Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_13-cv-01112/USCOURTS-caed-1_13-cv-01112-6/pdf.json

Parties Involved:
Board of Trustees of the Dairy Employees Union Local No. 17 Christian Labor Association of the United States of America Pension Trust
Counter Claimant
Charles Van Der Kooi Dairy
Counter Defendant
Cow-West North Star Dairy
Counter Defendant
Dairy Employees Union Local No. 17 Christian Labor Association of the United States of America Pension Trust
Counter Claimant
Henry Jongsma & Son Dairy
Counter Defendant
Irigaray Dairy
Counter Defendant

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A

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

IRIGARAY DAIRY, CHARLES VAN DER 

KOOI DAIRY, HENRY JONGSMA & SON 

DAIRY , and COW-WEST NORTH STAR 

DAIRY,

 Plaintiffs,

 

 vs.

DAIRY EMPLOYEES UNION LOCAL NO. 

17 CHRISTIAN LABOR ASSOCIATION 

OF THE UNIDED STATE OF AMERICA 

PENSION TRUST, and BOARD OF 

TRUSTEES OF THE DAIRY EMPLOYEES 

UNION LOCAL NO. 17 CHRISTIAN 

LABOR ASSOCIATION OF THE UNITED 

STATES OF AMERICA PENSION TRUST, 

 

 

 Defendants. 

1:13-cv-1112 AWI MJS

MEMORANDUM OPINION AND 

ORDER ON DEFENDANTS’ MOTION 

TO DISMISS PLAINTIFFS’ SECOND 

AMENDED COMPLAINT

Doc. # 60

On September 2, 2014, the court issued a Memorandum Opinion And Order (hereinafter, 

the “September 2 Order”) granting Defendants‟ motion to dismiss Plaintiffs‟ First Amended 

Complaint (“FAC”). Doc. # 57. The dismissal was with leave to amend. On September 22, 

2014, plaintiffs Irigaray Dairy, et al. (“Plaintiffs”) filed their Second Amended Complaint for 

Declaratory Judgment (“SAC”). Doc. # 59. Currently before the court is the motion of 

defendant Dairy Employees Union Local No. 17 Christian Labor Association of the United 

States of American Pension Trust, et al. (“Defendants”) to dismiss Plaintiffs‟ SAC pursuant to 

Case 1:13-cv-01112-MJS Document 69 Filed 03/04/15 Page 1 of 11
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F.R.C.P. 12(b)(6). Federal subject matter jurisdiction exists pursuant to 28 U.S.C. § 1331. 

Venue is proper in this court.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs are family-owned dairies that seek to cease participation in the retirement trust 

plan administered by Defendants (hereinafter, the “Plan”). In this action, Plaintiffs seek

declaratory judgment holding Plaintiffs not liable under the Employees Retirement Income 

Security Act (“ERISA”) for “unfunded liability” contributions to the Plan that would otherwise 

be required pursuant 29 U.S.C. § 1381 upon Defendants‟ withdrawal from a multiemployer 

retirement plan. Plaintiffs allege they have made regular contributions to the Plan for “decades,” 

but that the contributions were unlawfully coerced from Plaintiffs and not made according to any 

valid agreement between the parties. In its September 2 Order, the court discussed whether 

leave to amend should be granted. The court‟s primary concern was Plaintiffs‟ failure to allege 

facts that unambiguously described, among other things, the relationship between the Plaintiffs, 

the payments to the Plan that they made, and the Defendants. See Doc. # 57 at 17:5-11. In 

addition, the court expressed its concern with Plaintiffs‟ failure to unambiguously allege the 

relationship between themselves and the potential beneficiaries of the Plan. That is, what is the 

reasonable expectation of which workers to benefit now or in the future from contributions to the 

Plan?

Plaintiffs SAC adds a substantial amount of information relevant to the issue of the 

relationship between the Plaintiff dairies and the regular contributions made to the Plan over a 

period of decades. With regard to Plaintiff Henry Jongsma & Son Dairy, the SAC alleges:

In the case of Plaintiff Henry Jongsma & Son Dairy, no written agreement 

has ever existed obligating Plaintiff Henry Jongsma & Son Dairy to make 

payments. No [Agricultural Labor Relations Board (“ALRB”)] was ever 

held at the dairy and at no time has the [Christian Labor Association 

(“CLA”)] Union been certified pursuant to California law to represent 

Plaintiff Henry Jongsma & Son Dairy‟s employees. Plaintiff Henry 

Jongsma & Son Dairy only began to make the payments to Defendants to 

keep the milk drivers from refusing to pick up the milk. Plaintiff Henry 

Jongsma & Son Dairy did not make the payments for any other purpose 

and was illegally forced to make the payments to have its milk picked up 

by the milk truck drivers. At no time has a written agreement, much less a 

collective bargaining agreement ever existed requiring Plaintiff Henry 

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Jongsma & Son Dairy to make payments. Defendants accepted the 

payments without a written contract in violation of law and never 

informed Plaintiff Henry Jongsma & Son Dairy that such an arrangement 

was illegal. Despite not ever being the legal representative of Plaintiff 

Henry Jongsma & Son Dairy‟s employees pursuant to the Agricultural 

Labor Relations Act, the CLA Union and Defendants kept illegally 

accepting payments from the dairy in violation of state and federal law. 

Doc #. 59 at 3:18-4:5.

With regard to Plaintiff Charles Van Der Kooi Dairy, the SAC alleges:

Plaintiff Charles Van Der Kooi Dairy did not sign a written agreement 

with Defendants that began an obligation for Plaintiff Charles Van Der 

Kooi Dairy to make payments. Defendants accepted the payments 

without a written contract in violation of law and never informed Plaintiff 

Charles Van Der Kooi Dairy that such an arrangement was illegal. No 

ALRB election was ever held at the dairy and at no time has the CLA 

Union been certified pursuant to California law to represent Plaintiff‟s 

employees. At no time has a written agreement, much less a collective 

bargaining agreement ever existed requiring Plaintiff Charles Van Der 

Kooi Dairy to make payments. Plaintiff Charles Van Der Kooi Dairy 

made the payments based on false representations made by the CLA 

Union and/or mistake of fact and/or law. Defendants accepted the 

payments without a written contract in violation of law and never 

informed Plaintiff Charles Van Der Kooi Dairy that such an arrangement 

was illegal. Despite not ever being the legal representative of Plaintiff 

Charles Van Der Kooi Dairy‟s employees pursuant to the Agricultural 

Labor Relations Act, the CLA Union and Defendants kept illegally 

accepting payments form the dairy in violation of state and federal laws.

Doc. # 59 at 4:6-20. With regard to Plaintiff Irigaray Dairy, the allegations regarding the 

relationship of the Plaintiff to the payments made to the Plan are very similar to those made with 

regard to Plaintiff Van Der Kooi with the exception that Plaintiff Irigaray Dairy alleges that:

Decades later, after making payments for years without any written 

contract, Plaintiff Irigaray Dairy unknowingly signed an after-the-fact, 

illegal, and void collective bargaining agreement and signed the 

agreement shortly before Defendants allege Plaintiff Irigaray Dairy 

withdrew from the purported plan. Plaintiff Irigaray did not realize it was 

a collective bargaining agreement and signed the agreement based on 

misrepresentations from the CLA Union. Plaintiff Irigaray 

Dairy clearly made a mistake of fact/law and had no knowledge that 

Plaintiff Irigaray Dairy was not required to bake the illegal payments. 

(Operating Eng’rs Pension Trust v. Gillliam, 737 F.2d 1501, 1503-05 (9th 

Cir. 1984) (employer who was not aware he was signing a collective 

bargaining agreement could raise defense CBA was void.)) The document 

cannot be applied retrospectively to the illegal payments that were made 

for decades without a written agreement and the document does not render 

the decades of illegal payments that were accepted by Defendants without 

a written agreement legal and valid. 

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Doc. # 59 at 4:27-5:11. The SAC alleges essentially the same facts with regard to North Star 

Dairy as were made regarding Plaintiff Irigaray Dairy.

Plaintiffs also allege a set of facts that are intended to show that Defendant Plan is not a 

multiemployer retirement plan within the scope and meaning of 29 U.S.C. § 1381. These 

allegations pertain mainly to the directorship of the Trust and the lack of separation between the 

trust and the Union. In particular, Plaintiffs allege:

Plaintiffs are informed and believe and allege that Defendants have been 

illegally operating and managing the pension fund in the local CLA Union 

office. Specifically, one union trustee, who happens to also be the CLA 

Union California President, Vice President of the National CLA Union, 

and a local CLA Union employee, is running Defendants and the CLA 

Union as one entity out of the same office. Plaintiffs further allege that in 

direct violation of the LMRA, the same interested union trustee has been 

solely managing and making decisions on behalf of Defendants with not 

meetings and votes, much less notice or input, from the employer trustees 

or any other union trustees. Plaintiffs further allege that the sole interested 

union trustee and Defendants‟ attorneys are acting without joint authority 

from the employer trustees and have been seeking withdrawal liability 

against dairies with no votes or any other authority or approval of the 

trustees. Therefore, Defendants have no standing and authority to seek 

such relief and are a pension fund as defined under ERISA.

Doc. 59 at 8:1-13.

Plaintiffs also allege “the CLA union is virtually extinct and the alleged Pension Fund is 

a dying fund that has mismanaged itself to the brink of extinction. Instead of rewarding 

Defendants and the CLA Union for extraordinary misconduct, Plaintiffs propose that all funds 

that were unlawfully contributed to Defendants without a written agreement be remitted to the 

employees.” Doc. # 59 at 8:20-24. 

Defendants‟ motion to dismiss was filed on October 6, 2014. Plaintiffs‟ opposition was 

filed on October 20, 2014 and Defendants‟ reply was filed on October 28, 2014. The matter was 

taken under submission as of November 3, 2014. 

//

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LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure 

can be based on the failure to allege a cognizable legal theory or the failure to allege sufficient 

facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 

533-34 (9th Cir.1984). To withstand a motion to dismiss pursuant to Rule 12(b)(6), a complaint 

must set forth factual allegations sufficient “to raise a right to relief above the speculative level.” 

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (“Twombly”). While a court 

considering a motion to dismiss must accept as true the allegations of the complaint in question, 

Hospital Bldg. Co. v. Rex Hospital Trustees, 425 U.S. 738, 740 (1976), and must construe the 

pleading in the light most favorable to the party opposing the motion, and resolve factual 

disputes in the pleader's favor, Jenkins v. McKeithen, 395 U.S. 411, 421, reh'g denied, 396 U.S. 

869 (1969), the allegations must be factual in nature. See Twombly, 550 U.S. at 555 (“a 

plaintiff‟s obligation to provide the „grounds‟ of his „entitlement to relief‟ requires more than 

labels and conclusions, and a formulaic recitation of the elements of a cause of action will not 

do”). The pleading standard set by Rule 8 of the Federal Rules of Civil Procedure “does not 

require „detailed factual allegations,‟ but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009) (“Iqbal”). 

The Ninth Circuit follows the methodological approach set forth in Iqbal for the 

assessment of a plaintiff‟s complaint:

“[A] court considering a motion to dismiss can choose to begin by identifying 

pleadings that, because they are no more than conclusions, are not entitled to the 

assumption of truth. While legal conclusions can provide the framework of a 

complaint, they must be supported by factual allegations. When there are wellpleaded factual allegations, a court should assume their veracity and then 

determine whether they plausibly give rise to an entitlement to relief.”

Moss v. U.S. Secret Service, 572 F.3d 962, 970 (9th Cir. 2009) (quoting Iqbal, 129 S.Ct. at 

1950).

//

//

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DISCUSSION

At the outset, the court feels it is important to note what Plaintiffs seek to accomplish 

through this action as reflected in the prayer for relief set forth in the SAC. Plaintiffs seek (1) “a 

declaration that Plaintiffs have no legal obligation to make withdrawal liability payments to 

Defendants;” (2) a declaration that “Plaintiffs are not legally bound by Defendants‟ 

unconscionable Trust Agreement arbitration clause;” and (3) restitution of “the monies Plaintiffs 

paid directly to Plaintiffs‟ employees, instead of allowing Defendants to use the money for 

illegal union activities and pension fund mismanagement.” Doc. # 59 at 14:20-27. The first and 

second prayers for relief were set forth in previous complaints; the third is new. Defendants, in 

their motion to dismiss, note that Plaintiffs have abandoned their claim for declaratory relief 

from bearing costs for arbitration inasmuch as Plaintiffs have already agreed to arbitration. An 

inspection of Plaintiffs‟ opposition to Defendants‟ motion indicates no opposition to Defendants‟ 

representation. The court will therefore assume for the sake of this discussion that Plaintiffs

have abandoned their claim for declaratory relief with regard to any arbitration clause.

Neither party appears to address Plaintiffs‟ prayer for restitution directly to Plaintiffs‟ 

employees of moneys paid by Plaintiffs to Defendant Trust. The court has understood Plaintiffs‟ 

prior complaints to be about two issues only – the unfairness of an arbitration scheme that, 

according to Plaintiffs, has no contractual basis since no contract ever existed; and Plaintiffs‟ 

obligations for withdrawal liability under ERISA. In order to make sense of Plaintiffs‟ added 

prayer for relief, the court must assume that it is Plaintiffs‟ contention that they are not only 

entitled to relief from any obligation to pay a withdrawal penalty, but are also entitled to all the 

money ever paid to Defendant trust because Defendants were not legally entitled to receive such 

payments. Plaintiffs‟ SAC has added a great deal of verbiage directed to the proposition that 

Defendants had no right to collect any money at all from Plaintiffs and had no legal right to 

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accept the money that was paid by Plaintiffs. However, inexplicably, while Plaintiffs have 

expended a great deal of effort alleging facts to support a claim that Defendants received regular 

payments unlawfully, they do not plead a separate legal basis for declaratory relief on that issue.

From the court‟s point of view, Plaintiffs SAC has conflated two separate claims for 

relief. Plaintiffs‟ claim that Defendants illegally accepted payments to Defendants‟ Trust, as 

expressed in Plaintiffs prayer for restitution, necessarily implicates, among others, issues of 

standing, time limitations and tolling, and the pleading standard required to assert common law 

defenses to contract formation (such as fraud). On the other hand, Plaintiffs‟ claim for 

declaratory judgment as to withdrawal liability under ERSA potentially raises separate issues, 

again among others, of ripeness, preemption, the scope of defenses under ERISA, and the basis 

of the court‟s review, if any, of withdrawal liability defenses that can waived if not addressed in 

arbitration. 

Of some significance, Defendants have requested judicial notice of a trio of decisions 

from the District Court for the Central District of California in the cases of Dairy Employees

Union Local No. 17 Christian Labor Ass‟n of the United States of America Trust, et al. v. Robert 

Vander Eyk Dairy, et al., CV 12-4545 DSF, and Dairy Employees Union Local No. 17, et al. v. 

Henry Vender Poel and Son Dairy, et al., CV 12-04550 FMO (OPx). See Declaration of Donna 

L. Kirchner, Doc. # 60-8. While Defendants requested judicial notice of the decisions for the 

purpose of illustrating their legal contentions regarding the scope of withdrawal liability under 

ERISA, the court finds there are at least two other features of these decisions that are notable. 

First, the court notes that on December 28, 2012, the defendants in Case # CV 12-4550 

(Henry Vander Poel & Son Dairy, et al.) cross claimed for “Employer Recovery of Mistaken 

Contributions under ERISA.” See Exh. “C,” Doc. # 6-11 at fn1. From the description of the 

cross-claim, the court suspects that Plaintiffs in this action have decided to assert as a claim in 

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this action that which was asserted as a cross-claim in the Central District case and in the process 

lost sight of the separate legal concerns raised by such claim. While the court is presently 

unaware of the connection, if any, of either party‟s counsel with similar cases in the Central 

District, it is not unreasonable to suppose that either or both counsel in this action have more 

familiarity with the issues presented by Plaintiffs‟ SAC than the court does. The parties may 

therefore know, or think they know, the nature of Plaintiffs‟ claim for restitution under the SAC, 

and may think the claim can adequately be addressed as stated. The court, however, is frankly 

confused by the manner in which Plaintiffs have put forward their prayer for restitution and that 

is sufficient to support a finding that Plaintiffs have failed to plead “a short and plain statement 

of the claim showing that the pleader is entitled to relief” as required by F.R.C.P. § 8(a)(2). 

Second, the copies of the Central District Court‟s three orders submitted in the Kirchner 

Declaration are notable in that two decisions are rulings on motions for summary judgment and 

therefore cover a broader range of factual possibilities than are available in the complaint. See

Doc. #‟s 60-9 and 60-10. What the discussions in the Central District‟s rulings evince is the 

importance of information outside the boundaries of the complaint in finally adjudicating the 

rights of the parties. In particular, the Central District‟s decision granting summary judgment to 

the plaintiffs in Dairy Employees Union Local No. 17 v. Vander Eyk Dairy, et al., CV 12-4545, 

Doc. # 60-10, relied heavily on deposition testimony by the defendant‟s agent to reach the 

conclusion that the defendant actually did understand he was executing an agreement obligating 

payments to the plaintiffs retirement trust fund. See Doc. # 60-10 at 3. The court further relied 

on deposition testimony to establish that, although the plaintiff union had not been certified to 

represent the employees of the Plaintiff, the union had been certified by the prior owner of the 

dairy prior to its purchase as a “turnkey” operation by the defendant Vander Eyk. 

Finally, the court notes the Central District‟s reliance on MacKillop v. Lowe‟s Market, 

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Inc., 58 F.3d 1441 (9th Cir. 1995), for the proposition that defenses to the formation of a 

collective bargaining agreement (“CBA”) generally do not relieve a party from withdrawal 

liability under ERISA. This court placed similar reliance on MacKillop in its September 2 

Order, noting that MacKillop limits defenses to withdrawal liability to situations where either (1) 

any agreement directing payment to a retirement trust was void ab initio, or (2) where there the 

payments were unlawful because “there is no agreement specifying the terms of the employers 

contribution.” Doc. # 57 at 5:18-19. The holding in MacKillop figures significantly in the 

analysis of Defendants‟ motion because it not only limits the range of defenses to withdrawal 

liability under ERISA, it also provides the two explicit circumstances under which the lack of 

withdrawal liability can be pled.

With regard to the issue of withdrawal liability, Defendants state that their motion to 

dismiss Plaintiffs‟ SAC is grounded on the following contentions: (1) that Plaintiffs allegation

that Defendant Pension Fund is not a “valid multiemployer fund under ERISA” is in 

contradiction to their prior admission in the FAC and the allegation is controverted in any event 

by facts alleged in the proposed SAC; and (2) that Plaintiffs allegation that Defendant Union 

lacks ALRB certification is insufficient as a matter of law to constitute a defense to withdrawal 

liability under ERISA. See Doc. # 60-1 at 2:18-20 (listing contentions upon which Defendants‟ 

motion is grounded). However, it appears to the court that even if Defendants‟ contentions are 

both legally and factually supported, dismissal of Plaintiffs‟ SAC would still not be warranted. 

What Defendants do not address are Plaintiffs‟ still ambiguously worded allegations that, at least 

with respect to Plaintiffs Jongsma & Son Dairy and Charles Van Der Kooi Dairy, there was no 

“written agreement” “requiring [Plaintiff] to make payments.” Doc. # 59 at 11-13. As noted 

above, the Central District cases Defendants submit for judicial notice illustrate the point that 

there is considerable space between “no written agreement requiring Plaintiffs to make 

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payments” and “no agreements of any kind requiring payment.” However, the space between 

the two allegations includes room for the latter, unstated proposition. Similarly, Plaintiffs‟ 

allegation that there was never a union election on the premises and no union was ever certified 

is not the same as the allegation that none of Plaintiffs ever believed they belonged to a union 

and never paid union dues. Again, Plaintiffs‟ failure to set forth plain, dispositive facts creates a 

factual space between what they allege and what would be considered a defense to withdrawal 

liability under MacKillop. That said, however, the facts that Plaintiffs do allege are not 

inconsistent on their face with the possibility, however unlikely, that there are no employees of 

Plaintiff Dairies, past or present, who can legitimately claim benefits from Defendants‟ 

retirement Trust Fund. 

As the court noted in its September 2 Order, the policy purpose of 28 U.S.C. § 1381 is to 

avoid unfunded liability in pension plans that arise when employer withdrawal from the Plan 

creates a deficit between the withdrawing employers contributions up to that point and the 

potential claims by future retirees who worked for that employer. See Doc. # 57 at 4:16-5:3. As 

the court also noted, the existence of any legitimate claims on retirement funds by the present or 

past employees of Plaintiff Dairies gives rise to important equitable principles that may be 

applied to estop Plaintiffs from asserting defenses to withdrawal liability where the Plaintiffs‟ 

conduct gives rise to a legitimate expectation of retirement benefits under Defendants‟ 

retirement Plan. The court notes that neither Plaintiffs nor Defendants address, either in the SAC 

or in the motion to dismiss, the court‟s concerns regarding waiver or estoppel, time limits or 

tolling of limits. 

The court is of the opinion that Plaintiffs are not going to allege facts that allow for 

adequate analysis of their claims in any future complaints because they have not done so to date. 

At this point, the court appreciates that the dispositive decisions in the cases before the Central 

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District were made in the context of motions for summary judgment. It is this court‟s opinion 

that the only way there will be sufficient information before this court to permit any dispositive 

analysis of the Parties‟ rights and obligations will be if the court is free to consider competent 

evidence outside the SAC or any further amendment thereof and Defendants are similarly free to 

raise any and all relevant defenses to Plaintiffs‟ claims. The court, it is anticipated, will also 

cease unnecessarily expending time and resources on ambiguously pled claims and insufficient 

motions to dismiss. 

THEREFORE, it is hereby ORDERED that:

1. Defendants‟ motion to dismiss is GRANTED to the extent Plaintiffs‟ SAC seeks 

restitution of funds, either to themselves or their employees, of monies previously paid to 

Defendant Plan.

2. Defendants‟ motion to dismiss is DENIED in all other respects.

3. Plaintiffs are granted leave to file a third amended complaints should they so desire

provided they notify the court within seven (7) days of the service of this order of their 

intention. Any further amended complaint shall be filed and served not later than twentyone (21) days from the date of service of this order.

4. The parties shall meet and confer to agree on a further scheduling order directing conduct 

of further discovery, if any, and filing of motions for summary judgment. The parties 

shall submit any agreed upon scheduling order to the Magistrate Judge and shall schedule 

a further scheduling hearing with the Magistrate Judge if necessary.

IT IS SO ORDERED.

Dated: March 4, 2015 

 SENIOR DISTRICT JUDGE

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