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HANLEY v. LOBSTER BOX RESTAURANT

March 8, 1999

EDWARD T. HANLEY, JIM ARNOLD, ROBERT BAKER, WALT ELLIOT, JAMES F. FLANAGAN, DAVID HARTIGAN, JACK KENNEALLY, CANDACE LANDERS, ROBERT W. MAGEE, BOB MCDEVITT, MORTY MILLER, JOHN O'GARA KENNETH PAULSEN, RONALD RICHARDSON, NANCY ROSS, MARTY RUSSO, JOHN WILHELM, PATRICK J. KANE, NICHOLAS AMATO, JAMES ANDERSON, KARL R. BENNETT, JR., JERRY BERNS, RICHARD BETTY, RICHARD W. BUNKER, JOSEPH D'AMATO, EDWARD HEGARTY, ARNOLD KARR, CARL MADDA, BRIAN MCKAY, JACK PENMAN, JOSEPH T. PRIMAVERA, MIKE SLOAN, MICHAEL WALSH, LAWRENCE F. WILKAS, GEORGE WRIGHT AS TRUSTEES OF THE HOTEL EMPLOYEES AND RESTAURANT EMPLOYEES INTERNATIONAL UNION PENSION AND WELFARE FUNDS, PLAINTIFFS,
v.
LOBSTER BOX RESTAURANT, INC., DEFENDANT. LOBSTER BOX RESTAURANT, INC., THIRD-PARTY PLAINTIFF, V. HOTEL EMPLOYEES AND RESTAURANT EMPLOYEES UNION, LOCAL 100, OF THE HOTEL EMPLOYEES AND RESTAURANT EMPLOYEES INTERNATIONAL UNION, AFL — CIO, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Berman, District Judge.

DECISION AND ORDER

I. Introduction

Third-party defendant Hotel Employees and Restaurant Employees Union, Local 100, of the Hotel Employees and Restaurant Employees International Union, AFL — CIO ("Local 100"), has filed a motion to dismiss the (Second Amended) Third-Party Complaint of the defendant and third-party plaintiff Lobster Box Restaurant, Inc. ("Lobster Box"), pursuant to Federal Rule of Civil Procedure ("Fed.R.Civ.P.") 12(b)(1) and (6), for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted.

Local 100 and Lobster Box both agree that resolution of the instant motion hinges upon, and is governed by, the recent United States Supreme Court decision in Textron Lycoming Reciprocating Engine Division, AVCO Corp. v. United Automobile, Aerospace and Agricultural Implement Workers of America) International Union, 523 U.S. 653, 118 S.Ct. 1626, 140 L.Ed.2d 863 (1998). The parties disagree, however, as to the interpretation of the Supreme Court's ruling in Textron.

For the reasons stated below, the Court grants Local 100's motion to dismiss on the ground that the Court lacks subject matter jurisdiction with respect to Lobster Box' third-party claims.

II. Background

Plaintiffs Edward T. Hanley, et al., as Trustees of the Hotel Employees and Restaurant Employees International Union Pension and Welfare Funds ("Funds"), brought the underlying action, pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132, and the Labor Management Relations Act § 301 ("LMRA"), 29 U.S.C. § 185, against Lobster Box for alleged failure by Lobster Box to pay certain contributions to the Funds in violation of a collective bargaining agreement ("Agreement") between Lobster Box and Local 100. After being sued by the Funds, Lobster Box, in turn, filed a (Second Amended) Third-Party Complaint against Local 100 seeking, inter alia, a declaration that the Agreement between Local 100 and Lobster Box is voidable and that Lobster Box is, in any event, entitled to indemnification by Local 100 for any judgment or damages against Lobster Box in the underlying action. In its (Second Amended) Third-Party Complaint, Lobster Box alleges that, in failing to make contributions to the Funds, it relied upon advice from representatives of Local 100 who represented that such contributions were not required. These representations were presumably made during negotiations leading to the Agreement. Lobster Box further alleges that Local 100 engaged in fraud and negligent misrepresentation in the Agreement negotiations.

III. Discussion

A. LMRA § 301

In the third-party action against Local 100, Lobster Box is asking the Court to declare that the Agreement between Local 100 and Lobster Box is invalid. Lobster Box asserts that this Court has subject matter jurisdiction to make this determination under LMRA § 301. Local 100 counters that the Court lacks subject matter jurisdiction because the third-party claim is not about a (contract) violation of the Agreement, but rather is a claim that the Agreement is invalid.

LMRA § 301 provides, in part, that "[s]uits for violation of contracts between an employer and a labor organization . . . may be brought in any district court of the United States . . ." 29 U.S.C. § 185(a). By its terms, "this provision confers federal subject-matter jurisdiction only over '[s]uits for violation of contracts.'" Textron Lycoming Reciprocating Engine Division, Avco Corp., 118 S.Ct. at 1629. It does not generally confer jurisdiction on Federal District Courts in suits concerning contract validity. Id. ("'[s]uits for violation of contracts' under § 301(a) are not suits that claim a contract is invalid, but suits that claim a contract has been violated".)

Lobster Box argues that because contract violation is in issue in the "underlying" action by the Funds against Lobster Box, the Court in the third-party proceeding may adjudicate the validity of the Agreement. Lobster Box relies upon a quote from Textron for the proposition that the jurisdictional requirement of a contract violation:

  does not mean that a federal court can never
  adjudicate the validity of a contract under ยง
  301(a). That provision simply erects a gateway through
  which parties may pass into federal court; once they
  have entered, it ...

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