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Bac Local Union 15 Welfare Fund v. Williams Restoration Co., Inc.

United States District Court, D. Kansas

July 17, 2017

BAC LOCAL UNION 15 WELFARE FUND, et al., Plaintiffs,
v.
WILLIAMS RESTORATION COMPANY, INC., et al., Defendants.

          MEMORANDUM AND ORDER

          J. THOMAS MARTEN, JUDGE.

         Plaintiffs, employees and organizations in a collective bargaining agreement with Williams Restoration Company, Inc. (“Williams”), bring an Employee Retirement Income Security Act claim against Williams and alleged successor, Fox Holdings, Inc. (“Fox”). This matter comes before the court on a Motion to Dismiss (Dkt. 35) filed by Defendant Fox. For the reasons explained below, Defendant's motion to dismiss for failure to state a claim is denied.

         I. INTRODUCTION

         Defendant Fox Holdings, Inc. moves to dismiss the Plaintiffs' claims against it, as set forth in Plaintiffs' first amended complaint (Dkt. 30), pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Fox also requests that the Court take judicial notice of the documents authenticated by the affidavits of Jordan Fox and Mark M. Schorr, which are attached to their motion to dismiss and respectively the Asset Purchase Agreement between Fox and Williams Restoration, Inc. and the National Labor Relations Boards' rulings concerning a prior dispute between Plaintiff and Defendants.

         Plaintiffs allege they are entitled to relief under a theory of successor liability, and contend the complaint presents factual assertions, which taken as true, state a plausible claim for relief under the Iqbal standard for Rule 8 and the Spears standard for successor liability. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); Spears v. Mid-America Waffles, Inc., No. 11-2273-CM 2011 WL 6304126 *4 (D. Kan. Dec. 16, 2011).

         II. Legal Standard

         “In reviewing a motion to dismiss, this court must look for plausibility in the complaint . . . . Under this standard, a complaint must include 'enough facts to state a claim to relief that is plausible on its face.'” Corder v. Lewis Palmer Sch. Dist. No. 38, 566 F.3d 1219, 1223-24 (10th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 129 S.Ct. at 1949 (clarifying and affirming Twombly's probability standard). Allegations that raise the specter of mere speculation are not enough. Corder, 566 F.3d at 1223-24. The court must assume that all allegations in the complaint are true. Iqbal, 129 S.Ct. at 1944. “The issue in resolving a motion such as this is 'not whether [the] plaintiff will ultimately prevail, but whether the claimant is entitled to offer evidence to support the claims.'” Bean v. Norman, No. 008-2422, 2010 U.S. Dist. LEXIS 7811, 2010 WL 420057, at *2 (D. Kan. Jan. 29, 2010) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)). The Tenth Circuit utilizes a two-step process when analyzing a motion to dismiss. Hall v. Witteman, 584 F.3d 859, 863 (10th Cir. 2009). First, the court must identify conclusory allegations not entitled to the assumption of truth. Id. Second, the court must determine whether the remaining factual allegations plausibly suggest the plaintiff is entitled to relief. Id.

         In evaluating whether successor liability is appropriate, Tenth Circuit courts have considered the following factors: (1) whether the successor company had notice of its predecessor's legal obligation; (2) the ability of the predecessor to provide relief; and (3) whether there has been a substantial continuity in operations, work force, location, management, working conditions and methods of production. Spears v. Mid-America Waffles, Inc., No. 11-2273-CM 2011 WL 6304126 *4 (D. Kan. Dec. 16, 2011).

         Spears found that the following allegation supported a plausible claim for successor liability:

35. Ozark Waffles, LLC is a successor in interest in that substantial continuity of business operations exist between Defendants Mid-America Waffles, Inc. and Ozark Waffles, LLC in terms of the line of work, the employees, the locations, the management in place and the name in that the same operations continue under the Waffle House name.
36. Prior to the sale, a representative from Waffle House, Inc. and/or Ozark Waffles, Inc. frequently and regularly visited the facilities operated by Mid-America Waffles, Inc. to review the manner and method in which restaurant employees were performing duties.

         Federal common law supports successor liability when the court finds both: (1) there is a substantial continuity of identity between the predecessor and successor business entity; and (2) the successor entity has notice of the obligation. Upholsterers' Intl. Union Pension Fund v. Artistic Furniture of Pontiac 920 F.2d 1323, 1329 (7th Cir. 1990). Substantial continuity of identity may be permissible when five conditions are present: (1) continuity of employees between the predecessor and successor; (2) continuity of management personnel between the predecessor and successor; (3) continuity of equipment, tools and plant between the predecessor and successor; (4) continuity of customers between the predecessor and successor; and (5) continuity of the type of work performed by the predecessor and successor. Id.

         Courts must consider a complaint in its entirety, as well as other sources courts ordinarily examined when ruling on 12(b)(6) motions to dismiss. These may include documents referred to in the complaint if the documents are central to the plaintiff's claim and are undisputed, and matters of which a court may take judicial notice. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); Alvarado v. KOB-TV, L.L.C., 493 F.3d 1210, 1215 (10th Cir. 2007); Tal v. Hogan, 453 F.3d 1244, 1264 n.24 (10th Cir. 2006).

         The court may take judicial notice of adjudicative facts and facts that are not subject to reasonable dispute. Fed.R.Evid. 201(a), (b). Adjudicative facts fall into one of two categories: (1) facts that are “generally known within the territorial jurisdiction of the trial court”; or (2) facts that are “capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). When the interpretation of a document is subject to a reasonable dispute, and the document is being offered for the truth of its content, judicial notice of the document may be unwarranted. See Southmark Prime Plus, L.P. v. Falzone, 776 F.Supp. 888, 893 (D. Del. 1993) (explaining that judicial notice of a letter sent between two defendants was unwarranted because the content of the letter addressed a disputed fact and the accuracy of this fact could reasonably be questioned); Patel v. Parnes, 253 F.R.D. 531, 546 (C.D. Cal. 2006) (explaining ...


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