) (citing Tefft v. Seward, 689 F.2d 637, 639 (6th Cir. 1982)). Thus, leave to amend a complaint should be "freely given when justice so requires." Whether justice requires the amendment is committed to the trial court's sound discretion. Id. (citing Zenith Radio Corp. v. Hazeltine, Research, Inc., 401 U.S. 321 (1971)). However, discretion is abused when a district court fails to state a basis for its decision to deny a motion to amend. Rose v. Hartford Underwriters Insurance Co., 203 F.3d 417, 420 (6th Cir. 2000).
The factors that a district court should consider when deciding whether to grant leave to amend include undue delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of amendment. Coe v. Bell, 161 F.3d 320, 341 (6th Cir. 1998), cert. denied, 528 U.S. 842 (1999). A proposed amendment is futile if the amendment could not withstand a motion to dismiss. Rose, 203 F.3d at 420; Neighborhood Development Corp. v. Advisory Council On Historic Preservation, 632 F.2d 21, 23 (6th Cir. 1980).
ANALYSIS
The Plaintiffs seek to amend their Amended Complaint to add NPWSI and the NPWSI Plan as defendants. The Defendants argue that allowing Plaintiffs to amend their complaint would be futile. It would be futile, according to the Defendants, because NewPage is not a party to the CBAs that Plaintiffs allege were breached, because the NewPage Plan is not the ERISA plan that provides benefits to the individual Plaintiffs. In addition, according to the Defendants, jurisdiction and venue do not lie in this Court against NPWSI or the NPWSI Plan, the two new defendants that Plaintiffs seek to add
NewPage and the NewPage Plan are the only two Defendants named in Plaintiffs' Amended Complaint.
The Plaintiffs do not now argue that NewPage and the NewPage Plan are proper parties. They do, however, argue that this Court has jurisdiction over their claims against NPWSI and the NPWSI Plan just as the Court had jurisdiction over their claims against NewPage and the NewPage Plan. Therefore, this Court must determine whether it has jurisdiction over Plaintiffs' claims against NPWSI and the NPWSI Plan and whether venue for those claims lies in this District.
The Defendants have filed a Motion To Dismiss (doc. #14) that addresses the dismissal of NewPage and the NewPage Plan. This Motion To Dismiss does not address the dismissal of NPWSI or the NPWSI Plan.
Venue for ERISA Claim
Venue in the federal court system is prescribed by statute. 56 A.L.R. Fed. 757 § 2. Venue means the place where a cause of action is to be tried as distinguished from jurisdiction which refers to the power and authority of the court to hear the action. Id. Finally, the plaintiff has the burden of proving venue if challenged. McCracken v. Automobile Club of Southern California, Inc., 891 F. Supp. 559, 560 (D. Kan. 1995) (citing Bartholomew v. Virginia Chiropractors Association, Inc., 612 F.2d 812, 816 (4th Cir. 1979), cert. denied, 446 U.S. 938 (1980)).Venue for an ERISA claim is the district where the plan is administered, where the breach took place or where a defendant resides or may be found. 29 U.S.C. § 1132(e)(2). For purposes of venue, a defendant that is a corporation is deemed to reside in any judicial district in which the corporation is subject to personal jurisdiction at the time the action is commenced. Moore v. Rohm Haas Co., 446 F.3d 643, (6th Cir. 2006); McCracken, 891 F. Supp. at 561. Further, only one defendant must reside in or be found in a district but all of the defendants must be subject to personal jurisdiction in that district. Turner v. CF Steel Corp., 510 F. Supp. 537, 542 (E.D. Pa. 1981)
When considering venue, all well-pleaded allegations regarding venue in the complaint are taken as true unless contradicted by the defendant's affidavits, and facts outside the complaint may be examined to determine whether venue is proper. Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 (5th Cir. 2009); Pierce v. Shorty Small's of Branson, Inc., 137 F.3d 1190, 1192 (10th Cir. 1998); McCracken, 891 F. Supp. at 561 (citing Federal Deposit Insurance Corp. v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992)). All reasonable inferences are drawn and all factual conflicts resolved in favor of the plaintiff. 5B Fed. Prac. Proc. Civ. § 1352 (3d ed.).
The Plaintiffs argue that venue lies in this district because the NPWSI Plan was administered in this district and breaches of the NPWSI Plan occurred in this district. The Plaintiffs provide no evidence that breaches of the NPWSI Plan occurred in this district but do identify a Form 5500 filed by the NPWSI Plan as evidence that the NPWSI Plan is administered in this district. The Form 5500 filed by the NPWSI Retiree Health Plan lists 8540 Gander Creek Drive, Miamisburg, Ohio as the plan sponsor's name and address.
The Defendants respond that the Proffered Complaint fails to allege any factual support for Plaintiffs' conclusion that the NPWSI Plan is administered in this district. However, when challenged, the Plaintiffs have responded with evidence, the Form 5500, that is not disputed and, in fact, was submitted by the Defendants. Thus, there is evidence, undisputed at this time, that the NPWSI Plan is administered in this district. As a result, venue regarding the ERISA claim lies in this district.
Venue for LMRA Claim
The LMRA provides for venue "in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." 29 U.S.C. § 185. The basic purpose of enacting 29 U.S.C. § 185 was not to limit, but to expand the availability of forums for the enforcement of labor agreements. Moore, 446 F.3d at 646.
Regarding employers involved in an alleged collective bargaining agreement enforcement suit, a federal district court that has personal jurisdiction over the employer also has venue for the action. Stith v Manor Baking Co., 418 F. Supp. 150, 155 (W.D. Mo. 1976) (citing Ford v. Valmac Industries, Inc., 494 F.2d 330 (10th Cir. 1974)). Thus, whether venue for the LMRA claim lies in this district turns on whether this Court has personal jurisdiction over NPWSI.
Personal Jurisdiction
As determined above, venue regarding Plaintiffs' ERISA claim against NPWSI and the NPWSI Plan lies in this district because there is evidence that the NPWSI Plan is administered in this district. Venue in this district regarding Plaintiffs LMRA claim against NPWSI is determined by whether this Court has personal jurisdiction over NPWSI. Finally, personal jurisdiction over the Defendants that the Plaintiffs wish to add must exist or the addition of these Defendants will be futile, and the Defendants have challenged this personal jurisdiction. Thus, the legal provisions regarding personal jurisdiction will first be set forth followed by an analysis of whether personal jurisdiction over NPWSI and the NPWSI Plan would exist in this district.
Relevant Legal Provisions Regarding Personal Jurisdiction
When personal jurisdiction is challenged, the plaintiff has the burden of proving that jurisdiction exists. Burnshire Development, LLC v. Cliffs Reduced Iron Corp., 198 Fed. App'x 425, 429 (6th Cir. 2006) (citing CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1261-62 (6th Cir. 1996)). As a part of the burden of proof, the plaintiff's burden of persuasion depends upon whether the court conducts an evidentiary hearing.
When an evidentiary hearing is held, the Plaintiff must establish jurisdiction by a preponderance of the evidence. Youn v. Track, Inc., 324 F.3d 409, 417 (6th Cir. 2003). When there is no evidentiary hearing, as is the case thus far here, the plaintiff must make only a prima facie showing and the pleading and affidavits, when in conflict, are viewed in a light most favorable to the plaintiff. Burnshire, 198 Fed. App'x at 429.
The Sixth Circuit applies a two-part test to determine if personal jurisdiction exists. Logan Farms v. HBH, Inc. DE, 282 F. Supp. 2d 776, 795 (S.D. Ohio 2003). First, the federal court must determine if the law of the forum state, Ohio in this case, provides for personal jurisdiction. Nationwide Mutual Insurance Co. v. Tryg International Insurance Co., Ltd., 91 F.3d 790, 793 (6th Cir. 1996). If so, the federal court must then determine if the exercise of personal jurisdiction comports with due process. Id.
Personal Jurisdiction Under Ohio Law
The Sixth Circuit has explained that there are two kinds of personal jurisdiction that can be exercised, general jurisdiction and specific jurisdiction. Brunner v. Hampson, 441 F.3d 457, 463 (6th Cir. 2006). General jurisdiction exists when the defendant's contacts with the forum state are "substantial" and "continuous and systematic," such that the state may exercise personal jurisdiction even if the action does not relate to the defendant's contacts with the state. Youn, 324 F.3d at 418. Specific jurisdiction exists when the contacts giving rise to jurisdiction relate to the claim that is before the court. Id.Ohio does not recognize general jurisdiction over non residents. Signom v. Schenck Fuels, Inc., No. C-3-07-037, 2007 WL 1726492 at *3 (S.D. Ohio June 13, 2007). In Ohio, jurisdictional analysis over non residents is based only upon specific jurisdiction that may be available under Ohio law. Id.
In this case, NPWSI, is, according to the Proffered Complaint, a Wisconsin corporation with its principal offices in Wisconsin Rapids, Wisconsin, and there are no allegations in the Proffered Complaint that NPWSI is a resident of Ohio. Thus, according to the Proffered Complaint, NPWSI is not an Ohio resident. The Proffered Complaint offers no indication of the residency of the NPWSI Plan.
Specific jurisdiction under Ohio law is provided by Ohio's Long-Arm Statute, Ohio Rev. Code § 2307.382. Ohio's Long-Arm Statute enumerates nine (9) categories of conduct that subject an entity to personal jurisdiction in Ohio if a cause of action arises out of such conduct. Shaker Construction Group, LLC v. Schilling, No. 1:08cv278, 2008 WL 4346777 at *2 (S.D. Ohio Sept. 18, 2008). Ohio's Long-Arm Statute, Ohio. Rev. Code § 2307.382, provides as follows:
(A) A court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a cause of action arising from the person's:
(1) Transacting any business in this state;
(2) Contracting to supply services or goods in this state;
(3) Causing tortious injury by an act or omission in this state;
(4) Causing tortious injury in this state by an act or omission outside the state if he regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;
(5) Causing injury in this state to any person by breach of warranty expressly or impliedly made in the sale of goods outside this state when he might reasonably have expected such person to use, consume, or be affected by the goods in this state, provided that he also regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered in this state;
(6) Causing tortious injury in this state to any person by an act outside this state committed with the purpose of injuring persons, when he might reasonably have expected that some person would be injured thereby in this state;
(7) Causing tortious injury to any person by a criminal act, any element of which takes place in this state, which he commits or in the commission of which he is guilty of complicity;
(8) Having an interest in, using or possessing real property in this state;
(9) Contracting to insure any person, property, or risk located within this state at the time of contracting.
(B) For purposes of this section, a person who enters into an agreement, as a principal, with a sales representative for the solicitation of orders in this state is transacting business in this state. As used in this division, "principal" and "sales representative" have the same meanings as in section 1335.11 of the Revised Code.
(C) When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him.
Federal Due Process
The Sixth Circuit has established a three part test for determining whether personal jurisdiction under Ohio's Long-Arm Statute comports with the Due Process Clause. Burnshire, 198 Fed. App'x 430 (6th Cir. 2006) (citing Southern Machine Co. v. Mohasco Industries, Inc., 401 F.2d 374, 381 (6th Cir. 1968)). First, the defendant must purposely avail himself of the privilege of acting in Ohio or causing a consequence in Ohio. Id. Second, the cause of action must arise from the defendant's activities in Ohio. Id. Finally, the acts of the defendant or consequences caused by the defendant must have a substantial enough connection with Ohio to make the exercise of jurisdiction over the defendant reasonable. Id."Purposeful Availment"
The purposeful availment prong of the constitutional analysis is coextensive with the "transacting any business" standard of Ohio's Long-Arm Statute. Id. at 432. Identical standards are used to interpret the "transacting any business" standard of Ohio's Long-Arm Statute and the "purposeful availment" prong of the constitutional standard. Id."Arising From"
The "arising from" prong requires only that the cause of action have a substantial connection with the defendant's activities in Ohio. Genesis Insurance Co. v. Alfi, 425 F. Supp. 2d 876, 893 (S.D. Ohio 2006). However, the Sixth Circuit has found that the requirement that contacts be the proximate cause of the asserted harm under Ohio's Long-Arm Statute is more restrictive than the but for "arising from" standard applicable to the Due Process analysis. Burnshire, 198 Fed. App'x 430 n. 2."Substantial Connection"
The "substantial connection" prong requires that the acts of the defendant or the consequences caused by the Defendants must have a substantial enough connection with Ohio to make the exercise of jurisdiction over the Defendants reasonable. Genesis, 425 F. Supp.2d at 893 (citing Southern Machine, 401 F.2d at 384)). However, then the first two prongs of the Due Process analysis are satisfied, "an inference arises that the third, fairness, is also present; only the unusual case will not meet this third criterion." Id. (citing First National Bank of Louisville v. J. W. Brewer Tire Co., 680 F.2d 1123, 1126 (6th Cir. 1982)). Factors considered under the "substantial connection" prong include the burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies." Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)). Finally, most of these considerations usually may be accommodated through means short of finding jurisdiction unconstitutional. Id.
Analysis of Personal Jurisdiction
Plaintiffs argue that this Court has personal jurisdiction over their ERISA claim but cite to ERISA venue provisions for their support. Plaintiffs also argue that this Court has personal jurisdiction over the NPWSI Plan but, again cite to venue provisions for support.One bit of evidence of personal jurisdiction presented by the Defendants is a copy of a State of Ohio Certificate indicating that the Ohio Secretary of State has custody of a foreign license for NPWSI to transact business in Ohio. The license application indicates that NPWSI is organized under the laws of the State of Wisconsin and that its principal place of business is in Wisconsin Rapids, Wisconsin. NPWSI further indicates that it intends to conduct any lawful activity in the State of Ohio. CT Corporation System is appointed to receive process for NPWSI in Ohio. Finally, the application indicates that NPWSI's permanent office in Ohio will be located in Miamisburg. However, this application and registration is, of course, not evidence that NPWSI has acted in Ohio to raise a cause of action identified in Ohio's long-arm statute.
Another bit of evidence of personal jurisdiction identified by the Plaintiffs is a filing by NPWSI in the State of Wisconsin that indicates that NPWSI's principal office is in Miamisburg, Ohio. This too is not evidence that NPWSI has acted in Ohio to raise a cause of action identified in Ohio's long-arm statute.
An argument identified by Plaintiffs regarding personal jurisdiction is that NPWSI's ultimate parent, NewPage has repeatedly held itself out to the public as the owner and operator of the Wisconsin facilities in question which supports piercing the corporate veil. However, the arguments now offered by Plaintiffs regarding piercing the corporate veil are not well founded. In particular, none of them refer to Ohio law or argue why federal law and not Ohio law applies.
Thus, the Plaintiffs have not yet made a prima facie case that this Court has personal jurisdiction over NPWSI or the NPWSI Plan. Further, the Plaintiffs have not presented evidence beyond the allegations in their Proffered Complaint that this Court has personal jurisdiction over NPWSI or the NPWSI Plan.
CONCLUSION
Because of the consequences of a ruling on the pending Motion To Amend are great and because the issue of personal jurisdiction over NPWSI and the NPWSI Plan has not been fully addressed by any of the Parties in light of the governing law, the Court wants to receive more argument and evidence from the Parties. Therefore, a telephone conference will be conducted at 10:00 a.m. on Tuesday, May 18, 2010, to discuss limited discovery and further briefing on the personal jurisdiction issue. Ruling on Plaintiffs' Motion for Leave To File Second Amended Complaint will be deferred until this Court decides whether it has personal jurisdiction over NPWSI and the NPWSI Plan.
Denying Plaintiffs' Motion To Amend may significantly impact them getting the "day in court" that they desire and granting Plaintiff's Motion To Amend will most probably result in a motion to dismiss which could result in an analysis of personal jurisdiction
The Plaintiffs have asserted that, in the "unlikely" event that the Court is inclined to deny their Motion To Amend, the Court's decision should be deferred and discovery regarding personal jurisdiction permitted.
DONE and ORDERED in Dayton, Ohio.