RB Restoration, Inc. v. Mosaic, Terrazo & Chem. Prod. Decorative Finisher Masons Workers Ass'n

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RB RESTORATION, INC., Plaintiff, v. MOSAIC, TERRAZZO AND CHEMICAL PRODUCT DECORATIVE FINISHER MASONS WORKERS ASSOCIATION LOCAL NO. 7 OF NEW YORK & VICINITY OF THE INTERNATIONAL UNION OF BRICKLAYERS AND ALLIED CRAFTWORKERS, et al., Defendants.

Civil Action No. 21-19770 (ES) (JSA)

United States District Court, D. New Jersey

February 24, 2022

NOT FOR PUBLICATION

OPINION

JESSICA S. ALLEN UNITED STATES MAGISTRATE JUDGE

Before the Court is the motion of Defendants Mosaic, Terrazo and Chemical Product Decorative Finisher Masons Workers Association Local No. 7 of New York & Vicinity of the International Union of Bricklayers and Allied Craftworkers (“the Union”); Trustees of the Mosaic and Terrazzo Welfare, Pension, Annuity, and Vacation Funds (collectively, the “Local Funds”), and Trustees of the Bricklayers & Trowel Trades International Pension Fund and the International Masonry Institute (collectively the “International Funds, ” and together with the Local Funds, hereinafter collectively referred to as the “Funds”); and the Marble Terrazzo and Specialty Contractors Association (the “Employer Association”) to transfer this case to the United States District Court for the Eastern District of New York pursuant to 28 U.S.C. § 1404(a).^[1] (ECF No. 5). Plaintiff, RB Restoration, Inc. (“Plaintiff” or “RB Restoration”), opposes the motion. No. oral argument was heard pursuant to Fed.R.Civ.P. 78. After carefully considering the papers submitted in support of and Plaintiff's brief in opposition to the motion ^[2] and for good cause shown, and for the reasons set forth below, Defendants' motion to transfer is GRANTED.

I. BACKGROUND

This case arises from a dispute relating to the parties' rights and obligations under a collectively bargained agreement (“CBA”) between RB Restoration and the Union. As alleged in the Complaint, RB Restoration is an independent construction contractor with its principal place of business in Hillsdale, New Jersey. (Compl., ¶ 1.)^[3] RB Restoration specializes in terrazzo installations. (Plaintiff's Br. 1; ECF No. 12). The Union's members are tile, marble, and terrazzo workers. According to RB Restoration, to hire members of the Union, RB Restoration had to sign the CBA, pay union wages, and make contributions to designated employee benefit funds, which are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1132, et seq., and RB Restoration further claims to have operated in accordance with the Labor Relations Management Act of 1947 (“LMRA”), 29 U.S.C. § 185, et seq. (Pl's Br. 1-3; Compl., ¶¶ 19, 34-36).

The Funds are responsible for, inter alia, ensuring the receipt of employee benefit contributions. (Compl., ¶¶ 3-4; Harras Decl. ¶¶ 7-8: ECF No. 6). The Employer Association is a collective association of employers who designate representatives to negotiate collective bargaining agreements with the Union. (Compl., ¶ 5). The Complaint further alleges that in February 2021, the Funds, pursuant to the CBA, requested an audit (herein “the Audit”) of RB Restoration's books and records to determine if it had remitted benefit contributions for every hour of work performed by its employees in the trade and geographical jurisdiction of the CBA. (Compl., ¶ 47; Harris Decl., ¶ 9: ECF No. 6).

The scope and outcome of the Audit are at the heart of the parties' dispute and this case. RB Restoration contends that the Funds' attempted Audit, among other things: (1) exceeded the scope and time periods authorized by the CBA (which had expired); (2) sought information relating to non-Union employees; and (3) demanded the production of documents not authorized by the CBA, including confidential and proprietary business information and tax returns, which it contends are protected from disclosure. (Compl., ¶¶ 47-53).

Defendants counter that Plaintiff failed to supply its complete books and records and failed to cooperate with the Audit. (Defs.' Br 1-2). Defendants demanded Plaintiff's complete and unredacted books as well as records and advised that, if not provided, the Funds' Auditors would issue a report based on the information available. (Defs.' Br. 2; Harris Decl., ¶¶ 16-18). Plaintiff did not provide additional information. (Compl., ¶ 52; Harris Decl., ¶ 15). Defendants further assert that as a result, on October 8, 2021, the Funds' auditors issued an Audit based on actual and estimated findings of delinquent contributions owed by Plaintiff to the Funds and identified a total delinquency owed, for the period of January 1, 2018 through June 20, 2021, of $6, 419, 805.09, consisting of (1) delinquent contributions of $4, 561, 075.58; (2) interest thereon of $1, 043, 681.26; (3) liquidated damages of $811, 560, 25; and (4) audit costs of $3, 488. (Compl., ¶ 54; Harris Decl., ¶¶ 16, 21).

A. The Eastern District of New York Action

On November 4, 2021, the Funds filed an action in United States District Court for the Eastern District of New York against RB Restoration, captioned Trs. of the Mosaic and Terrazzo Welfare Fund, et al. v. RB Restoration, Inc., Civ. A. No., 21-6169 (FB) (LB) (the “EDNY Action”), wherein the Funds seek to recover the amount of the Audit pursuant to Sections 502(a)(3) and 515 of ERISA and Section 301 of the LMRA. (Defs.' Br. 2; Harris Decl., ¶¶ 18-21 and Exh. G: ECF No. 6), Defendants essentially assert that the EDNY Action, which was filed first, is the mirror image of the present action filed by Plaintiff.

B. The District of New Jersey Action

On November 5, 2021, RB Restoration filed the present action in this Court pursuant to the federal Declaratory Judgment Act, 28 U.S.C. § 2201, et seq. and ERISA § 1132 (Count One). (Compl., ¶¶ 6-9). The Complaint seeks, inter alia, (1) a declaration regarding the parties' rights and obligations under the CBA, and (2) a declaration regarding the propriety and legality of Defendants' demand for payment and books and records in connection with the Audit. The Complaint also alleges violations of ERISA, in particular, that Defendants failed to provide annual reports and have demanded illegal and excessive payments (Count Two). (Compl., ¶¶ 6-9, 72-83).

II. MOTION TO TRANSFER

On December 8, 2021, Defendants filed the instant motion to transfer this action to the United States District Court for the Eastern District of New York, pursuant to 28 U.S.C. § 1404(a) . (ECF No. 5). Defendants argue that the EDNY Action was commenced first, and thus the “first- filed rule” compels transfer of this case to the Eastern District. (Defs.' Br. 3). Defendants further contend that transfer is appropriate, consistent with the relevant factors enunciated by the Third Circuit in Jumara, because (1) the two cases involve the same primary parties, same audit, and same issues, and that this case should be transferred to avoid separate lawsuits over the same subject in different courts before different judges; (2) the majority of witnesses involved in this case are located in the Eastern District; and (3) Plaintiff's counsel is seeking to avoid litigation in the Eastern District of New York where sanctions are pending against him in another case. (Id.)

Plaintiff opposes transfer. It contends that the Eastern District of New York is not a proper venue for this case, pursuant to 28 U.S.C. § 1391, and thus, the case cannot be transferred to that district. (Pl.'s Br. 5-6). Plaintiff also contends its choice of forum is entitled to deference and that the convenience of the parties and witnesses do not favor transfer. (Pl.'s Br. 4, 6). Finally, Plaintiff contends that the first-filed rule should not apply because, among other reasons, Defendants have engaged in forum shopping, there is no risk of conflicting judicial determinations because Plaintiff has not yet been served in the EDNY Action, and Defendants filed the EDNY Action in bad faith. (Pl.'s Br. 8)

On reply, Defendants argue that venue is proper in New York, both pursuant to section 1391 and the special venue provisions of ERISA, see ERISA § 502(e)(2). (Defs.' Reply Br. 2-4). Defendants also contend that the interests of the parties and witnesses favor transfer. (Defs.' Reply Br. 5).

III. DISCUSSION

A. Legal Standard

Section 1404(a) confers federal courts with authority to transfer a case to another district “where it may have been brought, ” when doing so is “in the interest of justice” and serves “the convenience of parties and witnesses.” 28 U.S.C. § 1404(a). The decision to transfer a case under § 1404(a) rests within the sound discretion of a district court. See Plum Tree, Inc. v. Stockment, 488 F.2d 754, 756 (3d Cir. 1973); Cadapult Graphic Sys., Inc. v. Tektronix, Inc., 98 F.Supp.2d 560, 564 (D.N.J. 2000). The purpose of section 1404(a) “is to prevent the waste of ‘time, energy and money' and to ‘protect litigants, witnesses and the public against unnecessary inconvenience and expenses....'” Ricoh Co., Ltd. v. Honeywell, Inc., 817 F.Supp. 473, 479 (D.N.J. 1993) (quoting Van Dusen v. Barrack, 376 U.S. 612, 616 (1964)).

As directed by the Third Circuit Court of Appeals in Jumara, the reviewing court must balance private and public interest factors to determine whether the litigation would more conveniently proceed and the interests of justice would be better served by a transfer. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). The moving party bears the burden of establishing “both the propriety of venue in the transferee district and jurisdiction over all of the defendants.” LG Elecs Inc. v. First Int'l Computer, 138 F.Supp.2d 574, 586 (D.N.J. 2001) (citing Shutte v. Armco Steel Corp., 431 F.2d 22, 24 (3d Cir. 1970)). Once the court determines that jurisdiction and venue would be proper in the transferre district, the court, then, must consider...