Opinion
No. C 04-2054 FMS.
October 25, 2004
ORDER ON MOTION TO DISMISS OR, ALTERNATIVELY, TRANSFER THE ACTION
INTRODUCTION
This is an action brought under the Employment Retirement Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001- 1461, by plaintiff Radfer Trust ("Radfer") against defendant First UNUM Life Insurance Company ("First UNUM") on behalf of the real party in interest, John Doe ("Doe"). Before the Court is First UNUM's motion to dismiss or, alternatively, transfer the action. Having considered the pleadings and papers filed by both sides, the Court VACATES the hearing and GRANTS First UNUM's motion to dismiss for the reasons set forth below. Radfer's request to seal is also GRANTED.
The true name of the party of interest was impounded by Chief Judge William Young in a related action that is being litigated in the United District Court for the District of Massachusetts.
BACKGROUND
Radfer alleges that First UNUM wrongfully denied benefits owed to Doe under a group long term disability policy (the "Policy") that First UNUM managed for Doe's former employer, the New York City law firm of Hawkins, Delafield Wood ("Hawkins"). This action is related to another action that was recently decided by the United States District Court for the District of Massachusetts, Radford Trust v. First UNUM Life Ins. Co. of Am., 321 F. Supp. 2d 226 (D. Mass., 2004) (the "Massachusetts action"). The plaintiff in the previous suit, Radford Trust ("Radford"), brought suit against First UNUM on behalf of the same real party in interest, John Doe, regarding the same underlying transaction, namely the denial of disability benefits. In that suit, Chief Judge William Young entered judgment in favor of Radford on March 31, 2004, and then issued a published opinion on June 15, 2004 explaining the court's reasoning and denying a Motion to Amend Judgment that had been filed by Radford. Id. at 230. Judge Young determined that Doe became disabled by schizophrenia while employed by Hawkins and was entitled to receive benefits under the Policy for twenty-four months, observing that "twenty-four months was the maximum period for receipt of benefits for disability due to a `mental illness.'" Id. at 251. First UNUM appealed to the First Circuit where the case is currently pending.Radfer, the plaintiff in the action before this Court is a second incarnation of Radford. In the instrument that created Radford, John Doe's aging father, Bernard Doe, was named as the trustee exclusively responsible for determining distribution of assets and no successor was named. Radfer, which provides for a successor trustee when Bernard Doe dies, was created after Judge Young's judgment in favor of Radford in March 2004. Claims for benefits in excess of the approximately $250,000 awarded by Judge Young were assigned to Radfer. (Decl. of Counsel Supporting Def.'s Mot. to Dismiss or Transfer the Action, Ex. A.)
Radfer filed action in this Court on May 25, 2004. In this action, Radfer claims that First UNUM is liable under ERISA for benefits to Doe beyond those awarded by the Massachusetts court and that the mental illness limitation and social security offset provisions contained in the Policy are unenforceable as a matter of New York state law. On June 22, 2004, Radfer filed for partial summary judgment and to impound Doe's true name. On July 1, 2004, First UNUM filed a motion to dismiss for insufficient service of process. This Court issued an order on July 2, 2004 vacating all hearing dates and staying all briefing. This Court issued a second order on July 15, 2004 determining that the parties would remedy any service issues through the waiver of service procedure and that First UNUM would answer or otherwise respond to Plaintiff's pleading within the time detailed by the Federal Rules of Civil Procedure.
On September 10, 2004, First UNUM filed this motion to dismiss or alternatively transfer. First UNUM argues that the case should be dismissed for lack of personal jurisdiction and improper venue under Federal Rule of Civil Procedure Rule 12(b), and because Radfer's claims are barred by res judicata, collateral estoppel, and failure to exhaust administrative remedies. In the alternative, First UNUM argues that the action should be transferred to the District of Massachusetts "for the convenience of parties and witnesses, in the interest of justice" under 28 U.S.C. § 1404(a). In addition to opposing First UNUM's motion to dismiss, Radfer moves the court to strike a declaration submitted by First UNUM that contains Doe's true name.
DISCUSSION
A) Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue
First UNUM urges the Court to dismiss Radfer's action for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) and improper venue under Federal Rule of Civil Procedure 12(b)(3). First UNUM, however, waived these defenses by filing a prior motion to dismiss for lack of sufficiency of process without consolidating these defenses. As the Ninth Circuit explained in Chilicky v. Schweiker, 796 F.2d 1131, 1136 (9th Cir., 1986):
Fed.R.Civ.P. 12, and specifically subdivisions (g) and (h), promote the early and simultaneous presentation and determination of preliminary defenses. Rule 12(g) requires that a party who raises a defense by motion prior to an answer raise all such possible defenses in a single motion; omitted defenses cannot be raised in a second, pre-answer motion. Rule 12(h) imposes a higher sanction with respect to the failure to raise the specific defenses of (1) lack of personal jurisdiction, (2) improper venue, (3) insufficiency of process, and (4) insufficiency of service of process. If a party files a pre-answer motion, but does not raise one of the defenses enumerated above, the party waives the omitted defense and cannot subsequently raise it in his answer or otherwise (citations and footnotes omitted)
First UNUM filed its first motion to dismiss in this action on July 1, 2004. This motion raised a single preliminary defense, insufficiency of service of process. The preliminary defenses argued by First UNUM in this second motion were available to First UNUM at the time that it made its first motion to dismiss. Because they were not raised then, First UNUM waived these defenses.
First UNUM argues that these defenses were not waived because its hearing date was vacated and the motion was never heard. First UNUM also argues that the defenses it raises in the present motion were not "then available" under the meaning of Rule 12 (g) because of insufficient service of process. Even if First UNUM's defenses were not waived, however, the Court finds them to be without merit. As the Ninth Circuit has held, "Where a federal statute . . . confers nationwide service of process, `the question [of personal jurisdiction] becomes whether the party has sufficient contacts with the United States, not any particular state.'" Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309, 1315 (9th Cir. 1985) (citation omitted). Because ERISA authorizes nationwide service of process, 29 U.S.C. § 1132(e)(2), this Court can constitutionally exercise personal jurisdiction over First UNUM under ERISA even absent minimum contacts with California or this district. Cf. United Electrical, Radio and Machine Workers v. 163 Pleasant St. Corp., 960 F.2d 1080, 1085 (1st Cir. 1992) (holding that under ERISA, "the Constitution requires only that the defendant have the requisite `minimum contacts' with the United States, rather than with the particular forum state"); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049 (2nd Cir. 1993) (following minimum contacts with United States analysis for case brought under Multiemployer Pension Plan Amendments Act (amending ERISA)); Bellaire Gen. Hosp. v. Blue Cross Blue Shield of Mich., 97 F.3d 822 (5th Cir. 1996) (following contacts with United States analysis in ERISA case).
Under ERISA, moreover, venue is proper where (1) the plan is administered, (2) where the breach took place, or (3) where a defendant resides or may be found. 29 U.S.C. § 1132(e)(2). A corporate defendant is deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. 28 USCS § 1391(c).
B) Res Judicata
First UNUM also argues that Radfer's claims are barred by res judicata. Res judicata, or claim preclusion, bars a party from bringing a claim if a court of competent jurisdiction has rendered final judgment on the merits of the claim in a previous action involving the same parties or their privies. Robertson v. Isomedix, Inc. (In re International Nutronics), 28 F.3d 965, 969 (9th Cir. 1994). "Res judicata bars all grounds for recovery that could have been asserted, whether they were or not, in a prior suit between the same parties on the same cause of action." Id. at 969, citing Clark v. Bear Stearns Co., 966 F.2d 1318, 1320 (9th Cir. 1992). In order to bar a later suit under the doctrine of res judicata, an adjudication must (1) involve the same "claim" as the later suit, (2) have reached a final judgment on the merits, and (3) involve the same parties or their privies. Blonder-Tongue Laboratories v. Univ. of Ill. Found., 402 U.S. 313, 323-24, 91 S. Ct. 1434, 28 L. Ed. 2d 788 (1971); Nordhorn v. Ladish Co., 9 F.3d 1402, 1404 (9th Cir., 1993).
The second and third requirements of res judicata are clearly met. In the Massachusetts action, there was a final judgment on the merits. Judge Young rendered final judgments on the merits on March 31, 2004 and June 15, 2004. This action and the Massachusetts action also involve the same parties or their privies. The Ninth Circuit has held that when two parties are so closely aligned in interest that one is the virtual representative of the other, a claim by or against one will serve to bar the same claim by or against the other. Nordhorn, supra, at 1405. The plaintiff Radfer in this action is a second incarnation of the plaintiff Radford in the Massachusetts action. Both were established to sue First UNUM on behalf the same real party in interest, John Doe.
The final requirement for the application of res judicata is that the two adjudications involve the same claim. The central criterion in determining whether there is an identity of claims between the first and second adjudications is "whether the two suits arise out of the same transactional nucleus of facts." Frank v. United Airlines, Inc., 216 F.3d 845, 851 (9th Cir., 2000), citing Costantini v. Trans World Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982). Both this action and the Massachusetts action clearly arise out of the same transactional nucleus of facts. In both actions, the plaintiffs seek disability benefits allegedly owed to Doe under the Policy because of the onset of schizophrenia while Doe was employed by Hawkins.
The Court further finds that the grounds for recovery asserted by Radfer in this action could have been asserted by Radford in its case before the Massachusetts court. Indeed, Radfer's arguments regarding the social security offset were raised by Radford in the prior case in a filing on April 25, 2004. (Decl. of Counsel Supporting Def.'s Reply in Support of the Mot. to Dismiss or Transfer, Ex. A.) The Massachusetts district court also considered and made a ruling relevant to the mental illness limitation. It awarded benefits based on an application of the mental illness limitation and held that "any decision whether Doe's disability was a `mental' or a `physical' one was for First UNUM to make in the first instance." Radford, supra, at 251. The similarity of the arguments made by Radford before the Massachusetts court and the arguments made by Radfer before this Court is evidence that the claim is actually the same claim.
Radfer argues that res judicata does not apply to this case because " Young ordered that a second ERISA suit need be filed to recover additional benefits." (Opp'n. at 7) (emphasis in original). Radfer relies heavily on the Massachusetts court's statement that "should First UNUM or any court or other entity with the power to pass on such matters determine that Doe's disability is a `physical' one, entitling him to receive benefits for the length of his disability, he would have to be treated as if that determination had been made before his eligibility for receipt of benefits for `mental' disability expired." Radford, supra, at 252. The Massachusetts court's reference to the possibility that a court might ultimately determine whether the mental illness limitation applied to Doe, however, does not amount to an order by that court to file a new lawsuit. The Court finds Radfer's representation of the Massachusetts judgment inaccurate and misleading.
Where a party has had a full and fair opportunity to litigate, res judicata "protects their adversaries from the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions." Montana v. United States, 440 U.S. 147, 153-154 (1979). Radfer, in its previous incarnation as Radford, had a full and fair opportunity to litigate its claim against First UNUM in the Massachusetts court, which entered judgment in its favor. The Massachusetts court's dicta implying the possibility of further litigation does not change the fact that final judgment has already been rendered on the merits of Radfer's claim against First UNUM. The doctrine of res judicata prevents Radfer from taking a second bite at the apple.
C) Motion to Strike Defendant's Declaration
Radfer moves the Court to strike from the record a Declaration of Counsel submitted by First UNUM that discloses John Doe's true identity. (Compl., Ex. B.) In reply, First UNUM states that it does not object to the sealing of the declaration such that it will not be available to the public. The Court accordingly determines that the "Declaration of Counsel Supporting Defendant's Motion to Dismiss or Transfer the Action" shall be placed under seal.
CONCLUSION
Because Radfer's action against First UNUM is precluded under the doctrine of res judicata by previous litigation in a Massachusetts district court, First UNUM's motion to dismiss is GRANTED, without leave to amend. To protect the identity of John Doe, the court also determines that First UNUM's "Declaration of Counsel Supporting Defendant's Motion to Dismiss or Transfer the Action" shall be sealed. The hearing set for October 28, 2004 is VACATED.
IT IS SO ORDERED.