District Council 16 Northern California Health and Welfare Trust Fund v. Kya…

Background

Several union benefit trust funds and their trustees sued Kya Services, LLC under the Employee Retirement Income Security Act (ERISA) and section 301(a) of the Labor Management Relations Act. They alleged that a collective bargaining agreement required Kya to make employer contributions to the trust funds based on its employees’ monthly work hours. The agreement also required Kya to keep records and submit to audits when requested.

The plaintiffs alleged that Kya failed to pay delinquent contributions, liquidated damages, and interest identified in a payroll audit covering March 1, 2018 through April 30, 2019. They asserted one claim for unpaid contributions and related amounts under 29 U.S.C. § 1145 and the Labor Management Relations Act.

Motion and timeliness issue

Kya moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal for failure to state a legally sufficient claim. Kya argued that the plaintiffs’ claim was barred by a four-year limitations period because the alleged unpaid contributions related to months outside that period.

The plaintiffs’ complaint was filed on July 26, 2023. Kya waived service on August 3, 2023, and the waiver stated that Kya had 60 days from that date to file an answer or a Rule 12 motion. Kya filed its motion on October 3, 2023, which the opinion describes as 61 days later and 12 hours late. Kya did not file a separate motion under Rule 6(b) asking the court to excuse the late filing. Kya’s attorney submitted a declaration stating that she was sick on the day the motion was due and believed there was good cause to excuse the delay.

Ruling

The court held that Federal Rule of Civil Procedure 6(b)(1)(B) governed Kya’s request to excuse the late filing because the deadline had already expired. Under that rule, a party seeking an extension after a deadline has passed must make a motion based on excusable neglect. The court explained that Kya had not made a formal Rule 6(b) motion or another sufficiently formal request that would notify the plaintiffs that a motion for relief from the deadline was being presented. The court therefore declined to consider the Rule 12 motion and denied it on that basis.

The court added that it would deny the motion even if it considered the limitations argument. A limitations defense is generally an affirmative defense, and dismissal at the pleading stage is proper only when the complaint itself establishes the defense. The court said the complaint did not establish when the plaintiffs knew or had reason to know that Kya had underpaid contributions. The fact that the contributions concerned months outside the four-year period was not enough, and determining when the limitations period began required development of the record rather than resolution from the pleadings.

The court denied Kya’s motion to dismiss. It also vacated the scheduled hearing and continued the initial case-management conference, as stated in the order.