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Schneider's Dairy, Inc. v. Service Personnel and Employees of Dairy Industry

United States District Court, Third Circuit

December 10, 2013

SCHNEIDER'S DAIRY, INC., Plaintiff,
v.
SERVICE PERSONNEL AND EMPLOYEES OF THE DAIRY INDUSTRY, TEAMSTERS LOCAL UNION NO. 205, Defendant.

MEMORANDUM OPINION

TERRENCE F. McVERRY, District Judge.

Pending before the Court is the MOTION OF SERVICE PERSONNEL AND EMPLOYEES OF THE DAIRY INDUSTRY, LOCAL 205, TO DISMISS PLAINTIFF'S COMPLAINT FOR LACK OF SUBJECT MATTER JURISDICTION, FOR IMPROPER VENUE AND FOR FAILURE TO STATE A CLAIM UPON WHICH RELIEF MAY BE GRANTED (ECF No. 5) filed by Defendant, Service Personnel and Employees of the Dairy Industry, Teamsters Local Union No. 205 ("Union"). Schneider's Dairy, Inc. ("Schneider's") has filed a brief in opposition (ECF No. 7). Accordingly, the motion is ripe for disposition.

I. Background

This is an action by an employer, Schneider's, under § 301(a) of the Labor Management Relations Act of 1947, 29 U.S.C. § 185(a) and the Declaratory Judgment Act, 28 U.S.C. § 2201. Schneider's seeks a judicial declaration that, under the terms of its collective bargaining agreement ("CBA") with the Union, it is not obliged to arbitrate a particular grievance filed by the Union.

Schneider's is a family-owned and operated producer and distributor of dairy products, with its principal place of business in Whitehall, Pa. ("Whitehall facility"). The Union is a local chapter of the International Brotherhood of Teamsters based in White Oak, Pa. Over the years, Schneider's and the Union have been parties to a number of CBAs. The current version, which is attached to the Complaint as Exhibit A, became effective on May 1, 2011, and expires on April 30, 2014. By its terms, the CBA covers

Schneider's Dairy, Inc., its successors and/or assigns, hereinafter referred to as the "Employer" or the "Company", and the Service Personnel and Employees of the Dairy Industry, Teamsters Local Union No. 205 of White Oak, Pennsylvania, affiliated with the International Brotherhood of Teamsters....

Compl. Ex. A at 7 (ECF No. 1). Furthermore, it provides that "[a]ll disputes between the parties shall be settled in accordance with the grievance procedure" set forth in the CBA. Id. at 16 (emphasis added). The final step of the grievance procedure is binding arbitration. Id. at 17.

The grievance central to this case involves Schneider's iced tea production. In addition to milk and other dairy products, Schneider's processes and distributes fruit drinks, 100% juice, and iced tea in cartons and plastic bottles at and from its Whitehall facility. However, according to the Complaint, Schneider's has never sold, packaged, processed, or delivered canned iced tea at the Whitehall facility or any of its other facilities. On December 13, 2012, five Schneider family members created a separate corporation, Burgh Beverages, for the purpose of producing and distributing canned iced tea. Burgh Beverages hired a sub-contractor to produce and package the canned iced tea, but it stores and distributes the product itself. Neither Burgh Beverages nor the third party co-packer is a signatory to the CBA.

On May 8, 2013, the Union filed the grievance at issue, alleging

[i]t has come to our attention that Schneider Dairy is in violation specifically, but not limited to, Article No. II - Labor Management Cooperation, Section 6, subcategory C. The Employer violated the Agreement by having product (iced tea) packed and delivered by another processing company without the involvement of Union members. We request that said processing cease and desist immediately and all bargaining unit employees be made whole for any lost wages, benefits, etc.

The grievance does not mention Burgh Beverages or the third-party co-packer, but the Union informed Schneider's that the grievance is intended to stop Burgh Beverages and the co-packer from processing and delivering canned iced tea without employing Union members. In essence, the Union contends that Schneider's and Burgh Beverages are alter egos, with Burgh Beverages having been established merely to evade the CBA requirements. After Schneider's denied the grievance, the Union advised Schneider's of its intent to submit the dispute to arbitration in accordance with the CBA.

On September 11, 2013, Schneider's initiated this action with the filing of a Complaint against the Union. In its Complaint, Schneider's urges the Court to declare that the grievance is not arbitrable because Burgh Beverages and its co-packer are not parties to the CBA and thus "(a) [the grievance] does not plausibly allege any violations of the CBA; (b) Schneider's Dairy cannot grant the relief the Union requests; and (c) the parties that can grant the relief the Union seeks are not obligated to arbitrate the Grievance." Compl. ¶ 28. On October 5, 2013, the Union responded by filing the instant motion to dismiss.

II. Discussion

The Union asserts three independent grounds for dismissal: lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1), improper venue under Fed.R.Civ.P. 12(b)(3), and failure to state a claim under Fed.R.Civ.P. 12(b)(6).[1] In practical effect, however, the Union's argument is primarily directed at this Court's subject matter jurisdiction (or purported lack thereof). Specifically, the Union contends that because the CBA requires "[a]ll disputes between the parties [to] be settled in accordance with the grievance procedure, " it also requires the parties to submit the ...


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