September 30, 2016

Third Circuit Reinstates Dismissed Case Based on "Unmentioned" Exhibits

John Austin

In a recent decision in the Third Circuit Court of Appeals, the court reinstated a dimissed case where it found exhibits to the complaint (which were not mentioned or explained in the complaint itself) supplied the needed allegations to survive a 12(b)(6) motion.

In Carpenters Health and Welfare Fund of Philadelphia and Vicinity v. Management Resource Systems, Inc, (15-2508, Decided: September 13, 2016), plaintiffs, union and management sponsored trust funds and employee benefit plans that represent construction industry employees, filed suit against Management Resource Systems (MRS), seeking injunctive relief to force an audit on MRS. The plaintiffs alleged in their complaint that they are “without sufficient information or knowledge to plead the precise nature, extent and amount of the Defendants’ delinquency since the books, records and information necessary to determine this liability are in the exclusive possession, custody and control or knowledge of the Defendants.” MRS moved to dismiss under rule 12(b)(6), which the district court granted.

In this case, the plaintiffs’ complaint failed to have essential allegations to support its claims. Instead, the plaintiffs simply attached documents to the complaint without explanation. The Third Circuit held, “[A]lthough the complaint did not specifically allege the existence of the evergreen clause in so many words, when the complaint is read in context with the attachments, the nature of the claim for relief is obvious.” A complaint need only contain allegations to give “the defendant fair notice of what the . . . claim is and the grounds upon which it rests.”

The Third Circuit also held that the complaint also satisfies the demanding requirement of plausibility. The court held the documents attached to the complaint were “common contractual provisions in the construction industry.” The allegations are, therefore, more credible because they are consistent with prevailing collective bargaining practices, which was the subject of the litigation.

While practitioners should never fail to identify and incorporate exhibits attached to the complaint, this case may prove helpful in preparing for a motion to dismiss hearing.


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John Austin

Principal at John Austin Law Firm in Raleigh, North Carolina.