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International Brotherhood of Teamsters Local 651 v. Philbeck

United States District Court, E.D. Kentucky, Central Division at Lexington

October 22, 2019



          Danny C Reeves Chief Judge

         Defendant Michael Philbeck has filed a motion to dismiss under Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. [Record No. 3');">33');">3] Philbeck&#3');">39;s motion will be denied because the Court has subject matter jurisdiction over all of Plaintiff International Brotherhood of Teamsters Local 651&#3');">39;s (referred to hereafter as “Local 651” or “the Union”) claims and it has pled sufficient facts to state claims for relief.


         Philbeck previously served as president of Local 651 from January 1, 2010, to December 3');">31, 2018. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, 3');">3');">p. 3');">3-4] Philbeck lost his bid for re-election for president of Local 651 to Michael Watson in November 2018, but he remains a member of the Union. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, p. 4] Following the election loss, Philbeck allegedly removed property that belonged to the Local 651, including a digital camera, a laptop, and points on the Union credit card (which he converted to gift cards) that he retained for his personal benefit and gave to other business agents. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, p. 1-2]

         While Philbeck was president of Local 651, he maintained control over its Facebook page and created a Union member group on Facebook. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, 3');">3');">p. 3');">3] Philbeck presently retains control over the Facebook pages. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, 3');">3');">p. 3');">3] Philbeck was previously enjoined by this Court from holding himself out as a current officer of Local 651, required to identify himself as the author of the posts on the pages, and required that he explain that the pages were not official Union pages. [Record No. 14] The Court later modified the injunction to require Philbeck to post a clear disclaimer at the beginning and end of every post on social media. [Record No. 52]

         Watson notified Philbeck on November 20, 2018, not to make any extraordinary expenditures ($1, 000.00 or more) without notifying the incoming officers of Local 651. [Record No. 3');">32');">3');">32');">3');">32');">3');">32-5] Article XXII, Section 4 of the IBT Constitution states:

During the period between the date of election and the end of the term of office, no extraordinary expenditure of Local Union funds shall be made, and no action shall be taken that commits the Local Union to make such extraordinary expenditures in the future, without the approval of the officers-elect and the membership.

[Record No. 3');">32');">3');">32');">3');">32');">3');">32-3');">3, p. 170] The IBT Constitution further requires that outgoing officers “promptly deliver any money or property of [the] Union in [his] possession to [his] successor in office.” [Record No. 3');">32');">3');">32');">3');">32');">3');">32-3');">3, p. 9] Watson requested a meeting with Philbeck on December 20, 2018, to discuss alleged extraordinary expenditures, but no meeting took place. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, pp. 5-6] Philbeck allegedly paid himself and other business agents $20, 000.00 for accrued vacation retained during previous years. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, p. 6] He also allegedly kept a $2, 000.00 laptop for himself, but only paid the Union $200.00 for it. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, p. 6] Additionally, he kept a digital camera without proper authorization from Local 651. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, p. 6] Next, Philbeck allegedly converted 165, 000 credit card points (worth more than $1, 600.00) to gift cards and other items for personal use. [Record No. 3');">32');">3');">32');">3');">32');">3');">32, p. 6]

         Local 651 filed this action on March 15, 2019, asserting that Philbeck breached contracts under Section 3');">301 of the Labor-Management Relations Act (“LMRA”) (Count I), breached his fiduciary duty under the Labor-Management Reporting and Disclosure Act (“LMRDA”) (Count II), and converted Local 651&#3');">39;s property (Count III). [Record No. 3');">32');">3');">32');">3');">32');">3');">32] The plaintiff also asserts claims for invasion of privacy (Count IV), false designation of origin under the Lanham Act (Count V) and unfair competition (Count VI). [Record No. 3');">32');">3');">32');">3');">32');">3');">32]


         i. Federal Rule of Civil Procedure 12(b)(1)

         The plaintiff has the burden of proving that the federal court has jurisdiction to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1). See Madison-Hughes v. Shalala, 3');">3d 1121');">80 F.3');">3d 1121, 113');">30 (6th Cir. 1996). “[T]he court is empowered to resolve factual disputes when subject matter jurisdiction is challenged.” Moir v. Greater Cleveland Regional Transit Authority, 895 F.2d 266, 269 (6th Cir. 1990). A motion to dismiss under Rule 12(b)(1) “may either attack the claim of jurisdiction on its face or it can attack the factual basis of jurisdiction.” Golden v. Gorno Bros., Inc., 3');">3d 879');">410 F.3');">3d 879, 881 (6th Cir. 2005). A factual attack challenges the actual existence of the court&#3');">39;s jurisdiction and no presumption of truthfulness applies to the allegations. United States v. Ritchie, 3');">3d 592');">15 F.3');">3d 592, 598 (6th Cir. 1994).

         ii. Federal Rule of Civil Procedure 12(b)(6)

         When evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must determine whether the complaint alleges “sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.&#3');">39;” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The plausibility standard is met “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (quoting Twombly, 550 U.S. at 556). While a complaint need not contain detailed factual allegations, a plaintiff must provide more than mere labels and conclusions, and “a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. While plaintiffs are not required to plead facts showing that the defendant is likely to be responsible for the harm alleged, plaintiffs must demonstrate “more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678.


         i. This Court has subject matter jurisdiction to hear Local 651&#3');">39;s breach of contract claim under Section 3');">301 of the LMRA and Local 651 has pled sufficient facts to state a claim for relief.

         Section 3');">301 of the LMRA allows for breach of contract actions between labor organizations and employees, like the breach of a union constitution. See Wooddell v. International Bhd. of Elec. Workers, Local 71, 3');">3');">502 U.S. 93');">3, 101 (1991); Madsen v. Am. Fed&#3');">39;n of Musicians of the United States, 3');">3 F.Supp.3');">3d 820');">13');">3 F.Supp.3');">3d 820, 824-26 (N.D. Ohio 2014) (“§ 3');">301 also applies to lawsuits between individual union members and labor organizations, if the allegations include a violation of the union constitution or other contract between labor organizations”). But see Int&#3');">39;l Ass&#3');">39;n of Heat & Frost Insulators & Asbestos ...

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