155 mot for reconsideration - local 501

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  • 8/13/2019 155 MOT for Reconsideration - Local 501

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    PLAINTIFFSNOTICEOFMOTIONANDMOTIONFORRECONSIDERATIONOFPORTIONSOFTHECOURTSOCTOBER9,2013ORDERGRANTINGMOTIONSTODISMISS

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    J. Mark Moore, State Bar No. [email protected]

    H. Scott Leviant, State Bar No. [email protected]

    MOORE &LEVIANT LLP20700 Ventura Blvd., Suite 140Woodland Hills, CA 91364Telephone: (877) 360-7020Facsimile: (310) 870-7020

    Attorneys for Plaintiffs

    UNITED STATES DISTRICT COURT

    CENTRAL DISTRICT OF CALIFORNIA

    FINN PETTE, et al.,

    Plaintiffs,

    vs.

    INTERNATIONAL UNION OFOPERATING ENGINEERS, a tradeunion, et al.,

    Defendants.

    Case No.: 2:12-cv-09324-DDP-VBK

    CLASS ACTION

    PLAINTIFFS NOTICE OFMOTION AND MOTION FORRECONSIDERATION OFPORTIONS OF THE COURTS

    OCTOBER 9, 2013 ORDERGRANTING MOTIONS TODISMISS

    Date: November 18, 2013Time: 10:00 a.m.Location: Courtroom 3

    312 N. Spring StreetLos Angeles, CA 90012

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 1 of 12 Page ID #:2574

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    PLAINTIFFSNOTICEOFMOTIONANDMOTIONFORRECONSIDERATIONOFPORTIONSOFTHECOURTSOCTOBER9,2013ORDERGRANTINGMOTIONSTODISMISS

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    TO THE COURT, TO ALL PARTIES AND TO THEIR COUNSEL OF RECORD:

    PLEASE TAKE NOTICE that on Monday, November 18, 2013 at 10:00

    a.m., or as soon thereafter as may be heard, in Courtroom 3 of the above-entitled

    Court, located at 312 N. Spring Street, Los Angeles, California, 90012-4701,

    Plaintiffs Finn Pette, James Mclaughlin, Daniel Himmelberg, Glenn Szalay, Jay

    Brophy, Anne Brophy, Cheryl Culbreath, Robert Fox, John Crooks, Nye Nelson,

    Linda Pette, Judy Mclaughlin, Christine Himmelberg, Erik B. Smith, Christopher

    Menor, and Patrick Adams (Plaintiffs) will and hereby do move the Court for

    reconsideration of its Order, issued October 9, 2013 (Docket No. 151).

    Specifically, Plaintiffs respectfully move for an order:

    1. Reconsidering the portion of the October 9, 2013 Order dismissingPlaintiffs aiding and abetting claim for with prejudice based on principles

    of federal aiding and abetting law, since aiding and abetting liability

    under California law can be predicated on state law claims for violations

    of the Unfair Competition Law (UCL), Cal. Bus. & Prof. Code section

    17200, et seq., and for common law breach of fiduciary duty. The prior

    complaint contained both a UCL claim, which this Court expressly

    authorized Plaintiffs to amend and expand, and a claim for Breach of

    Fiduciary Duties under ERISA and Common Law, with respect to which

    this Court also granted leave to amend. In dismissing the aiding and

    abetting claim with prejudice based entirely on federal aiding and abetting

    principles (Dkt. 151 at 10:4-11, 14-15), it appears the Court did not

    consider the import of these state law claims, which can support aiding

    and abetting liability;

    2. Reconsidering the portion of the October 9, 2013 Order dismissing all ofPlaintiffs RICO claims with prejudice on the ground that Plaintiffs pled,

    and identified in their Opposition briefing, allegations of direct injury to

    themselves and class members resulting from forced contributions into the

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 2 of 12 Page ID #:2575

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    PLAINTIFFSNOTICEOFMOTIONANDMOTIONFORRECONSIDERATIONOFPORTIONSOFTHECOURTSOCTOBER9,2013ORDERGRANTINGMOTIONSTODISMISS

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    EPEC fund. The Court recognized the presence of such allegations in its

    Order at page 2, but then did not consider their effect in the subsequent

    analysis that led to its conclusion that RICO standing was absent.

    Plaintiffs request for reconsideration of this claim is limited to the

    Defendants associated with the EPEC contributions, which have

    previously been identified as the IUOE Defendants.

    Plaintiffs therefore respectfully move for reconsideration pursuant to to

    Local Rule 7-18(c), on the ground that the Court failed to consider material facts

    presented to it in reaching its ruling on the RICO and aiding and abetting claims.

    This motion is made following the October 11, 2013 conference of counsel

    pursuant to Local Rule 7-3. At the time of the conference, counsel for the IUOE

    Defendants indicated that they would oppose the Motion, and counsel for the other

    Defendants expressed their uncertainty as to whether they would oppose the

    motion.

    This motion is based upon this Notice, the Memorandum of Points and

    Authorities filed in support thereof, the pleadings and records on file in this action,

    the October 9, 2013 Order of this Court, and such additional oral argument and

    evidence as may be presented at the hearing on this motion.

    Respectfully submitted

    Dated: October 21, 2013 MOORE & LEVIANT LLP

    By: /s/J. Mark MooreJ. Mark MooreH. Scott Leviant

    Attorneys for Plaintiffs

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 3 of 12 Page ID #:2576

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    PLAINTIFFSNOTICEOFMOTIONANDMOTIONFORRECONSIDERATIONOFPORTIONSOFTHECOURTSOCTOBER9,2013ORDERGRANTINGMOTIONSTODISMISS

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    TABLE OF CONTENTS

    I. INTRODUCTION .......................................................................................... 1II. THE STANDARD GOVERNING MOTIONS FOR RECONSIDERATION 2III. RECONSIDERATION IS WARRANTED HERE ......................................... 3

    A. The Dismissal of the RICO Claims Should Be Reconsidered WithRespect to Allegations of Forced EPEC Contributions, Since Plaintiffs

    Alleged That They Paid Mandatory EPEC Contributions, but the Court

    Did Not Analyze Those Allegations in Deciding That RICO Standing

    Was Lacking ............................................................................................... 3B. The Dismissal of the Aiding and Abetting Claim Also Should Be

    Reconsidered Since State Law Recognizes That Claim ............................ 4IV. CONCLUSION AND RELIEF REQUESTED ............................................... 7

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 4 of 12 Page ID #:2577

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    TABLE OF AUTHORITIES

    FEDERALDECISIONALAUTHORITYMcKay v. Hageseth, 2007 WL 1056784 (N.D. Cal. April 6, 2007) .......................... 6

    Monaco v. The Bear Stearns Companies, Inc., 2011 WL 11027559 (C.D. Cal. Jan.

    13, 2011) ............................................................................................................... 2

    Neilson v. Union Bank of California, N.A., 290 F.Supp.2d 1101 (C.D. Cal. 2005) .. 6

    Pegasus Satellite Television, Inc. v. DirecTV, Inc., 318 F.Supp.2d 968 (C.D. Cal.

    2004) ..................................................................................................................... 2

    Plascencia v. Lending 1stMortg., 583 F.Supp.2d 1090 (N.D. Cal. 2008) ................ 6

    Service Employees International Union v. Roselli, 2009 WL 3013501 (N.D. Cal.

    Sept. 17, 2009) ...................................................................................................... 6

    Smith v. Massachusetts, 543 U.S. 462, 475, 125 S.Ct. 1129 (2005) ......................... 2

    Velazquez v. GMAC Mortgage Corporation, LLC, 605 F.Supp.2d 1049 (C.D. Cal.

    2008) ..................................................................................................................... 5

    STATEDECISIONALAUTHORITYCasey v. U.S. Bank National Assn, 127 Cal.App.4th 1138 (2005) .......................... 6

    RULESLocal Rule 7-18 ............................................................................................ 3, 1, 2, 7

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 5 of 12 Page ID #:2578

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    MEMORANDUM OF POINTS AND AUTHORITIES

    I. INTRODUCTIONPresented with five motions to dismiss Plaintiffs Second Amended

    Complaint (SAC), raising a host of disparate issues and arguments, the Courts

    ultimate Order on those motions, issued October 9, 2013 (October 9, 2013 Order,

    Docket no. 151), dismissed a number of claims with prejudice, including Plaintiffs

    RICO claims against the IUOE Defendants and Plaintiffs aiding and abetting claim

    in its entirety. Those discrete aspects of the October 9, 2013 Order were erroneous

    and should be reconsidered under Local Rule 7-18(c), as this Court, in dismissing

    those claims, did not consider material facts in making its decision.

    Specifically, the Court did not consider Plaintiffs allegations that the IUOE

    Defendants illegally mandated that certain employee Plaintiffs and other employee

    class members make direct monetary contributions to the IUOEs EPEC fund,

    under threat of termination or retaliation (Hobbs Act violations), which provides

    the direct RICO standing that this Court held is necessary. The Court also did not

    consider that Plaintiffs alleged, and were given leave to amend, state law claims for

    UCL violations and common law breach of fiduciary duties, both of which permit

    aiding and abetting liability under state law, irrespective of whether federal law

    permits aiding and abetting liability for the SACs federal claims.1

    Accordingly, Plaintiffs respectfully request that the Court reconsider its

    Order and hold that the claims in question are not dismissed insofar as the

    allegations addressed herein are concerned.

    1Reconsideration of this second issue will prevent the incongruous result ofexpressly permitting Plaintiffs to allege state law claims that recognize aiding andabetting liability under state law, while simultaneously precluding all aiding andabetting-based liability.

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 6 of 12 Page ID #:2579

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    II. THE STANDARD GOVERNING MOTIONS FORRECONSIDERATION

    Local Rule 7-18 addresses motions for reconsideration of decisions on

    motions, stating in pertinent part: L.R. 7-18 Motion for Reconsideration. A

    motion for reconsideration of the decision on any motion may be made only on the

    grounds of (c) a manifest showing of a failure to consider material facts

    presented to the Court before such decision. No motion for reconsideration shall in

    any manner repeat any oral or written argument made in support of or in opposition

    to the original motion. Courts in this district and elsewhere have granted

    reconsideration when they were persuaded that they had not considered relevant

    facts that were presented to them. See, e.g., Monaco v. The Bear Stearns

    Companies, Inc., 2011 WL 11027559, *3-4 (C.D. Cal. Jan. 13, 2011) (granting the

    plaintiffs motion for reconsideration pursuant to L.R. 7-18(c) after the court failed

    to consider facts regarding tolling of the statute of limitations in dismissing TILA

    claim); Pegasus Satellite Television, Inc. v. DirecTV, Inc., 318 F.Supp.2d 968, 979

    (C.D. Cal. 2004) (granting motion for reconsideration, the Court stating:

    DirecTV has demonstrated a manifest showing that the Court has failed to

    consider material facts presented to the court on this issue. See Summary Judgment

    2 Order, at 4445. Therefore, reconsideration of the Courts Order denying

    DirecTV summary judgment on Pegasus claim for restitution of the Launch Fees is

    appropriate.)

    Beyond Local Rule 7-18, and as held by the United States Supreme Court,

    (a) district court has the inherent power to reconsider and modify its interlocutory

    orders prior to the entry of judgment . . . Smith v. Massachusetts, 543 U.S. 462,

    475, 125 S.Ct. 1129, 1139 (2005) (internal quotes omitted).

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 7 of 12 Page ID #:2580

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    III. RECONSIDERATION IS WARRANTED HEREA. The Dismissal of the RICO Claims Should Be Reconsidered With

    Respect to Allegations of Forced EPEC Contributions, Since

    Plaintiffs Alleged That They Paid Mandatory EPEC

    Contributions, but the Court Did Not Analyze Those Allegations in

    Deciding That RICO Standing Was Lacking

    In the SAC, Plaintiffs alleged that they and other union employee class

    members were illegally required to make mandatory contributions to the IUOEs

    EPEC fund. See, e.g.,SAC 75-80, 266 (defining an EPEC PAC sub-class).

    Plaintiffs also discussed those allegations in opposing the IUOE Defendants

    motion to dismiss the SAC. (See, e.g.,Dkt. 125 at 4:18-5:4 and n. 4.) At page 2 of

    its Order, this Court noted the allegations of forced EPEC contributions, stating:

    The SAC alleges Defendant Vincent Giblin, the former General President of

    IUOE, . . . , required local union officers to contribute hundreds and thousands of

    dollars per year to IUOEs political action fund . . . ([SAC]. 75-80). (October 9,

    2013 Order, at 2.)

    Yet in its subsequent analysis of RICO standing, the Court did not address or

    analyze Plaintiffs allegations of direct, coerced monetary contributions by union

    employees. Instead, without addressing those allegations, the Court held that

    Plaintiffs had alleged no direct, concrete losses to themselves, but rather only

    injuries to the union and the associated trusts/benefit plans. Based on its

    conclusion that RICO standing was lacking for this reason, the Court dismissed the

    RICO claims with prejudice. (SeeOrder at 7:17-22, 10:14-15.)2

    2 For example, the Court stated: The various racketeering acts alleged inthe SAC harmed Local 501 and its benefit funds, not Plaintiffs. Even if Plaintiffshad identified any non-speculative injury to themselves, any such harm would bethe indirect result of direct injuries to the non-party union and plans. Thus,Plaintiffs cannot satisfy 18 U.S.C. 1964(c), and lack statutory standing to bringtheir RICO claims. (October 9, 2013 Order, at 7.) This analysis by the Court

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    In sum, the SAC alleged that the IUOE Defendants mandated that Plaintiffs

    and other union employees make direct monetary contributions to the IUOE

    Defendants EPEC fund. These contributions, as alleged and as argued in

    opposition by Plaintiffs, were compelled, at the peril of job loss, in violation of the

    Hobbs Act. Unquestionably, they were paid directly by Plaintiffs and other

    employees. Yet the Court did not consider those losses in analyzing RICO standing

    and in concluding that the RICO claims should be dismissed with prejudice based

    on the absence of any direct, concrete injury. As such, reconsideration is proper.

    The RICO claims against the IUOE Defendants should be permitted to proceed

    insofar as the allegations of forced EPEC contributions are concerned.

    B. The Dismissal of the Aiding and Abetting Claim Also Should BeReconsidered Since State Law Recognizes That Claim

    In its Order, the Court also dismissed the SACs aiding and abetting claim,

    with prejudice. Order at 10:14-15. It did so based solely on federal authorities

    holding that, where federal statutes are involved, aiding and abetting liability must

    be expressly authorized. Specifically, the Court stated:

    Congress has not enacted a civil aiding and abetting statute. Central

    Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511

    U.S. 164, 182 (1994). Aiding and abetting liability is therefore limited

    to those statutes in which it is imposed. Id., Freeman v. DirecTV, Inc.,

    457 F.3d 1001, 1006 (9th Cir. 2006); In re Easysaver Rewards

    Litigation, 737 F.Supp.2d 1159, 1181 (S.D. Cal. 2010). Plaintiffs

    Aiding and Abetting claim is dismissed with prejudice.

    (October 9, 2013 Order, at 10:4-11.)

    Regardless whether Congressional authorization of aiding and abetting

    liability is necessary in the context of federal claims, this Court did not consider

    disregarded the allegations of forced EPEC contributions, which are direct injuriesto Plaintiffs and other class members.

    Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 9 of 12 Page ID #:2582

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    Plaintiffs non-federalclaims in dismissing their aiding and abetting claim as a

    matter of law.

    First, Plaintiffs alleged a claim for breach of fiduciary duties under ERISA

    and California common law,3though the Court found the claim deficient as pled.

    The Court in its Order noted that Plaintiffs had asserted a Sixth Claim for Breach

    of Fiduciary Duties Under ERISA orCommon Law (October 9, 2013 Order at

    8:14-15).4 (Emphasis added.) After finding that the claim was not yet sufficiently

    pled, the Court granted Plaintiffs leave to amend it. (October 9, 2013 Order at 10.)

    Likewise, the Court recognized that Plaintiffs had alleged a UCL claim

    against certain defendants and that Plaintiffs sought to expand and amend that

    claim. (October 9, 2013 Order at n. 2 [Though no Defendant has moved to

    dismiss Plaintiffs eight[th] cause of action for unfair competition under California

    Business & Professions Code 17200, Plaintiffs have expressed a desire to amend

    that cause of action.].) At the conclusion of its Order, the Court ordered Plaintiffs

    to amend the UCL claim, stating: Any amended complaint shall also include

    amendments to Plaintiffs unfair competition claim, to which no Defendant appears

    to object. (October 9, 2013 Order, at fn. 5.)

    Both of the aforementioned claims can serve as a predicate primary violation

    for aiding and abetting liability under California law. This very Court has

    recognized that aiding and abetting liability may be stated under the UCL. In

    Velazquez v. GMAC Mortgage Corporation, LLC, 605 F.Supp.2d 1049 (C.D. Cal.

    2008) (Pregerson, J.), this Court held:

    3In retrospect, Plaintiffs acknowledge that it may have been preferable toplead the two fiduciary breach theories as separate claims, although labels are notdispositive in the pleading context.

    4The Court described the breach of fiduciary duty claim as lacking sufficientsupporting facts. The breach of fiduciary duty claim in the SAC incorporated all ofthe prior factual allegations therein by reference. In the forthcoming ThirdAmended Complaint, Plaintiffs will clarify -- within the claim itself -- the factssupporting ERISA and common law fiduciary liability for the various defendants.

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    While Californias UCL does not support claims for vicarious liability,

    a plaintiff can allege a claim for aider and abettor liability under

    17200. See In re First Alliance Mortgage Co., 471 F.3d 977, 995-96

    (9th Cir. 2006); People v. Toomey, 157 Cal.App.3d 1, 14-15, 203

    Cal.Rptr. 642 (1984) ([I]f the evidence establishes defendants

    participation in the unlawful practices, either directly or by aiding and

    abetting the principal, liability under section[ ] 17200 ... can be

    imposed.). To allege aiding and abetting under California law, a

    plaintiff must plead that the alleged aider and abettor (1) knew that the

    others conduct constituted a breach of a duty and (2) gave substantial

    assistance or encouragement to the other so to act. First Alliance, 471

    F.3d at 993.

    Velasquez, 605 F.Supp.2d at 1068. See also Plascencia v. Lending 1stMortg., 583

    F.Supp.2d 1090, 1098 (N.D. Cal. 2008) (recognizing viability of aiding and

    abetting liability in connection with the UCL); Casey v. U.S. Bank National Assn,

    127 Cal.App.4th 1138 (2005) (recognizing existence of state law claim for aiding

    and abetting of breach of fiduciary duty but finding claim not adequately alleged);

    Service Employees International Union v. Roselli, 2009 WL 3013501, *6-7 (N.D.

    Cal. Sept. 17, 2009) (holding, in case in which the IUOE Defendants counsel

    represented the SEIU plaintiff, that claim for aiding and abetting breach of

    fiduciary duty was cognizable against former union officials and employees under

    either common law or the LMRDA);Neilson v. Union Bank of California, N.A.,

    290 F.Supp.2d 1101, 1118-37 (C.D. Cal. 2005) (finding claim for aiding and

    abetting fiduciary duty adequately alleged);McKay v. Hageseth, 2007 WL

    1056784, *2-3 (N.D. Cal. April 6, 2007) (recognizing that under California law,

    aiding and abetting liability can exist for negligent acts and UCL violations);

    Since the Courts Order relied solely on federal law (October 9, 2013 Order

    at 10), it appears to Plaintiffs that, in dismissing the aiding and abetting claim with

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    prejudice, the Court overlooked Plaintiffs allegations of non-federal liability,

    which in the same Order Plaintiffs were being given leave to amend. Thus,

    reconsideration under LR 7-18(c) is warranted. Plainly, assuming the elements of

    state law aiding and abetting liability can be pled (as they were before and can be

    again), federal law poses no absolute bar to such liability in connection with

    Plaintiffs primary state law claims. This is particularly true in view of Rule 15s

    pronouncement that leave to amend should be freely granted when justice so

    requires, and this Court has already granted leave to amend the primary claims for

    violations of the UCL and breach of fiduciary duty.

    IV. CONCLUSION AND RELIEF REQUESTEDFor the reasons set forth above, Plaintiffs respectfully request that their

    motion for reconsideration be granted and that the Court vacate its rulings

    dismissing the RICO claims and the aiding and abetting claim.5

    Respectfully submitted

    Dated: October 21, 2013 MOORE & LEVIANT LLP

    By: /s/J. Mark MooreJ. Mark MooreH. Scott Leviant

    Attorneys for Plaintiffs

    5To the extent the Court deems amendment necessary notwithstandingPlaintiffs belief that, for the reasons set forth herein, the claims at issue should nothave been dismissed in their entirety in the first instance, Plaintiffs request leave toamend the operative complaint to re-allege the theory of RICO liability discussedherein and to allege claims for state law aiding and abetting liability with respect tothe UCL claim and the claim for common law breach of fiduciary duty. BecausePlaintiffs must file an amended complaint that excludes claims consistent with theOctober 9, 2013 Order before the Court rules on this motion, Plaintiffs believe thata clarifying amendment would also be beneficial if any aspect of this motion isgranted.

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