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American Water Works Company, Inc v. Utility Workers Local 423

September 23, 2011

AMERICAN WATER WORKS COMPANY, INC.,
PLAINTIFF,
v.
UTILITY WORKERS LOCAL 423, ET AL.,
DEFENDANTS.



The opinion of the court was delivered by: William J. Martini, U.S.D.J.

OPINION

This matter comes before the Court on two related motions to dismiss filed by two of the union defendants (the "Moving Defendants"). Both Moving Defendants argue that the Complaint fails to state a claim and that venue is improper. One Moving Defendant also argues that this Court lacks subject matter jurisdiction. For the reasons stated below, the Court finds that venue is improper as to the Moving Defendants. The Court will sever those defendants and transfer their cases and will otherwise deny the motions.

I.Background

Plaintiff American Water Works Company ("AWW") is the parent company of various local subsidiaries called operating companies that operate local water and wastewater utilities through the United States. The six defendants are various unincorporated local unions that represent employees of the operating companies. Of the six defendants, only one, Utility Workers Local 423, is based in New Jersey; Local 423 did not file or join any motion to dismiss. The two defendants that have filed the present motions, Local 1353 of the Laborers International Union of North America and Utility Workers Local 537, are based in West Virginia and Pennsylvania, respectively.

The union defendants negotiate with the operating companies to develop local collective bargaining agreements covering some terms of employment for their members. But the defendants ceded authority to negotiate certain other terms of employment, specifically relating to medical, retirement, and other benefits, to a committed of representatives that bargains directly with AWW at a national level.

In 2010, the national-level negotiations failed to reach a deal, and AWW implemented its last, best, final offer regarding these other terms of employment. The defendants have since filed separate grievances with their local operating companies regarding implementation of these terms, and some or all have allegedly threatened to seek or have demanded arbitration. AWW filed its complaint seeking a declaration that the terms are not grievable, that the grievances are not arbitrable, and that in any event the defendants are preempted from grieving the issue by the Labor Management Relations Act ("LMRA").

II.Legal Analysis

A.Defendants' Arguments Regarding Subject Matter Jurisdiction and Failure to State a Claim Fail Local 537 argues that the Court lacks subject matter jurisdiction under Section 301(c) of the LRMA, 29 U.S.C. § 185. But, as discussed below, Section 301(c) actually refers to venue, and so Local 537's argument fails. See, e.g., United Rubber, Cork, Linoleum and Plastic Workers of America, AFL-CIO, Local 102 v. Lee Rubber & Tire Corp., 394 F.2d 362, 363 (3d Cir. 1968) (rejecting argument that court lacks subject matter jurisdiction under Section 301(c)); Gilreath v. Plumbers, Pipefitters & Service Technicians Local 502, 2010 WL 6429570, at *3 & n.3 (S.D. Ohio Sept. 2, 2010); National Elevator Bargaining Ass'n v. International Union of Elevator Constructors, 2008 WL 4566684, at *2 n.1 (D. Md. Oct. 10, 2008); Franchino v. Valenti, 347 F. Supp. 1020, 1022 (E.D.N.Y. 1972). This Court has subject matter jurisdiction over this action because AWW asks the Court to determine the arbitrability of the defendants' grievances. Lukens Steel Co. v. United Steelworkers of America (AFL-CIO), 989 F.2d 668, 671 (3d Cir. 1993).

The Moving Defendants also argue that AWW has failed to state a claim upon which relief can be granted because AWW has not alleged that it is a party to the local collective bargaining agreements under which the defendants grieved. But the Moving Defendants fail to cite any legal basis for this argument, and it is unclear if the Moving Defendants are actually raising the issue of standing. Contrary to their general argument, there are instances where an individual that is not a signatory or party to an agreement may have standing to bring a claim about that agreement and/or may be able to state a claim for relief that relates to that agreement. See, e.g., Cargill Global Trading v. Applied Development Co., 706 F. Supp. 2d 563, 579 (D.N.J. 2010) (recognizing that under New Jersey law third party beneficiary of contract has standing to sue ). In light of this -- and the fact that they have not really developed their argument by pointing to any case law to the contrary -- the Court will deny the motion to dismiss on this point at this time.

B.Venue is Improper as to the Moving Defendants

Both moving defendants argue that the venue is improper in this district under Section 301(c) of the LRMA:

For the purposes of actions and proceedings by or against labor organizations in the district courts of the United States, district courts shall be deemed to have jurisdiction of a labor organization

(1) in the district in which such organization maintains its principal office, or (2) in any district in which its duly authorized officers or agents are engaged in representing or acting for employee members.

29 U.S.C. § 185(c). Despite the fact that the legislation explicitly uses the word "jurisdiction", numerous courts, including the Third Circuit Court of Appeals, have held that the statute actually governs the issue of venue, as cited above. According to the allegations of the Complaint, neither Moving Defendant maintains its principal place of business in New Jersey, nor does either Moving Defendant engage in representing or acting for its members in New Jersey. Nor has AWW alleged anything to suggest that the Moving Defendants have even minimal contacts with this District. See Reed v. International Union of United Auto., Aerospace & Agr. Implement Workers of America, 945 F.2d 198, 201 n.3 (7th Cir. 1991) (holding ...


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