United States District Court, D. Minnesota
International Association of Sheet Metal, Air, Rail, and Transportation Local Union No. 10, Plaintiff and Counterclaim Defendant,
A-1 Refrigeration of Hibbing, Inc., d/b/a A-1 Refrigeration Heating and Air Conditioning, Inc., Defendant and Counterclaimant.
D. Cummins, Cummins & Cummins, PLLP, Minneapolis, MN, for
Plaintiff and Counterclaim Defendant International
Association of Sheet Metal, Air, Rail, and Transportation
Local Union No. 10.
J. Roby, Jr. and Susan L. Waldie, Johnson, Killen &
Seiler, P.A., Duluth, MN, for Defendant and Counterclaimant
A-1 Refrigeration of Hibbing, Inc., d/b/a A-1 Refrigeration
Heating and Air Conditioning, Inc.
MEMORANDUM OPINION AND ORDER
C. Tostrud United States District Judge
matter is before the Court on the motion of Plaintiff and
Counterclaim Defendant International Association of Sheet
Metal, Air, Rail, and Transportation Local Union No. 10
(“Local 10”) to dismiss the claims for breach of
contract and defamation (Counts II and III, respectively, of
the Counterclaim) filed by Defendant and Counterclaimant A-1
Refrigeration of Hibbing, Inc., d/b/a A-1 Refrigeration
Heating and Air Conditioning, Inc. (“A-1”).
See ECF No. 25. The Court has subject-matter
jurisdiction over the breach-of-contract counterclaim
pursuant to 28 U.S.C. § 1331 and 29 U.S.C. § 185(a)
and (c) and supplemental jurisdiction over the defamation
claim pursuant to 28 U.S.C. § 1367(a).
reasons described below, the Court grants Local 10's
motion to dismiss with respect to the defamation claim and
denies it with respect to the breach-of-contract claim.
13, 2018, Local 10 filed a one-count Complaint seeking
enforcement of a February 2018 arbitration award of more than
$140, 000 in unpaid fringe-benefit contributions it alleged
A-1 owed under a 2017 collective-bargaining agreement
(“CBA”). Compl. [ECF No. 1] ¶¶ 8,
12-13, 16-23. A-1 filed an Answer and Amended Counterclaim,
denying that it was bound by the 2017 collective-bargaining
agreement under which Local 10 pursued arbitration and sought
fringe-benefit contributions, Am. Countercl.[ECF No. 22]
¶¶ 6-13, and asserting claims for a declaratory
judgment that the arbitration award is void ab
initio for lack of any valid written arbitration
agreement (Count I), for breach of an alleged verbal contract
between Local 10 and A-1 (Count II), and for business
defamation (Count III). Local 10 brings this motion for
partial dismissal only as to Counts II and III, arguing that
each is preempted under federal labor law. See Mot.
[ECF No. 25]
the Court heard argument on Local 10's motion, the
parties stipulated to allowing A-1 to file an Answer and
Second Amended Counterclaim to change an approximate date
range in one paragraph of the counterclaim's factual
allegations. ECF No. 39 (“Stipulation”). A-1
subsequently filed that amendment. ECF No. 40. The parties
agreed that Local 10's motion for partial dismissal
“and any related ruling on the Motion by the Court
shall apply with identical scope and effect to the Second
Amended Counterclaim Complaint as they do to the Amended
Counterclaim Complaint.” Stipulation at 1-2. U.S.
Magistrate Judge Leo I. Brisbois subsequently entered an
order adopting that stipulation. ECF No. 42. Because the
parties and the Court agree that none of the changes in the
Second Amended Counterclaim affects the disposition of Local
10's pending motion, the Court will address the
parties' arguments as though they were made in reference
to the Second Amended Counterclaim.
acknowledges that on December 23, 2001, it signed a
one-sentence document (the “2001 Document”)
agreeing to abide by the CBA with Local 10 that was then in
effect (the “2001 CBA”). Second Am. Countercl.
¶ 5. The 2001 CBA required covered employers to make
contributions to certain fringe-benefit funds and to adhere
to certain grievance procedures, including binding
arbitration. Aff. of Michael McCauley (“McCauley
Aff.”), Ex. 1 (“2001 CBA”), Arts. X,
XVI-XXI [ECF No. 28-1 at 14, 21-26]. A-1 asserts that the
2001 Document “expired by its own terms on April 30,
2004, and it has not been renewed or reinstated.”
Second Am. Countercl. ¶ 6. Similarly, it asserts that
the 2001 CBA, to which A-1 was undisputedly bound under the
2001 Document, was “expressly scheduled to expire [on]
April 30, 2004.” Id. ¶ 5. Since April 30,
2004, A-1 has not considered itself bound by the 2001 CBA or
by any other written arbitration agreement. Id.
2001 Document, which A-1's president signed, states in
full: “I hereby agree to abide by the labor agreement
negotiated between Northern Minnesota Division of SMARCA of
Minnesota, Inc., and Sheet Metal Workers' International
Association, Local Union Number 10, effective May 1, 2001[, ]
with an expiration date of April 30,
2004.” McCauley Aff., Ex. 2 [ECF No. 28-1 at 34].
The 2001 CBA referenced in the 2001 Document contains an
evergreen clause that provides:
This Agreement shall become effective on the 1st day of May,
2001, and remain in full force and effect through the 30th
day of April, 2004, and shall continue in force from year to
year thereafter, unless written notice of reopening is given
not less than ninety (90) days prior to the expiration date.
In the event such notice of reopening is served, this
Agreement shall continue in force and effect until
conferences relating thereto have been terminated by either
McCauley Aff., Ex. 1 at 30-31. The 2001 CBA further provides
that “[e]ach Employer hereby waives any right it may
have to repudiate this Agreement during the term of the
Agreement, or any modification or amendment to this
Agreement.” Id. at 31. Nowhere in A-1's
Answer and Second Amended Counterclaim does it allege that it
has ever provided Local 10 with written notice of reopening,
as contemplated by the 2001 CBA's evergreen clause;
conducted or terminated any conferences relating to the
reopening of the 2001 CBA; or undertaken any other
affirmative act to terminate the 2001 CBA.
the above-quoted contract language, A-1 alleges that at about
the same time it signed the 2001 Document, it also reached a
verbal agreement with Local 10. See Second Am.
Countercl. ¶¶ 3, 4. Specifically, A-1 alleges the
parties verbally agreed that one of A-1's co-owners, Mr.
Aikey, would become a member of a different union, the
Plumbers & Steamfitters Local 589; that A-1's other
co-owner, Mr. Lees, would become a member of Local 10; and
that dues and fringe-benefit contributions would be paid for
each co-owner to his respective union. Id. ¶ 4.
It appears that, according to A-1, from the time the initial
term of the 2001 CBA “expired” in April 2004 and
for six or seven years thereafter, the parties continued
exclusively under the verbal agreement. See Id.
¶¶ 6, 10, 15. Then, in “late 2010 or early
2011, ” at Local 10's request, the parties verbally
agreed that dues for Local 10 also would be paid for Mr.
Aikey, with the result that both owners of A-1 also became
members of Local 10. Id. ¶¶ 10-12. A-1
alleges that the verbal agreements did not obligate it to
make fringe-benefit contributions for Mr. Aikey or to
arbitrate any disputes with Local 10. Id.
¶¶ 13, 14.
10 did not object to the sufficiency of the payments A-1 made
on Mr. Aikey's behalf until mid-2016, when Local 10's
affiliated fund, the Sheet Metal Local No. 10 Control Board
Trust Fund (the “Fund”), audited A-1 and
preliminarily assessed fringe-benefit contributions allegedly
owed on behalf of Mr. Aikey for 2012 through 2014.
Id. ¶¶ 4, 15-16. A-1 objected to the
assessment, citing the verbal agreements described above, and
the Fund did not pursue the assessment for the years 2012
through 2014. Id. ¶ 16. In late 2017, the Fund
again audited A-1 and preliminarily assessed fringe-benefit
contributions allegedly owed on behalf of Mr. Aikey, this
time for 2015 through 2017. Id. ¶ 17. It is
this 2017 assessment that Local 10 ultimately pursued in the
arbitration underlying its Complaint. Id.
the grievance process, including at the arbitration and
subsequent appeal, A-1 argued that it was not bound by any
written CBA during the relevant time period, was not
obligated to arbitrate disputes with Local 10, and was
participating in the arbitration process only under protest.
See generally Id. ¶¶ 18-31. The hearing
panel found in favor of Local 10, and the appeal panel denied
A-1's appeal. Id. ¶¶ 29, 31. Neither
the arbitration panel nor the appeal panel explicitly
addressed A-1's contention that it was under no
obligation to arbitrate disputes with Local 10. Id.
¶¶ 29, 32.
further alleges that in late 2017 or early 2018-at roughly
the same time the Fund was conducting its second preliminary
audit and the parties were engaged in arbitration related to
Local 10's conclusions in that audit-Local 10's agent
made statements “to the effect that [A-1] is not
qualified or authorized to perform work on projects because
Mr. Aikey is not a union member.” Id. ¶
54. The statement was made to at least six “persons or
entities”: three unidentified Max Gray Construction
superintendents, one unidentified Hawk Construction
superintendent, the Pipefitters local union, and the
Electricians local union. Id. Max Gray and Hawk
Construction were both important customers of A-1,
id. ¶ 50, and Local 10's statements
dissuaded both from doing business with A-1, id.
¶ 58. A-1 asserts that Local 10's statements were
false and were made with actual malice-that is, that Local 10
either knew they were false or acted with reckless disregard
of their truth or falsity-for three reasons: first, because
Local 10 should have possessed records showing membership and
dues payments for Mr. Aikey; second, because the statements
were made by Local 10's business agent, who was familiar
with the terms of the parties' verbal agreements; and
third, because “nothing [A-1] could have said or did
would have rendered it unqualified or unauthorized to perform
sheet metal and other work.” Id. ¶ 56.
A-1 claims Local 10's contractual breaches and defamatory
statements have cost, and will continue to cost, A-1 $40, 000
to $60, 000 per year in lost profits, and that it has
suffered reputational damages of at least $100, 000.
10 has moved to dismiss Counts II and III of the Counterclaim
pursuant to Fed.R.Civ.P. 12(b)(1), arguing that federal labor
law preempts those claims. Mot.; Mem. in Supp. at 4, 10-23
[ECF No. 27]. Local 10 further argues that, even if the
defamation claim were not preempted, it nevertheless should
be dismissed pursuant to Rule 12(b)(6) both because the
statements at issue constitute non-actionable expressions of
opinion and because A-1 has not satisfied the heightened
pleading standard governing statements made in relation to a
labor dispute. Mem. in Supp. at 23-30.