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United States District Court, Northern District of Illinois, Eastern Division

April 1, 2003


The opinion of the court was delivered by: James B. Zagel, District Judge.


The Trustees of the Suburban Teamsters of Northern Illinois Welfare and Pension Funds ("Funds") filed a Complaint against Hope Cartage, Inc. ("Hope") seeking recovery of fringe benefit contributions owed pursuant to a collective bargaining agreement. The Funds alleged that Hope was party to a collective bargaining agreement which required it to make fringe benefit contributions to the Funds and that Hope now owes the Funds $43,866.78 in contributions. The Funds seek judgment against Hope for its contributions owed, as well as attorneys' fees, costs, interest, and liquidated damages pursuant to § 502(g)(2) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1132(g)(2) ("ERISA"). A few months ago, Hope filed a Third Party Complaint against the International Brotherhood of Teamsters Local 179 ("Local 179") and Robert White as third-party defendants alleging breach of contract and seeking indemnification. Hope alleges that in 1988, White, an agent of Local 179, induced Hope to sign a union contract by stating that Hope "which is a one person corporation, would not be required to make contributions" to the Funds. Hope further alleges that "in reasonable reliance upon the oral agreement reached with White, Hope signed the Collective Bargaining Agreement." Finally, Hope asserts that "despite the agreement," the Funds have filed a lawsuit against Hope seeking contributions. Local 179 and White have moved to dismiss the Third Party Complaint filed by Hope Cartage under Federal Rule of Civil Procedure 12(b)(6). In addition, the Funds have moved to sever the third party claims under Federal Rule of Civil Procedure 14(a).

A motion to dismiss a complaint under Rule 12(b)(6) is proper "where it appears beyond doubt that the plaintiff can prove no set of facts in support of his or her claim on which relief may be granted." Hickey v. O'Bannon, 287 F.3d 656, 657 (7th Cir. 2002). In ruling on a motion to dismiss, all well-pleaded factual allegations are accepted as true and construed in favor of the plaintiff. Scott v. O'Grady, 975 F.2d 366, 368 (7th Cir. 1992). In Count I of its Third-Party Complaint, Hope alleges that Local 179 committed a breach of contract; in Count III, Hope alleges that White individually committed a similar breach. Hopes cites § 301 of the Labor Management Relations Act, 29 U.S.C. § 185, as the jurisdictional basis for these claims. That section establishes federal jurisdiction for "suits for violations of contracts between an employer and a labor organization representing employees." As such, § 301 provides no support for Hope's breach of contract claim against White individually. Therefore, I dismiss Count III for lack of jurisdiction. Even if this is an inappropriate basis for dismissal, I would nonetheless dismiss this count for the same reason that I dismiss the count against Local 179 — Hope's failure to allege any action arguably constituting a breach. Regarding Local 179, Hope's reasoning appears to be that in 1988, Local 179 and Hope allegedly reached an oral agreement that Hope did not have to make contributions to the Funds but that Local 179 has now somehow breached this agreement fourteen years later by the Funds' lawsuit against Hope seeking contributions owed. Setting aside the issue of whether an oral agreement allegedly made in 1988 has any viability fourteen years later, Hope has failed to allege any action arguably constituting a breach by Local 179. A trust fund and a union are "separate and distinct" legal entities, and a Fund "may move to enforce the terms of [a collective bargaining agreement] without asking the union for approval or support and may bring a lawsuit for unpaid contributions against an employer . . . without involvement from the union." Trustees of the Will County Carpenters Health & Welfare Fund v. F.V.E. & Associates, Inc., No. 00 C 7685, 2001 WL 1571458, at *2 (N.D.Ill. Dec. 4, 2001). The fact that the Funds filed a lawsuit against Hope for contributions provides no basis for Hope's allegation that Local 179 breached an agreement with Hope. As such, I dismiss Count I.

In Counts II and IV of the Complaint, Hope alleges that Local 179 and White are responsible for indemnifying Hope for any amounts it is required to pay to the Funds. As the court noted in Trustees v. F.V.E., "[w]here an employer seeks indemnification from a union for contributions made to the trust funds, the employer must properly allege and ultimately prove, fraudulent conduct by the union." 2001 WL 1571458, at *2. In order to establish a claim for fraudulent misrepresentation, Hope would have to allege and prove that Local 179 and/or White knowingly made a false representation concerning a material fact with the specific intent to deceive. Rozay's Transfer v. Local Freight Drivers, Local 208, Intern. Broth. of Teamsters, Chauffeurs, Warehousemen and Helpers of America, 850 F.2d 1321, 1326 (9th Cir. 1998); Trustees v. F.V.E., supra; White and Brewer Trucking, Inc. v. Donley, 952 F. Supp. 1306, 1317 (C.D.Ill. 1997). Moreover, pursuant to Federal Rule of Civil Procedure 9(b), allegations of fraudulent conduct must be made with specificity as to the circumstances constituting the fraud. As the court explained in Ackerman v. Northwestern Mut. Life Ins. Co., 172 F.3d 467, 469 (7th Cir. 1999), the "purpose . . . of the heightened pleading requirement in fraud cases is to force the plaintiff to do more than the usual investigation before filing his complaint." Here, Hope's indemnity counts are devoid of any allegation that Local 179 and/or White knowingly made false representations with the specific intent to deceive. Since Hope has not alleged this, I dismiss Counts II and IV.

For the aforementioned reasons, Local 179 and White's Motion to Dismiss Third-Party Complaint is GRANTED and the Funds' Motion to Strike or Sever for Separate Trial of Third Party Claim is DENIED as moot now that I have dismissed the Third-party Complaint in its entirety.


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