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
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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
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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
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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
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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
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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.
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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).
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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.
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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
Case 2:12-cv-09324-DDP-VBK Document 155 Filed 10/21/13 Page 11 of 12 Page ID#:2584
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8/13/2019 155 MOT for Reconsideration - Local 501
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PLAINTIFFSNOTICEOFMOTIONANDMOTIONFORRECONSIDERATIONOFPORTIONSOFTHE COURTS OCTOBER 9 2013 ORDER GRANTING MOTIONS TO DISMISS
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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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