Fontainebleau Florida Hotel, LLC v. The South Florida Hotel and Culinary Employees Welfare Fund

United States District Court

for the

Southern District of Florida

Fontainebleau Florida Hotel, LLC, )

Plaintiff, )

)

v. )

) Civil Action No. 20-22667-Civ-Scola

The South Florida Hotel and )

Culinary Employees Welfare Fund )

and Unite Here, Local 355, )

Defendants. )

Order on Motions to Dismiss

This matter is before the Court upon United Here Local 355 (“Local 335”)

and The South Florida Hotel and Culinary Employees Welfare Fund’s (the

“Welfare Fund”) respective motions to dismiss (ECF Nos. 38, 39.) Having

considered the parties’ motions and the relevant legal authorities, the Court

grants Local 355’s motion (ECF No. 38) and grants the Welfare Fund’s motion

(ECF No. 39).

1) Background

In this declaratory judgment action, the Plaintiff, Fontainebleau Florida

Hotel, LLC (“Fontainebleau”) asks the Court to declare that certain employees

who were laid-off as a result of the COVID-19 pandemic are not eligible

employees under Fontainebleau and Local 355’s collective bargaining

agreement (the “CBA”) such that Fontainebleau has no obligation to make

health care contributions to the Welfare Fund on behalf of the laid-off

employees. (ECF No. 35, at 10.) Alternatively, Fontainebleau asks the Court to

declare that any obligation Fontainebleau had to make healthcare

contributions on behalf of its laid-off employees is forgiven as the COVID-19

caused closure constituted force majeure, making Fontainebleau’s performance

under the CBA impossible. (ECF No. 35, at 10-11.)

The backdrop of this dispute is as follows. On March 24, 2020,

Fontainebleau was forced to close its operations pursuant to an order from the

City of Miami Beach in order to minimize the spread of COVID-19. (ECF No. 35,

at ¶ 1.) As a result of shutdown, Fontainebleau’s occupancy dropped from

about 80% to zero and all restaurants, bars and other businesses affiliated

with Fontainebleau closed. (ECF No. 35, at ¶ 1.) On March 30, 2020,

Fontainebleau laid-off 2,083 of its roughly 2,151-person workforce, including

1,077 employees represented by Local 355. (ECF No. 35, at ¶ 1.)

Fontainebleau and Local 355 are parties to a CBA1 with effective dates

from July 1, 2017 through June 30, 2022. The CBA requires Fontainebleau to

make health benefits contributions to the Welfare Fund for eligible employees.

(ECF No. 38-1, at 32; ECF No. 39, at 3.) After Fontainebleau laid-off Local 355’s

members, Local 355 and the Welfare Fund demanded that Fontainebleau

continue to make health benefits contributions, consistent with the terms of

the CBA, on behalf of the eligible laid-off employees. (ECF No. 35, at ¶ 1.)

Fontainebleau did not make such payments. The Welfare Fund sent

Fontainebleau notices of delinquency but has not made efforts to collect on the

funds it claims it is owed from Fontainebleau. (ECF No. 35-2; ECF No. 47, at

2.) On June 8, 2020, Local 355 filed a grievance relating to Fontainebleau’s

alleged obligation to continue to make contributions to the Welfare Fund on

behalf of the laid-off employees. (ECF No. 35, at ¶33.) That grievance was

submitted to arbitration, but before the parties could select an arbitrator

pursuant to the terms of the CBA, Fontainebleau filed its complaint against the

Defendants. (ECF No. 38, at 3.) Fontainebleau estimates approximately

$5,000,000.00 in health care benefits contributions are at issue under the

CBA. (ECF No. 47, at 2.)

2) Legal Standard

A. Federal Rule 12(b)(1)

Attacks on subject matter jurisdiction under Federal Rule 12(b)(1) come

in two forms: “facial attacks” and “factual attacks.” Lawrence v. Dunbar, 919

F.2d 1525, 1528-29 (11th Cir. 1990). Facial challenges to subject matter

jurisdiction are based solely on the allegations in the complaint. Carmichael v.

Kellogg, Brown & Root Servs., Inc., 572 F.3d 1271, 1279 (11th Cir. 2009).

Thus, the court will “look at the face of the complaint and determine whether

the plaintiff has alleged a sufficient basis for subject matter jurisdiction.” Scelta

v. Delicatessen Support Servs., Inc., No. 98-2578-Civ, 1999 WL 1053121, at *4

(M.D. Fla. Oct. 7, 1999) (citations omitted). Factual attacks, on the other hand,

challenge “the existence of subject matter jurisdiction in fact, irrespective of the

1 The CBA was attached to Fontainebleau’s first amended complaint (ECF No. 35) and Local

355’s motion to dismiss (ECF No. 38.) While district courts ordinarily should not look outside

the complaint when considering a motion to dismiss, the Court may consider “relationship-

forming contracts [that] are central to a plaintiff’s claim.” Sampson v. Washington Mut. Bank,

453 F. App’x 863, 866 (11th Cir. 2011) (internal quotations omitted). The CBA is at the very

core of the dispute between the parties and neither party contests the CBA’s accuracy or

contents. (ECF No. 38, at 3 n. 1.) Accordingly, the Court will consider the CBA as necessary in

adjudicating Local 355 and the Welfare Fund’s motions to dismiss.

pleadings,” and the court will consider “matters outside the pleadings, such as

testimony and affidavits.” Lawrence, 919 F.2d at 1529 (internal quotation

marks omitted). “A dismissal for lack of subject matter jurisdiction is not a

judgment on the merits and is entered without prejudice.” Stalley ex rel. U.S. v.

Orlando Reg’l Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008)

B. Federal Rule 12(b)(6)

When considering a motion to dismiss under Federal Rule 12(b)(6), the

Court must accept all of the complaint’s allegations as true, construing them in

the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282,

1284 (11th Cir. 2008). Under Federal Rule of Civil Procedure 8, a pleading need

only contain “a short and plain statement of the claim showing that the pleader

is entitled to relief.” Fed. R. Civ. P. 8(a)(2). The plaintiff must nevertheless

articulate “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). “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.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009). “Threadbare recitals of

the elements of a cause of action, supported by mere conclusory statements, do

not suffice.” Id. Thus, a pleading that offers mere “labels and conclusions” or “a

formulaic recitation of the elements of a cause of action” will not survive

dismissal. Id.

In applying the Supreme Court’s directives in Twombly and Iqbal, the

Eleventh Circuit has provided the following guidance to the district courts:

In considering a motion to dismiss, a court should 1) eliminate any

allegations in the complaint that are merely legal conclusions; and

2) where there are well-pleaded factual allegations, assume their

veracity and then determine whether they plausibly give rise to an

entitlement to relief. Further, courts may infer from the factual

allegations in the complaint obvious alternative explanation[s],

which suggest lawful conduct rather than the unlawful conduct

the plaintiff would ask the court to infer.

Kivisto v. Miller, Canfield, Paddock & Stone, PLC, 413 F. App’x 136, 138 (11th

Cir. 2011) (citations omitted).

3) Legal Analysis

In its motion to dismiss, Local 355 asks the Court to dismiss

Fontainebleau’s amended complaint on two grounds: 1) Local 355 argues that

the Court lacks subject matter jurisdiction to issue a declaratory judgment

under the Declaratory Judgment Act because the dispute between

Fontainebleau and Local 355 arises under the CBA and not the Employee

Retirement Income Security Act (“ERISA”) or Section 301 of the Labor

Management Relations Act (“LMRA”); and 2) Fontainebleau has failed to

exhaust arbitral remedies under the CBA. If the Court disagrees with these

arguments, Local 355 asks the Court to exercise its discretion and decline to

hear Fontainebleau’s claim under the Declaratory Judgment Act, or

alternatively, asks the Court to sever Local 355 as a party to Fontainebleau’s

declaratory relief claim. (ECF No. 38, at 1-2.)

The Welfare Fund advances similar arguments in its own motion to

dismiss. First, the Welfare Fund argues that this Court does not have subject

matter jurisdiction because Fontainebleau is not authorized to sue under

ERISA. (ECF No. 39, at 5-7.) Second, the Welfare Fund argues that

Fontainebleau is not entitled to declaratory relief because the Declaratory

Judgment Act is not an independent source of federal jurisdiction. If the Court

finds that Fontainebleau’s claims are proper, similar to Local 355, the Welfare

Fund asks the Court to exercise its discretion and decline to hear

Fontainebleau’s claims for declaratory judgment, or in the alternative, asks the

Court to sever the claims related to arbitration and drop the Welfare Fund as a

party.

A. The Court’s Subject Matter Jurisdiction

The Court turns first to the threshold issue of its subject matter

jurisdiction. The Declaratory Judgment Act is an “all-purpose remedy, designed

to permit an adjudication whenever the court has jurisdiction, there is an

actual case or controversy and an adjudication would serve a useful purpose.”

AquaDry Plus Corp. v. Rockhill Ins. Co., No. 19-62331-Civ, 2020 WL 927440

(S.D. Fla. Feb. 26, 2020) (Scola, J.). The Act gives federal courts “competence to

make a declaration of rights” but “did not impose a duty to do so.” Pub. Affairs

Assocs., Inc. v. Rickover, 369 U.S. 111, 112 (1962).

In its amended complaint, Fontainebleau asserts the Court has federal

subject matter jurisdiction pursuant to 28 U.S.C. § 1331 because

Fontainebleau’s substantive causes of action arise under Section 4301(a)(1)

and § 515 of ERISA. Fontainebleau also alleges this Court also has subject

matter jurisdiction pursuant to Section 301 of the LMRA, 29 U.S.C. § 185, as

Local 355 and the Welfare Fund’s “actions are in violation of the CBA.” (ECF

No. 35, at 4.)

(1) Section 4301 of ERISA

Section 4301(a)(1) of ERISA, 29 U.S.C. 1451(a)(1), was enacted as part of

the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”) and deals

exclusively with retirement benefit plans. See DiGeronimo Aggregates, LLC v.

Zemla, 763 F.3d 506, 509-10 (6th Cir. 2014) (“A brief review of the statutory

scheme governing multiemployer pension plans provides context. . . .

ERISA . . . created the Pension Benefit Guaranty Corporation (‘PBGC’) to

administer a newly-formed pension plan termination program. . . . Based upon

the PBGC’s recommendations, Congress enacted the [MPPAA] codified at 29

U.S.C. §§ 1381-1461”) (emphasis added); see also Connors v. Ryan’s Coal Co.,

Inc., 923 F.2d 1461, 1462-63 (11th Cir. 1991) (“The MPPAA was enacted in

1980 . . . to regulate employee benefit plans. Under ERISA, the PBGC, a

government corporation, protects covered employees by insuring their benefits

against fund insolvency or premature termination. . . . The MPPAA sought to

discourage voluntary withdrawals from multiemployer plans by imposing a

mandatory liability on all withdrawing employers.”). Section 4301(a)(1) provides

“a plan . . . employer . . . who is adversely affected by the act or omission of any

part under this subtitle” with the ability to “bring an action for appropriate legal

or equitable relief, or both.” 29 U.S.C. § 1451(a)(1) (emphasis added); Carl

Colteryahn Dairy, Inc. v. W. Pa. Teamsters and Emps. Pension Fund, 847 F.2d

113, 120 (3d Cir. 1988) (noting “this subtitle” for purposes of Section 4301

refers to Subtitle E of ERISA). Accordingly, the question is whether the instant

dispute relating to health care benefits payments under the CBA arises under

Subtitle E of ERISA.

The Court agrees with the Defendants that Section 4301 does not govern

health benefits plans and does not address an employer’s obligation to

contribute to a health benefit plan under the terms of collective bargaining

agreements. (ECF No. 38, at 8; ECF No. 39, at 9-10.) Accordingly, the Court

fails to see how Section 4301 gives the Court subject matter jurisdiction over

the instant dispute which does not arise under Subtitle E of ERISA. The Court

finds it does not have subject matter jurisdiction over this dispute pursuant to

Section 4301 of ERISA.

Separately, the Court notes that, in apparent recognition of the

shortcomings of its arguments with respect to Section 4301, Fontainebleau

failed to respond to the arguments raised by Local 355 and the Welfare Fund

on this topic in their respective motions to dismiss. Therefore, it appears

Fontainebleau has abandoned its Section 4301 arguments. See Jones v. Bank

of Am., N.A., 564 F. App’x 432, 434 (11th Cir. 2020) (when a party fails to

respond “to any portion or claim in a motion” it is appropriate for the Court to

find “such argument or claim [has been] abandoned”).

For these reasons, the Court finds it lacks subject matter jurisdiction

over the instant dispute pursuant to Section 4301(a)(1) of ERISA.

(2) Section 515 and Section 502(a)(3) of ERISA

Section 4301 notwithstanding, Fontainebleau argues the Court also has

subject matter jurisdiction sufficient to issue a declaratory judgment under the

Declaratory Judgment Act pursuant to Section 515 of ERISA, 29 U.S.C. § 1145.

Local 355 and the Welfare Fund advance similar arguments with respect to this

claim. They argue that Section 515 of ERISA does not create a cause of action

and instead only creates an “obligation on employers” to make contributions to

health benefits plans. (ECF No. 38, at 6-7; ECF No. 39, at 8-9.) A review of the

statute reveals that Section 515 simply provides “every employer who is

obligated to make contributions . . . shall . . . make such contributions in

accordance with the terms and conditions of such plan or such agreement.” 29

U.S.C. § 1145. Indeed, it does not appear Section 515, from its plain language,

empowers an employer to bring suit. Rather, Section 502(a)(3), 29 U.S.C. §

1132, provides the enforcement mechanism for Section 515. Section 502(a)(3)

empowers “a participant, beneficiary, or fiduciary” to bring civil actions to

“redress . . . violations” or “enforce any provisions of this subchapter or the

terms of the plan.” 29 U.S.C. 1132(a)(3).

In Gulf Life Ins. Co. v. Arnold, the Eleventh Circuit held that Section 502

“is essentially a standing provision: it sets forth those parties who may bring

civil actions under ERISA and specifies the types of actions each of those

parties may pursue.” 809 F.2d 1520, 1524 (11th Cir. 1987); see also Franchise

Tax Bd. Of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S.

1, 21 (1983) (“The express grant of federal jurisdiction in ERISA is limited to

suits brought by certain parties as to whom Congress presumably determined

that a right to enter federal court was necessary to further the statutes’

purposes.”) . Section 502’s standing provisions “must be construed narrowly;

civil actions under ERISA are limited only to those parties and actions

Congress specifically enumerated.” Id.

While Fontainebleau seems to tacitly acknowledge that it ordinarily could

not bring a civil suit under Section 515 or Section 502(a)(3) of ERISA,

Fontainebleau nonetheless argues it has properly brought suit against the

Defendants under the coercive action doctrine. The coercive action doctrine is

longstanding and confers federal courts with “original jurisdiction over

declaratory judgment suits in which, if the declaratory judgment defendant

brought a coercive action to enforce its rights, that suit would necessarily

present a federal question.” Source Capital Fund II, LP v. Iron Workers Local No.

25 Pension Fund, No. 16-CV-4007, 2017 WL 11529668, at *4 (N.D. Ga. Dec.

18, 2017).

In Source Capital, the court confronted a similar question as the one

posed here, albeit in the context of Section 4301, which is whether the coercive

action doctrine can be used to expand ERISA’s standing restrictions. Id. at *3-

4. In applying the coercive action doctrine (and considering several of the cases

Fontainebleau cites from other Circuits) the Source Capital court noted that the

plaintiffs did not cite, nor did the Court find “any Eleventh Circuit cases that

apply the coercive action doctrine” to expand standing provisions under ERISA.

Id. at *6. The Court sees no reason to disagree with the court’s decision in

Source Capital which effectuates the Eleventh Circuit’s mandate that district

courts construe ERISA standing provisions narrowly. Courts have been clear

that ERISA is a “comprehensive and reticulated statute” such that courts

should be “reluctant to tamper with the enforcement scheme embodied in the

statute by extending remedies not specifically authorized by its text.” Great-

West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002). The Court

sees no reason to relax Sections 515 and 502(a)(3)’s standing requirements as

requested by Fontainebleau. In order to bring suit under these provisions, a

plaintiff such as Fontainebleau must allege it is one of the entities as set forth

in Section 502(a)(3). Fontainebleau has not asserted, nor can it, that it is a

participant, beneficiary, or fiduciary and therefore Fontainebleau does not have

standing pursuant to Section 515 or Section 502(a)(3) under the coercive action

doctrine. As such, these subsections of ERISA do not confer subject matter

jurisdiction on the Court.

(3) Section 301 of LMRA

Finally, Fontainebleau asserts this Court has subject matter jurisdiction

pursuant to Section 301 of LMRA. A party may sue under Section 301 “for

violation of contracts” such as the CBA “between an employer and a labor

organization.” 29 U.S.C. § 185(a). A suit under Section 301 is “not one filed

with a view to a future contract violation (much less to facilitate action that

otherwise would be a contract violation). It is one filed because a contract has

been violated.” Textron Lycoming Reciprocating Engine Div., Avco Corp. v. United

Auto., Aerospace and Agric. Implement Workers of Am., Int’l Union, 523 U.S.

653, 657 (1998) (internal quotations omitted) (emphasis in original). Indeed,

Section 301 was enacted to empower federal courts to enforce collective

bargaining agreements. Lewis v. Benedict Coal Corp., 361 U.S. 459, 470 (1960).

Fontainebleau argues that the Court has subject matter jurisdiction over

its complaint because “the Union’s and Fund’s actions are in violation of the

CBA between the Union and Fontainebleau” (ECF No. 1, at ¶7) and “it is for

this Court, not an arbitrator, to determine the novel, federal common law issue

raised here regarding the continuing impact of the COVID-19 pandemic on the

obligations of the parties under the CBA.” (ECF No. 45, at 10.) As support for

its allegations that Local 355 and the Welfare Fund violated the CBA,

Fontainebleau states it only has an obligation to make contributions for

covered employees, the Welfare Fund issued letters demanding contributions

for Fontainebleau’s employees who were laid-off, and Local 355 initiated an

arbitration notwithstanding Fontainebleau’s position that the CBA

contemplated disputes over arrearages would be resolved by legal action, not

arbitration under the CBA. (ECF No. 45, at 11.)

The Court is not convinced that Fontainebleau has adequately alleged

that a contract, here the CBA between Fontainebleau and Local 355, has been

violated. While Fontainebleau argues the CBA required Local 355 and the

Welfare Fund to settle arrearages through “legal action” and Local 355 violated

that provision by initiating arbitration, the language of the CBA does not

appear to support Fontainebleau’s reading. Article 28, Section 6 of the CBA

provides “in the event the Fund must resort to legal action for arrearage

collections, then the Employer shall be responsible for all costs including legal

fees . . . .” (ECF No. 38-1, at 32) (emphasis added). Far from mandatory

language, this provision seems to suggest that legal action is one avenue,

among others, for the Welfare Fund to collect delinquent healthcare benefits

payments. Moreover, the Welfare Fund is not a party to the CBA, so it is

difficult to discern how Fontainebleau can argue the Welfare Fund violated a

contract to which it is not a party. Rather than restricting Local 355’s ability to

initiate arbitration, it appears that Article 28, Section 6 merely provides the

Welfare Fund with recourse if it incurs legal fees when collecting delinquent

health benefits payments.

The Court disagrees with Fontainebleau that Local 355 and the Welfare

Fund violated the CBA by initiating an arbitration (noting again that the

Welfare Fund is not a party to the CBA). Article 26, Section 1 of the CBA covers

“[a]ny grievance” between Fontainebleau and Local 355. (ECF No. 38-1, at 28)

(emphasis added). While Fontainebleau asserts the health care benefits

payments are not covered by Article 26, Fontainebleau does not provide this

Court with authority indicating why the parties’ broad arbitration provision

would not cover the instant dispute. Where a collective bargaining agreement

contains an arbitration clause, “there is a presumption of arbitrability in the

sense that an order to arbitrate the particular grievance should not be denied

unless it may be said with positive assurance that the arbitration clause is not

susceptible of an interpretation that covers the asserted dispute.” Int’l Bhd. of

Elec. Workers Sys. Council U-4 v. Fla. Power & Light Co., 627 F. App’x 898, 901

(11th Cir. 2015). Any doubts “should be resolved in favor of arbitration”

particularly where the provision is, as here, “broadly worded.” Id.

Fontainebleau has not provided sufficient argument to the Court indicating

how the Welfare Fund’s ability to recover legal fees under Article 28, Section 6

somehow restricts Local 355’s ability to initiate an arbitration to resolve a

grievance under Article 26 of the CBA.

With the above in mind, it appears that Fontainebleau’s allegation that

the instant dispute is “NOT arbitrable under the CBA” (ECF No. 35, at ¶33)

(emphasis in original) is unsupported. Even if Fontainebleau’s allegation was

better supported, it is entitled to no deference at the motion to dismiss stage.

The interpretation of contracts is a question of law for the Court, Reesey v. Fed.

Emergency Mgmt. Agency, No. 13-60488-Civ, 2013 WL 12086662, at *2 (S.D.

Fla. July 9, 2013) (Scola, J.), and a court “need not accept legal conclusions as

true”, only well-pleaded factual allegations. Perez v. Muab, Inc., No. 10-62441-

Civ, 2011 WL 845818, at *1 (S.D. Fla. March 7, 2011) (Cohn, J.). Given the

arbitration provision interpretation principles set forth above and the broad

nature of Article 26, the Court finds that Fontainebleau has failed to

adequately allege that the parties’ arbitration provision fails to cover the instant

dispute. As, Fontainebleau has failed to advance an “affirmative claim . . . of a

violation of the contact”, the court “does not have jurisdiction under Section

301(a). Nu Image, Inc. v. Int’l Alliance of Theatrical Stage Emps., 893 F.3d 636,

641 (9th Cir. 2018); see also Textron, 528 U.S. at 657-58.

The Court notes that Fontainebleau also asked the Court to declare its

requirement to pay health benefits under the CBA invalid. (ECF No. 45, at 12.)

However, Fontainebleau’s request ignores the Supreme Court’s Textron

precedent, which notes, “the federal court’s power to adjudicate [a] contract’s

validity is ancillary to, and not independent of, its power to adjudicate suits for

violation of contract.” Textron, 528 U.S. at 658. This restriction “does not mean

a federal court can never adjudicate the validity of a contract under § 301(a)”,

rather, the provision “simply erects a gateway through which parties may pass

into federal court.” Id. at 657-58. For instance, “a declaratory judgment

plaintiff accused of violating a collective-bargaining agreement may ask a court

to declare the agreement invalid” but such a case requires the Plaintiff to first

adequately allege a contract violation. Id. at 658. Fontainebleau has failed to

pass through the proverbial gateway that would allow the Court to traverse the

legal landscape to adjudicate the validity of the CBA. The Court therefore lacks

the ability to declare invalid Fontainebleau’s requirement to make healthcare

benefits payments.

4) Conclusion

In sum, the Court finds it lacks subject matter jurisdiction over

Fontainebleau’s declaratory judgment action. The Court grants Local 355 and

the Welfare Fund’s respective motions to dismiss Fontainebleau’s amended

complaint for declaratory relief. (ECF Nos. 38, 39.) This case shall remain open

as Local 355 and the Welfare Fund’s counterclaims against Fontainebleau

remain before the Court.

Done and ordered at Miami, Florida, on December 16, 2020.

[s— N. Scola, Jr.

United States District Judge