United States District Court, W.D. Pennsylvania
CARPENTERS COMBINED FUNDS, INC., by James R. Klein, Administrator, Plaintiff,
KELLY SYSTEMS, INC. and NOVINGER GROUP, INC., Defendants.
Nora Barry Fischer U.S. District Judge
This is an ERISA matter wherein Plaintiff Carpenters Combined Funds, Inc., (“Plaintiff” or “Fund”), the Pittsburgh-based administrator and collection agent of non-party Greater Pennsylvania Regional Council of Carpenters Union, (“Union”), seeks to enforce the collective bargaining obligations of non-party and Harrisburg-based Novinger’s Inc., (“Novinger’s”), against two related entities named as Defendants, Kelly Systems, Inc., (“Kelly”), and Novinger Group, Inc., (“NGI”), also located in Harrisburg. (Docket No. 1). Presently before the Court is a Motion to Transfer Venue Pursuant to 28 U.S.C. § 1404(a) or to Dismiss Count III of Plaintiff’s Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) filed by Defendants, (Docket Nos. 6, 7), Plaintiff’s Brief in Opposition thereto, (Docket No. 12), and Defendants’ Reply, (Docket No. 16). The parties’ filings include various evidentiary submissions, consisting of: excerpts of certain collective bargaining agreements; addenda thereto; other documents; and affidavits of party representatives. (Docket Nos. 6, 7, 12, 16). For the following reasons, Defendants’ Motion  is granted to the extent that they seek this matter to be transferred to the United States District Court for the Middle District of Pennsylvania.
This case arises out of two successive collective bargaining agreements between the Union and Novinger’s for the periods of 2008-2012 and 2012-2015, (collectively, “CBAs” or “2008 CBA”, “2012 CBA”), which cover various aspects of the relationship between Novinger’s and Union carpenters working in counties located within the Middle and Eastern Districts of Pennsylvania. (See Pl. Exs. “A” and “B” to Complaint, Docket Nos. 1-1; 1-2). The CBAs were negotiated in the Harrisburg area, with the Keystone Contractors Association acting as the bargaining agent for all employers, including Novinger’s. (Id.; Docket No. 6-1 at ¶¶ 2-3, 7-8). Novinger’s maintains its headquarters in Harrisburg and at the time of the negotiations, the Union was likewise based in Harrisburg. (Id.). Novinger’s President, James Novinger, executed the Joinder agreement on behalf of the company, binding Novinger’s to the CBAs as an “Employer.” (Pl. Ex. “C” to Complaint, Docket No. 1-3). Among other things, the CBAs outline the obligations of Novinger’s to make certain monthly fringe benefit contributions to the Union including, but not limited to amounts for pension and medical benefits. (Docket No. 1 at ¶ 11). The 2008 CBA and 2012 CBA contain identical provisions stating the following:
During the term of this contract and any extension thereof, the employer shall pay into the appropriate benefit fund as agreed to by the respective Boards of Trustees. Medical plan payments may go to the Greater Pennsylvania Carpenters’ Medical Plan or the Building Trades Health and Welfare Fund. Pension payments will go to the Greater Pennsylvania Carpenters’ Pension Fund or the Keystone Carpenters’ Pension Plan. Annuity payments will go to the Greater Pennsylvania Carpenters’ Annuity and Savings Fund. All of the terms and provisions of the Agreements and Declarations of Trust creating the above said Funds are hereby accepted by the parties hereto and copies of said Agreements and Declarations of Trust are incorporated by reference in this Contract and made a part hereof.
(See 2008 CBA at § XV; 2012 CBA at § XV). Both CBAs contain broad arbitration provisions setting forth dispute resolution procedures governing all types of disputes between employers, the Union and any employees. (See 2008 CBA at § XIII; 2012 CBA at § XIII (“Any and all disputes, complaints, controversies or grievances whatsoever between the Union or any employees and the Employer, which directly or indirectly arise under, out of, or in connection with or in any manner relate to this Agreement, or the breach thereof, or the acts, conduct or relations between the Parties shall be adjusted as follows: ….”)). These agreements lack any forum selection clauses. (See generally 2008 CBA; 2012 CBA).
Neither the Union nor Novinger’s are parties to this lawsuit. (Docket No. 1). Rather, this case is between Plaintiff, which administers the employee benefit funds on behalf of the Union and serves as its agent to collect alleged delinquent benefits, and two other entities that are owned by James Novinger but are not parties to the CBAs: NGI and Kelly. (Id.). Plaintiff is headquartered in Pittsburgh. (Id.). The Harrisburg-based Union recently was a party to a merger with additional unions from other areas, including the Western Pennsylvania regional carpenters union to form the Keystone Mountain Lakes Regional Council of Carpenters. (Docket No. 12-4 at ¶ 9).
To be clear, Plaintiff neither claims that Novinger’s violated the CBAs nor asserts that Novinger’s is delinquent in making necessary fringe benefit contributions to the Fund. (Docket No. 1). Instead, Plaintiff avers that, from September 2010 to the present, parent company NGI diverted drywall contracting work from its union subsidiary, Novinger’s, to non-union subsidiary, Kelly, purportedly for the purpose of avoiding Novinger’s collective bargaining obligations to make necessary contributions for fringe benefits to the Union for the benefit of its members. (Id.). Plaintiff seeks to enforce Novinger’s obligations to pay fringe benefits against NGI and Kelly under three alternative theories, including that: all three entities constitute a “single employer”; NGI and Kelly are the “alter egos” of Novinger’s; and/or, all three entities constitute a “joint employer.” (Id.). Plaintiff contends that the estimated principal delinquency exceeds two million dollars and that it is also pursuing interest, contractual liquidated damages plus attorneys’ fees and costs. (Id. at ¶ 33).
NGI and Kelly deny liability and will defend this case vigorously through an expected non-jury trial. (Docket Nos. 6, 7). Notably, NGI has been operating Novinger’s and Kelly as union and non-union drywall contracting companies, respectively, for decades and the non-union companies, NGI and Kelly, have never made any contributions to the Fund for fringe benefits or otherwise. (Docket No. 6-1 at ¶¶ 6-10). Hence, there is no established relationship between NGI, Kelly and Plaintiff or the Union for that matter. It also appears that the Union previously pursued an alter ego theory against NGI and Kelly before the National Labor Relations Board several years ago but such claim was denied at the administrative level. (Id. at ¶ 11; Docket No. 6-2).
On behalf of Defendants, James Novinger declares that all of the potential evidence in this case related to NGI and Kelly is located at their Harrisburg offices and any potential testimony concerning those records and/or their business practices would necessarily come from employees located in that region. (Docket No. 6-1 at ¶¶ 6-28). He adds that any evidence from contracting jobs for third parties performed by those entities would also be related to construction sites in the Middle and Eastern Districts of Pennsylvania because that is where those companies do business. (Id. at ¶¶ 26-27). He further states that each of the three entities operate independently; refuting the allegations in Plaintiff’s Complaint suggesting that the corporations operate, in effect, as one entity, without adhering to the necessary corporate formalities. (Id. at ¶¶ 10-11, 21). Mr. Novinger also acknowledges that if his companies are found liable in this lawsuit and/or another claim against it for withdrawal liability in Civil Action No. 14-956 seeking a judgment in excess of $1.9 million, that all three companies would be bankrupt.(Docket No. 6-1 at ¶ 29).
Plaintiff’s affiant, James Klein, suggests that its auditors intend to obtain the financial records of NGI and Kelly during discovery and then examine those records in the Pittsburgh area where the auditors maintain offices. (Docket No. 12-4 at ¶ 24 (“Following discovery, these auditors will have knowledge regarding the work performed by Novinger’s, as well as work performed by Kelly Systems and Novinger Group”)). Klein additionally declares that Plaintiff’s own records are maintained in this area, without specifying what records, if any, it has as to NGI and Kelly. (Id. at ¶26). Plaintiff further notes that it would call one of its executives as a possible witness, apparently to testify as to general topics akin to a 30(b)(6) deponent. (Id. at ¶ 21). These potential witnesses for Plaintiff – an executive and auditors who have not yet started their assignments – are located in Pittsburgh. (Id. at ¶¶ 25-27).
More broadly, the interested stakeholders in the case all work primarily in the Middle District of Pennsylvania, although the territory covered by the CBAs includes a small portion of the Commonwealth situated in the Eastern District of Pennsylvania. (See 2008 CBA; 2012 CBA). These interested individuals include the Union’s members in the Local 214 and Local 645, each of whom are third party beneficiaries of the CBAs and have a financial stake in this lawsuit. (Id.). Further, all of the employees of NGI and Kelly work in that area. (Docket No. 6-1 at ¶¶ 26, 27). As noted, third parties which have contracted with Kelly and/or NGI for carpentry services likewise do business in that area. (Id. at ¶ 15). Again, Plaintiff’s entire fringe benefits claim relies upon the value of the carpentry services that non-union employees of NGI and Kelly allegedly performed for these third party contractors and all such work occurred outside of this District. (See Docket No. 1).
It is not debatable that this case could have been filed in the U.S. District Court for the Middle District of Pennsylvania as venue is authorized in ERISA matters “in 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). NGI and Kelly seek to transfer the case there; Plaintiff opposes the transfer and argues that venue should remain here. ...