Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-01068/USCOURTS-cand-3_15-cv-01068-0/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1451 E.R.I.S.A.

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SOUTH CITY MOTORS, INC., et al.,

Plaintiffs,

v.

AUTOMOTIVE INDUSTRIES PENSION 

TRUST FUND, et al.,

Defendants.

Case No. 15-cv-01068-JST 

ORDER GRANTING IN PART AND 

DENYING IN PART DEFENDANT'S 

MOTION TO DISMISS AND ORDER 

GRANTING DEFENDANTS’ MOTION 

TO STAY PENDING ARBITRATION

Re: ECF No. 15

Before the Court is Defendant Automotive Industries Pension Trust Fund, et al.’s Motion 

to Dismiss or in the Alternative Stay Pending Arbitration. ECF No. 15. For the reasons set forth 

below, the motion to dismiss is GRANTED IN PART and DENIED IN PART. Defendants’ 

motion to stay pending arbitration is GRANTED.

I. BACKGROUND1

Plaintiffs South City Motors, Inc. (“South City”) and Capitol Expressway Ford, Inc.

(“Capitol”) are two Ford dealerships sponsored by Plaintiff Ford Motor Company’s dealer 

development program. ECF No. 1, ¶ 6. In 2005, both South City and Capitol entered into 

collective bargaining agreements that required each to make contributions to Defendant 

Automotive Industries Pension Trust Fund (the “Plan”), a multiemployer pension plan established 

under the Employee Retirement Income Security Act of 1974 (“ERISA”) as amended by the 

Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”). Id., ¶¶ 13-16. South City 

signed a Pension Agreement with the Plan agreeing to be bound by the Trust Agreement 

beginning September 1, 2005. Id. Capitol signed a Pension Agreement with the Plan effective 

 

1

The Court accepts the following allegations as true for the purpose of resolving Defendants’ 

motion to dismiss. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337–38 (9th Cir.1996).

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August 27, 2005. Id. It also signed a Pension Agreement with the Plan effective August 27, 2005. 

Id. 

ERISA permits a multiemployer plan to adopt a walk-away provision that allows 

employers to participate in the plan for a limited period of time without incurring pension 

withdrawal liability upon withdrawal from the plan. See ERISA § 4210(a), 29 U.S.C. § 1390(a). 

Such a term is called a “free look” provision, and it applies if a pension plan adopts it. The Plan 

contained a “free look” provision, which exempted an employer from withdrawal liability if the 

employer had an obligation to contribute to the Plan after March 1, 2005 and contributed for no 

more than five consecutive plan years preceding the year of its withdrawal. ECF No. 1, ¶¶ 12-13. 

South City and Capitol both withdrew from the Plan after contributing for fewer than five years. 

Id., ¶¶ 14, 16. 

When South City and Capitol withdrew, however, the Plan assessed Plaintiffs with 

withdrawal liability notwithstanding the “free look” provision. Id., ¶17. Defendants included 

Plaintiffs in a “controlled group” of contributing employers that were at least 80% owned by Ford 

Motor Company (the “Ford control group”). Id. Defendants argued that for withdrawal purposes, 

businesses under common control are treated as a single employer. Id., ¶ 20. Other dealerships in 

the Ford control group contributed to the Plan prior to Plaintiffs, thereby taking the entire group of 

dealerships outside the five year “free look” period. Id. Plaintiffs contend that Defendants

misapplied the Plan, because Plaintiffs have the right to have the “free look” provision apply to 

Plaintiffs individually, and not only to the Ford control group as whole. Id., ¶¶ 17-18. 

Plaintiffs pointed to two provisions in the Trust Agreement in support of their 

interpretation. First, they noted that the Trust Agreement’s “free look” provision states that an 

employer who would otherwise have withdrawal liability under ERISA would not be liable to the 

Plan if the employer met certain criteria. Id., ¶ 12. Specifically, the amended Trust Agreement 

provides in relevant part that “an Employer who withdraws from the Plan will not be liable for 

pension withdrawal liability under ERISA Subtitle E” if the employer first had an obligation to 

contribute to the Plan after March 1, 20015 and was obligated to contribute to the Plan for no more 

than five consecutive plan years preceding the year of withdrawal. Id. 

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Second, Plaintiffs noted that the Trust Agreement provided for a general definition of 

“Employer” – defined as “any association, individual, partnership, joint venture, trust, corporation 

or other entity, which at the time of reference, has a Pension Agreement in effect and is a party to 

this Trust Agreement.” Id. Defendants, however, applied the statutory definition of “employer” 

applied under ERISA section 4001(b)(1), whereby businesses with 80% common ownership are 

treated as a group under “common control” and treated as a single employer.2 Id., ¶ 20.

Plaintiffs and others in the Ford control group initiated arbitration proceedings on 

December 12, 2012 to challenge the Plan’s withdrawal liability, arguing that the “free look”

provision exempted them from liability. Id., ¶ 18. Plaintiffs raised multiple defenses contending 

that: the Plan’s “free look” provision applied on a non-controlled group basis; Plaintiffs did not 

trigger withdrawal liability because their withdrawals were exempt under the “free look” 

provision; equitable principles prevented the application of the “free look” provision on a 

controlled group basis; Plaintiffs only agreed to contribute to the Plan because it had a noncontrolled group “free look” provision; and if the “free look” rule were to apply on a controlled 

group basis, then the contribution was void due to mutual mistake of fact. Id.

On July 18, 2014, the arbitrator ruled that certain issues were not arbitrable, specifically 

estoppel, mistake, and other equitable defenses to withdrawal liability, and denied Plaintiffs’ 

discovery requests. Id., ¶ 19. Arbitration has been suspended pending the outcome of proceedings 

in this action. Id. 

Plaintiffs filed this case on March 6, 2015, making claims for fraudulent concealment, 

negligent concealment, and equitable estoppel, and seeking both restitution and declaratory relief. 

They allege that the Defendants fraudulently and negligently misrepresented that the “free look”

provision would apply to Plaintiffs on a non-controlled group basis. They seek to estop 

Defendants from collecting withdrawal liability payments with respect to Plaintiffs, to receive 

restitution for mistaken contributions, and to obtain declaratory relief that the Plan’s “free look”

 

2

Section 4001(b)(1) of ERISA states that “[A]ll employees of trades or businesses (whether or not 

incorporated) which are under common control shall be treated as employed by a single employer 

and all such trades and businesses as a single employer.” 29 U.S.C. § 1301(b)(1). 

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provision applies to Plaintiffs on a non-controlled group basis consistent with the Trust 

Agreement’s definition of “Employer.” See ECF No. 1. 

Defendants now move the Court to dismiss Plaintiffs’ Complaint or, in the alternative, stay 

this action until the arbitrator decides the central issue in the case. ECF No. 15. 

II. JURISDICTION

The Court has jurisdiction pursuant to 29 U.S.C. § 1132(e) and 28 U.S.C. § 1331. 

III. MOTION TO DISMISS

A. Legal Standard

When addressing a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil

Procedure, courts must determine whether a plaintiff has pled “enough facts to state a claim to 

relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). The 

Court must “accept all factual allegations in the complaint as true and construe the pleadings in the 

light most favorable to the nonmoving party.” Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir. 

2005). Even though the Court must accept all factual allegations in the complaint as true, 

“threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, 

do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). “Dismissal under Rule 12(b)(6) is 

appropriate only where the complaint lacks a cognizable legal theory or sufficient facts to support 

a cognizable legal theory.” Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th 

Cir. 2008). Allegations in a complaint must “contain sufficient allegations of underlying facts to 

give fair notice and to enable the opposing party to defend itself effectively” and “the factual 

allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not 

unfair to require the opposing party to be subjected to the expense of discovery and continued 

litigation.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). 

In addition, fraud-based claims are subject to a heightened pleading standard under Federal 

Rule of Evidence 9(b). This heightened standard applies when evaluating a Rule 12(b)(6) motion 

to dismiss. Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Fraud allegations must be 

specific enough to give the defendant notice of the particular misconduct alleged to constitute the 

fraud so that the defendant may defend against the charge. Id. In general, allegations sounding in 

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fraud must contain “an account of the time, place, and specific content of the false representations 

as well as the identities of the parties to the misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 

756, 765 (9th Cir. 2007). On the other hand, “[m]alice, intent, knowledge, and other conditions of 

a person’s mind may be alleged generally.” Fed. R. Civ. Pro. 9(b). State law causes of action 

must comport with the heightened pleading requirements of Rule 9(b) where applicable. See Vess 

v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (9th Cir. 2003).

If a court dismisses the complaint or a claim alleged therein, it must grant leave to amend 

unless amendment would be futile. Lucas v. Dep’t of Corrections, 66 F.3d 245, 248 (9th Cir. 

1995). 

B. Analysis

1. Fraudulent inducement/concealment

The elements of a cause of action for fraud based on concealment are: 

(1) [T]he defendant must have concealed or suppressed a material fact, (2) the 

defendant must have been under a duty to disclose the fact to the plaintiff, (3) the 

defendant must have intentionally concealed or suppressed the fact with the intent 

to defraud the plaintiff, (4) the plaintiff must have been unaware of the fact and 

would not have acted as he did if he had known of the concealed or suppressed fact, 

and (5) as a result of the concealment or suppression of the fact, the plaintiff must 

have sustained damage. 

Bank of Am. Corp. v. Superior Court, 198 Cal. App. 4th 862 (2011). 

The elements of fraud must be satisfied within the context of Rule 9(b). See Moore v. 

Brewster, 96 F.3d 1240, 1245 (9th Cir. 1996). Allegations of fraud must be “accompanied by the 

who, what, when, where, and how of the misconduct charged.” Vess, 317 F.3d at 1106 (quoting 

Cooper v. Pickett, 137 F.3d 616, 627 (9th Cir. 1997)). However, a plaintiff alleging fraudulent 

concealment will “not be able to specify the time, place, and specific content of an omission as 

precisely as would a plaintiff in a false representation claim.” Falk v. Gen. Motors Corp., 496 F. 

Supp. 2d 1088, 1098-99 (N.D. Cal. 2007). Thus, a fraud by concealment claim “can succeed 

without the same level of specificity required by a normal fraud claim.” Id. (citing Washington v. 

Baenziger, 673 F.Supp. 1478, 1482 (N.D. Cal. 1987)). 

Turning to the elements of this claim, the Court concludes that Plaintiffs have adequately 

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alleged materiality. Non-disclosed information is material if “had the omitted information been 

disclosed, one would have been aware of it and behaved differently.” Id. at 1095 (citations 

omitted). Plaintiffs allege that Defendants failed to disclose that Defendants would apply 

ERISA’s controlled group provision to the term “Employer” rather than the Trust Agreement’s 

definition. The Trust Agreement’s definition for the term “Employer” omits any reference to a 

“controlled group,” but Defendants applied the “free look” provision on that basis. Plaintiffs 

plausibly allege that South City and Capitol would not have entered into their collective 

bargaining agreements had they known that the “free look provision would apply on a controlled 

group basis. See ECF No. 1, ¶ 26. 

Plaintiff’s fraudulent concealment claim still fails, however, because Defendants had no 

duty of disclosure to Plaintiffs. A duty to disclose arises 

(1) when the defendant is in a fiduciary relationship with the 

plaintiff; (2) when the defendant had exclusive knowledge of 

material facts not known to the plaintiff; (3) when the defendant 

actively conceals a material fact from the plaintiff; and (4) when the 

defendant makes partial representations but also suppresses some 

material fact.

Falk, 496 F. Supp. 2d at 1095 (quoting LiMandri v. Judkins, 52 Cal.App.4th 326, 337 (1997). 

Defendants are not in a fiduciary relationship with Plaintiffs. ERISA section 404 states 

that fiduciaries of the Trust Fund must “discharge his duties with respect to a plan solely in the 

interest of the participants and beneficiaries.” 29 U.S.C. § 1104. ERISA defines “participants” to 

include “any employee or former employee of an employer, or any member or former member of 

an employee organization, who is or may become eligible to receive a benefit of any type from an 

employee benefit plan.” Id. at § 1002(7). Thus, Trustees owe a fiduciary duty to employees who 

may receive benefits from an employee benefit plan. See United Foods v. W. Conference of 

Teamsters Pension Trust Fund, 816 F. Supp. 602, 614 (N.D. Cal. 1993) (“Trustees owe fiduciary 

duties solely to the participants and beneficiaries of the pension plan, not to employers.”). 

Because Plaintiffs are employers, there is no fiduciary relationship between Defendants and 

Plaintiffs that would create a duty to disclose.

Plaintiffs also do not plausibly allege that Defendants had exclusive knowledge over a

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material fact or that Defendants actively concealed a material fact. The Amended Trust 

Agreement’s “free look” provision references the relevant statutory provision. ECF No. 1, ¶ 12. 

Plaintiffs had equal access to the relevant law, including the statutory definition of “employer” 

that includes all “trades or businesses” that are under “common control.” 29 U.S.C. § 1301(b)(1); 

see Central States, SE and SW Areas Pension Fund v. Safeway, Inc., 229 F.3d 605, 608 (7th Cir. 

2000) (regulations are notices to the world). 

Plaintiffs also do not plausibly allege that Defendants made any representations, much less 

partial representations, of fact. For example, nothing in the definition of “Employer” indicates 

that it would not include a group of contributing employers under common ownership, and 

nothing in the amendment to the Trust Agreement represents that the Trust Fund would not apply 

ERISA’s controlled group provision to the term “Employer.” Moreover, even if the terms at issue 

were representations, they do not make a statement about any “past or existing facts” such that 

further facts are necessary to make the representations complete. See Neu-Visions Sports, Inc. v. 

Soren/McAdam/Bartells, 86 Cal. App. 4th 303, 309 (2000) (“It is hornbook law that an actionable 

misrepresentation must be made about past or existing facts . . . .”). Rather, the terms of the 

contract state a promise of future action, as to which the parties now have different legal 

interpretations. 

Plaintiffs’ authorities do not support their position. For example, in Apollo Capital Fund, 

LLC v. Roth Capital Partners, LLC, 158 Cal. App. 4th 226 (2007), investors in an internet service 

company’s bridge notes brought a fraud claim against a broker-dealer. Id. at 234. Plaintiff alleged 

that the broker-dealer’s principal drafted offering documents which contained false statements of 

fact and also made false oral representations. Id. at 238-239. The complaint identified several 

such misrepresentations and omissions, both written and oral, on topics such as the likelihood of 

repayment of the notes, whether the issuing entity would merge with another firm, whether the 

issuing entity would be “cash flow positive,” and numerous other specific facts. Id. The court 

concluded that the plaintiff’s complaint stated a claim for common law fraud. Id. at 243. Here, 

unlike the situation in Apollo Capital Fund, Plaintiffs allege no such actionable 

misrepresentations. 

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Finally, Plaintiffs argue that the Complaint states a prima facie case of fraudulent 

concealment under federal common law. Plaintiffs cite to Carl Colteryahn Dairy, Inc. v. 

Pennyslvania Teamsters and Emp. Pension Fund, 847 F.2d 113 (3d Cir. 1998), cert. denied, 488 

U.S. 1041 (1989), where the Third Circuit recognized a federal common law fraud claim. There, 

an employer alleged that its pension fund, trustees, and others employed by the fund 

misrepresented the status of the pension fund when it merged with another fund. Id. at 117. The 

employer alleged that the fund fraudulently failed to disclose large unfunded liabilities that 

predated the merger. Id. The employer then withdrew from the fund but was imposed a large 

withdrawal liability assessment. Id. The employer stated that it would not have approved the 

merger had it known of the unfunded liabilities and that the withdrawal liability assessment 

consisted of primarily pre-merger undisclosed liabilities. Id. at 122 n. 13. The court held that the 

employer could sue in federal court for the return of any withdrawal liability sums assessed as a 

result of the fraudulent inducement to join the fund. Id. at 118. 

This case is not like Colteryahn. In that case, there were both affirmative 

misrepresentations and concealments of the pension fund’s financial condition. Id. at 120. By 

contrast, as stated earlier, Plaintiffs here have alleged neither an affirmative misrepresentation nor 

an actionable concealment. So, even assuming for the sake of argument that a federal common 

law fraud cause of action exists in this Circuit, the Court concludes that Plaintiffs’ alleged fraud 

claim does not fall within any such cause of action. 

Accordingly, the Court GRANTS Defendants’ Motion as to Plaintiffs’ claim for fraudulent 

concealment with leave to amend.

2. Negligent Misrepresentation/Concealment

Elements for negligent misrepresentation consist of: 

(1) A misrepresentation of a past or existing material fact, (2) without reasonable 

grounds for believing it to be true, (3) with intent to induce another's reliance on the 

fact misrepresented, (4) ignorance of the truth and justifiable reliance thereon by the 

party to whom the misrepresentation was directed, and (5) damages.

Fox v. Pollack, 181 Cal. App. 3d 954, 962 (1986). Negligent misrepresentation differs 

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with fraud in regards to one essential element: mental state.3 Petersen v. Allstate Indem.

Co., 281 F.R.D. 413, 418 (C.D. Cal. 2012). Negligent misrepresentation requires that the 

defendant “lacked any reasonable ground for believing [its] statement to be true,” but fraud 

requires that the defendant “made an intentionally false statement.” Id. at 417 (quoting 

Charnay v. Cobert, 145 Cal. App. 4th 170, 184 (2006)). 

Plaintiffs’ negligent misrepresentation claim fails for two reasons. First, as 

discussed earlier, Plaintiffs have not adequately alleged that Defendants made a statement 

of past or existing material fact. Instead, Plaintiffs allege that Defendants failed to inform 

them that Defendants would apply the withdrawal liability provision on a controlled group 

basis. This is not a statement of past or existing material fact. 

Second, negligent misrepresentation requires a positive assertion. Omissions or 

nondisclosures cannot give rise to a negligent misrepresentation claim. Mitsui O.S.K. Lines, Ltd. 

v. SeaMaster Logistics, Inc., 913 F.Supp.2d 780, 789 (N.D. Cal. 2012). Thus, a failure to disclose 

may give rise to a claim for fraud, but it will not support a claim for negligent misrepresentation. 

Id. 

Accordingly, the Court GRANTS Defendants’ Motion as to Plaintiffs’ claim for negligent 

misrepresentation with leave to amend.

3. Equitable Estoppel

Plaintiffs’ equitable estoppel claim seeks to compel Defendants to comply with the Trust 

Agreement based on the Trust Agreement’s definition of “Employer.” ECF No. 18 at 8. Although 

ERISA preempts state claims based on equitable estoppel, Ellenburg v. Brockway, Inc., 763 F.2d 

1091, 1095 (9th Cir.1985), the Ninth Circuit has recognized that, in certain circumstances, federal

equitable estoppel principles apply to some claims arising under ERISA. Greany v. W. Farm 

Bureau Life Ins. Co., 973 F.2d 812, 821 (9th Cir.1992). In order to state a cause of action for 

equitable estoppel in an ERISA action, a plaintiff must allege: “a material misrepresentation, 

 

3

The Court will conform to its prior determination that negligent misrepresentation claims are not 

subject to the heightened standard of Rule 9(b). See Howard v. First Horizon Home Loan Corp., No. 

12-CV-05735, 2013 WL 6174920, at *5 (N.D. Cal. Nov. 25, 2013).

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reasonable and detrimental reliance upon the representation, extraordinary circumstances, that the 

provisions of the plan at issue were ambiguous such that reasonable persons could disagree as to 

their meaning or effect, and finally, that representations were made involving an oral interpretation 

of the plan.” Spink v. Lockheed Corp., 125 F.3d 1257, 1262 (9th Cir. 1997).

Plaintiffs assert that the Trust Fund should be estopped from applying withdrawal liability 

on a controlled group basis. As discussed above, however, Plaintiffs’ have failed to adequately 

allege a material misrepresentation, and have not alleged that “representations were made 

involving an oral interpretation of the plan.” For these reasons, the Court also dismisses the 

equitable estoppel claim. 

As to this claim, the Court’s order is without leave to amend. Defendants correctly argue 

that Plaintiffs’ estoppel claim is not cognizable because they have no power to circumvent the 

provisions of ERISA, even if the parties agree to do so. ECF No. 15 at 12 (citing EUSA-Allied 

Acquisition, Corp. v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, No. 11-3181, 

2011 WL 3651315 (D.N.J. Aug. 18, 2011). 

In EUSA-Allied Acquisition, the employer plaintiff began contributing to the trust fund 

after signing an agreement that included a “free look” period. 2011 WL 3651315 at *1. The 

Agreement stated that plaintiff would face no withdrawal liability to the fund under the MPPAA 

so long as it contributed for no more than five plan years. Id. The employer thought this meant it 

could withdraw from the fund up to sixty months after its initial contributions. Id. Employer

withdrew four years and eleven months after beginning contributions. Id. at *2. The fund 

concluded that the “free look” period had expired several months earlier. Id. Plaintiff brought an 

action alleging that fund fraudulently misrepresented the period of time that the plaintiff could 

withdraw under the agreement. Id. The court denied the employer’s motion for preliminary 

injunction holding that the employer could not justifiably rely on the specific wording of the plan 

when it referenced the more restrictive language of the MPPAA for the vesting period and when 

parties could not modify withdrawal liability under the MPPAA by private agreement. Id. at *7.

Plaintiffs attempt to distinguish EUSA-Allied Acquisition, arguing that the “free look”

provision of ERISA section 4210 does not itself define “Employer” and that applying the Trust 

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Agreement of definition would not conflict with any term of section 4210. See ECF No. 18 at 7. 

However, this argument is unavailing because the subchapter governing withdrawal liability does 

provide for a definition of employer. See 29 U.S.C. § 1301(b) (“For purposes of this 

subchapter . . . all employees of trades or businesses (whether or not incorporated) which are 

under common control shall be treated as employed by a single employer and all such trades and 

businesses as a single employer.); Robbins v. Pepsi-Cola Metro. Bottling Co., 636 F. Supp. 641, 

654 (N.D. Ill. 1986) (“Section 1301(b)(1)’s definition of employer clearly applies to all decisions 

relating to withdrawals from multiemployer pension plans. Section 1301(b)(1) specifically states 

that the controlled group provision shall apply “for the purposes of this Title.”). 

Because the Court concludes that any amendment to Plaintiffs’ equitable estoppel claim 

would be futile, that claim is dismissed with prejudice.

4. Declaratory Judgment

A claim for declaratory relief under the Declaratory Judgment Act, 28 U.S.C. § 2201, 

applies “in a case of actual controversy within its jurisdiction.” 28 U.S.C. § 2201(a). A 

“controversy” must be one that is appropriate for judicial determination. Osborn v. Bank of 

United States, 9 Wheat. 738, 819. The controversy must be definite and concrete, touching the 

legal relations of parties having adverse legal interests. South Spring Gold Co. v. Amador Gold 

Co., 145 U.S. 300, 301 (1892). “The appropriate inquiry for a district court in a Declaratory 

Judgment Act case is to determine whether there are claims in the case that exist independent of 

any request for purely declaratory relief, that is, claims that would continue to exist if the request 

for a declaration simply dropped from the case.” Snodgrass v. Provident Life & Acc. Ins. Co., 147 

F.3d 1163, 1167-68 (9th Cir. 1998).

Plaintiffs allege that there is an actual controversy between Plaintiffs and Defendants with 

respect to the rights and obligations of the parties. ECF No. 1, ¶ 41. Plaintiffs seek a declaration 

that Defendants’ withdrawal liability assessment should be rescinded on the ground that Plaintiffs’ 

obligation to contribute to the plan was fraudulently induced by Defendants. Id., ¶ 42. 

Plaintiffs’ declaratory relief claim must be dismissed. A claim for declaratory relief fails 

where the Plaintiff seeks to redress past wrongs rather than seek declaration as to future rights. 

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See Edejer v. DHI Mortg. Co., 2009 WL 1684714, at *11 (N.D. Cal. June 12, 2009). As 

Defendants point out, the withdrawal liability assessment in this case has already occurred.

Plaintiffs’ declaratory relief claim must also be dismissed because Plaintiffs’ request for 

declaratory relief depends on whether Defendants “fraudulently induced” Plaintiffs to make 

contributions to the plan. See ECF No. 1, ¶ 41. Declaratory relief is not a standalone claim. See

28 U.S.C. §§ 2201, 2202; Fiedler v. Clark, 714 F.2d 77, 79 (9th Cir. 1983) (“The Declaratory 

Judgment Act does not provide an independent jurisdictional basis for suits in federal court . . . . It 

only permits the district court to adopt a specific remedy when jurisdiction exists.”) (citations 

omitted). The Court having already determined that no viable misrepresentation cause of action 

remains to support Plaintiff’s request for declaratory relief, that request is dismissed. The Court 

grants leave to amend the Complaint to include a request for declaratory judgment if the request is 

supported by at least one additional cause of action.

5. Restitution of Mistaken Contributions

ERISA § 403(c)(2)(A) permits a multiemployer trust fund to return to an employer 

contributions made by a mistake of law or fact. 29 U.S.C. § 1103(c)(2)(A ). Section 403 gives an 

employer an implied right of action to recoup mistaken contributions. Award Serv., Inc. v. N. Cal.

Retail Clerks Unions & Food Emp’r Joint Pension Fund, 763 F.2d 1066, 1068 (9th Cir. 1985); 

British Motor Car Distrib., Ltd. v. San Francisco Auto. Indus. Welfare Fund, 882 F.2d 371, 374 

(9th Cir. 1989). An employer is entitled to a refund if it can establish that it made a mistaken 

contribution within the meaning of ERISA section 403(c)(2)(A)(ii). 29 U.S.C. § 

1103(a)(2)(A)(ii). “The right to a refund is not automatic, however, even if the employer can 

demonstrate the requisite mistake of fact or law; the employer must also show that the equities 

favor restitution.” Alaska Trowel Trades Pension Fund v. Lopshire, 103 F.3d 881, 885 (9th Cir. 

1996).

Plaintiffs contend that they entered into collective bargaining agreements based on the 

bargaining parties’ mutual and good faith belief that the Plan’s “free look” provision would apply

to Plaintiffs. ECF No. 1, ¶ 46. Defendants assert that Plaintiffs’ restitution of mistaken 

contribution claim should be dismissed because Plaintiffs only alleged a conditional mistake and 

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that Plaintiffs failed adequately to allege that the equities favor a refund to them. ECF No. 15 at 

16. 

At the motion to dismiss stage, Plaintiffs need only plausibly allege that the balance of 

equities tips in their favor. Whether they can prevail on this claim will require the Court to weigh 

the evidence on the merits. See Award Serv., 763 F.2d at 1069; Chase v. Trustees of W. 

Conference of Teamsters Pension Trust Fund, 753 F.2d 744, 753 (9th Cir. 1985). Plaintiffs have 

stated a claim adequately to survive a motion to dismiss. 

Defendants’ motion to dismiss the claim of relief for restitution of mistaken contributions 

is denied.4

IV. MOTION TO STAY PENDING ARBITRATION

A. Legal Standard

A district court’s discretion to stay proceedings “is incidental to the power inherent in 

every court to control disposition of the cases on its docket with economy of time and effort for 

itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299 U.S. 248, 254 (1936). This rule 

does not require that the issues in the other proceedings are necessarily controlling of the action 

before the court. Leyva v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863-64 (9th Cir. 1979). 

A district court may stay its proceedings in favor of arbitration in ERISA cases. Fujikawa v. 

Gushiken, 823 F.2d 1341 (9th Cir.1987), cert. denied, 108 S. Ct. 2913 (1988). The court should 

premise the stay on: (1) “receipt of satisfactory assurances that the arbitration is proceeding with 

diligence and efficiency,” . . . and (2) a determination that the relief available under [the relevant 

statutory provision] will not be jeopardized by the stay. Id. at 1347 (quoting Amaro v. 

Continential Can Co., 724 F.2d 747, 725 (9th Cir. 1984)).

B. Analysis

Plaintiffs demanded arbitration, but then brought this action upon learning that the 

arbitrator did not have jurisdiction to hear Plaintiffs’ estoppel, mistake, and other defenses to 

 

4 Defendants argue for the first time in their reply brief that Plaintiffs’ damages claims are timebarred. See ECF No. 20 at 8-10. The Court has not considered this argument. “It is inappropriate 

to consider arguments raised for the first time in a reply brief.” Ass’n of Irritated Residents v. C & 

R Vanderham Dairy, 435 F.Supp.2d 1078, 1089 (E.D. Cal. 2006). 

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withdrawal liability. ECF No. 1, ¶ 19. A hearing in the arbitration proceedings has not yet 

occurred. ECF No. 1, ¶ 10. 

Defendants contend that this action should be stayed while the arbitrator decides whether 

the “free look” provision applies on a controlled group basis. See ECF No. 15 at 17. Defendants 

argue that by not staying the case, the court would inappropriately interfere with the arbitrator’s 

authority under ERISA these issues in a mandatory MPPAA arbitration.5 Id. Defendants contend 

that after the parties know the extent of their withdrawal liability, the Court can then determine 

whether Plaintiffs’ are entitled to return of payments. Id.

Staying proceedings in this action is appropriate under the guidelines established by

Amaro and Fujikawa. The parties have already begun arbitration and the arbitration is in abeyance 

pending the decision in this motion. See ECF No. 20 at 10. The equitable relief sought by 

Plaintiffs can later be decided by the Court should the arbitrator decide that the “free look”

provision applies and Plaintiffs are then assessed with withdrawal liability. Because allowing

arbitration to proceed first would conserve judicial resources and would not jeopardize the relief 

sought by Plaintiffs, Defendants’ motion to stay pending arbitration is GRANTED. All further 

proceedings are stayed until arbitration is completed. 

CONCLUSION

Defendants’ motion to dismiss is GRANTED IN PART and DENIED IN PART. 

Defendants’ motion to dismiss is GRANTED as to the fraudulent inducement/concealment, 

negligent representation/concealment, equitable estoppel, and declaratory relief claims, and 

DENIED as to the restitution of mistaken contributions. Defendants’ motion to stay pending 

arbitration is GRANTED. 

The parties shall notify the Court within ten days of the conclusion of arbitration, and shall 

request that the Court reopen this matter or take other action consistent with the resolution of the 

arbitration. 

 

5

Section 1401 compels arbitration for disputes arising out of sections 1381 through 1399; section 

1381 imposes withdrawal liability upon an employer that withdraws from a multiemployer plan in 

a complete or partial withdrawal. See 29 U.S.C. §§ 1381, 1401. 

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The case management conference scheduled for August 5, 2015 is vacated. 

IT IS SO ORDERED.

Dated: August 4, 2015

______________________________________

JON S. TIGAR

United States District Judge

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