Cynthia Gosper v. Pacific Life Insurance Co. et al

NOTICE OF MOTION AND MOTION to Dismiss Claims One, Two, Four and Five of Plaintiff's Complaint

C.D. Cal.September 6, 2016

DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS COUNTS I, II, IV and V Case No. 8:16-cv-01306-JLS-DFM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO NICOLE A. DILLER, Bar No. 154842 nicole.diller@morganlewis.com ROBERTA H. VESPREMI, Bar No. 225067 roberta.vespremi@morganlewis.com MORGAN, LEWIS & BOCKIUS LLP One Market, Spear Street Tower San Francisco, California 94105-1596 Tel.: +1.415.442.1000 Fax: +1.415.442.1001 Attorneys for Defendant Pacific Life Insurance Co. UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION CYNTHIA GOSPER, Plaintiff, v. PACIFIC LIFE INSURANCE CO. and DOES 1 through 10, inclusive, Defendants. Case No. 8:16-cv-01306-JLS-DFM DEFENDANT PACIFIC LIFE INSURANCE COMPANY’S NOTICE OF MOTION AND MOTION TO DISMISS CLAIMS ONE, TWO, FOUR, AND FIVE OF PLAINTIFF’S COMPLAINT Hearing Date: October 28, 2016 Time: 2:30 p.m. Ctrm: 10A Hon. Josephine L. Staton Complaint Filed: May 17, 2016 Case 8:16-cv-01306-JLS-DFM Document 25 Filed 09/06/16 Page 1 of 2 Page ID #:411 2 DEFENDANT’S NOTICE OF MOTION AND MOTION TO DISMISS COUNTS I, II, IV and V Case No. 8:16-cv-01306-JLS-DFM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that Defendant Pacific Life Insurance Company moves this Court for an Order dismissing the First, Second, Fourth, and Fifth Causes of Action of Plaintiff Cynthia Gosper’s Complaint. This application is made pursuant to Federal Rule of Civil Procedure 12(b)(6). This Motion is based upon this notice of motion, the accompanying Memorandum of Points and Authorities, the [Proposed] Order concurrently lodged, all pleadings and papers on file in this action, and upon such other matters as may be presented to the Court at or before any hearing that may take place on this motion. Pursuant to Civil L.R. 7-3, the parties met and conferred more than seven days in advance of the filing of this motion, but were unable to resolve the disputed issues. Dated: September 6, 2016 MORGAN, LEWIS & BOCKIUS LLP By /s/ Nicole A. Diller Nicole A. Diller Attorneys for Defendant Pacific Life Insurance Company Case 8:16-cv-01306-JLS-DFM Document 25 Filed 09/06/16 Page 2 of 2 Page ID #:412 DB2/ 30569043.2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO MORGAN, LEWIS & BOCKIUS LLP Nicole A. Diller, Bar No. 154842 nicole.diller@morganlewis.com Roberta H. Vespremi, Bar No. 225067 roberta.vespremi@morganlewis.com One Market, Spear Street Tower San Francisco, CA 94105-1596 Tel: (415) 442-1000 Fax: (415) 442-1001 Attorneys for Defendant Pacific Life Insurance Company UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION CYNTHIA GOSPER, Plaintiff, vs. PACIFIC LIFE INSURANCE CO. and DOES 1 through 10, Defendants. Case No. 8:16-cv-01306-JLS-DFM MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT PACIFIC LIFE INSURANCE CO.’S MOTION TO DISMISS CLAIMS ONE, TWO, FOUR, AND FIVE OF PLAINTIFF’S COMPLAINT Hearing Date: October 28, 2016 Time: 2:30 p.m. Ctrm: 10A Hon. Josephine L. Staton Complaint Filed: May 17, 2016 Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 1 of 15 Page ID #:413 DB2/ 30569043.2 TABLE OF CONTENTS Page i 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO I. INTRODUCTION......................................................................................... 1 II. RELEVANT ALLEGATIONS AND PROCEDURAL HISTORY............. 2 III. LEGAL STANDARD................................................................................... 4 IV. LEGAL ARGUMENT .................................................................................. 4 A. The Common Law Claims Are Barred Under ERISA’s Complete and Express Preemption Doctrines. ..................................... 4 1. ERISA Completely Preempts the Common Law Claims Because They Conflict with ERISA’s Exclusive Civil Enforcement Mechanisms. ......................................................... 5 2. ERISA’s Statutory Preemption Provision Also Preempts the Common Law Claims Because They Relate to an ERISA-Governed Plan. .............................................................. 8 B. ERISA Also Preempts the Fifth Cause of Action for Unfair/Unlawful Business Practices Under California Business & Professions Code § 17200, et seq. .................................................... 9 V. CONCLUSION ...........................................................................................10 Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 2 of 15 Page ID #:414 DB2/ 30569043.2 TABLE OF AUTHORITIES Page(s) ii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO CASES Aetna Health Inc, v. Davila, 542 U.S. 200 (2004) .......................................................................................... 5, 6 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................. 4 Barbour v. United Automobile Workers, 594 F.3d 315 (4th Cir. 2010) ................................................................................. 5 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) .............................................................................................. 4 Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972 (9th Cir. 2007) ................................................................................. 6 Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011) .......................................................................................... 7 Cleghorn v. Blue Shield of Cal., 408 F.3d 1222 (9th Cir. 2005)............................................................................... 6 Dishman v. UNUM Life Ins. Co. of Am., 269 F.3d 974 (9th Cir. 2001) ................................................................................. 9 The District of Columbia v. The Greater Washington Board of Trade, 506 U.S. 125 (1992) .......................................................................................... 7, 8 FMC Corp. v. Holliday, 498 U.S. 52 (1990) .............................................................................................. 10 Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936 (2016) ........................................................................................ 8, 9 Ingersoll-Rand Co., v. McClendon, 498 U.S. 133 (1990) .............................................................................................. 8 Marder v. Lopez, 450 F.3d 445 (9th Cir. 2006) ................................................................................. 4 Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 3 of 15 Page ID #:415 DB2/ 30569043.2 TABLE OF AUTHORITIES (cont’d) Page(s) iii 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009) ................................................................................. 6 Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) ............................................................................................ 5, 6 N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 654 (1995) .............................................................................................. 8 Operating Eng’rs Health & Welfare Trust Fund v. IWI Contracting Co., 135 F.3d 671 (9th Cir. 1998) ................................................................................. 8 Parrino v. FHP, Inc., 146 F.3d 699 (9th Cir. 1998) ................................................................................. 4 Paulsen v. CNF Inc., 559 F.3d 1061 (9th Cir. 2009)........................................................................... 4, 5 Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987) ........................................................................................4, 6, 9 PM Group Life Ins. Co. v. W. Growers Assur. Trust, 953 F.2d 543 (9th Cir. 1992) ............................................................................... 10 Sprewell v. Golden State Warriors, 266 F.3d 979 (9th Cir. 2001) ................................................................................. 4 Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124 (9th Cir. 1992)............................................................................... 4 Varity Corp. v. Howe, 516 U.S. 489 (1996) .............................................................................................. 7 STATUTES Cal. Ins. Code § 709.03 ........................................................................................................... 9, 10 Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 4 of 15 Page ID #:416 DB2/ 30569043.2 TABLE OF AUTHORITIES (cont’d) Page(s) iv 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO California Business & Professions Code § 17200, et seq. ..............................................................................................1, 3, 9 ERISA, USC § 3(1), § 1002(1).................................................................................................... 2 § 502(a), § 1132(a) ........................................................................................5, 6, 7 § 514, § 1144 ................................................................................................passim RULES AND REGULATIONS Fed. R. Civ. P. 12(b)(6) ........................................................................................... 2,4 Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 5 of 15 Page ID #:417 DB2/ 30569043.2 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION This lawsuit concerns an attempt by Plaintiff Cynthia Gosper to recover benefits to which she claims entitlement under Defendant Pacific Life Insurance Company’s health care benefit plan (the “Plan”), a welfare benefit plan governed by Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Ms. Gosper includes five causes of action in this lawsuit, four of which attempt to assert state law claims based on Defendant Pacific Life Insurance Company’s (“Pacific Life”) administration of the Plan and termination of Plan benefits. Although Ms. Gosper pleads three of these claims -- breach of contract, negligent misrepresentation, and breach of the implied covenant of good faith and fair dealing (the “Common Law Claims”) -- under state common law, ERISA both completely and expressly preempts them because they are inextricably related to the Plan and ERISA’s civil enforcement mechanisms. Ms. Gosper’s fifth claim for unfair or unlawful business practices under California Business & Professions Code § 17200, et seq. is premised on an underlying violation of the California Insurance Code. Because the Plan is self-funded, though, ERISA preempts that state insurance law. ERISA’s complete preemption doctrine preempts any state law claim that seeks to duplicate, supplant, or supplement a cause of action under ERISA. Because the claims at issue seek benefits or assert breaches of duties for which ERISA offers its own set of claims and remedies, the claims necessarily attempt to duplicate or supplant an ERISA cause of action. In addition to ERISA’s complete preemption doctrine, ERISA contains a statutory preemption provision. ERISA § 514(a), 29 U.S.C. § 1144(a), broadly provides that ERISA shall preempt any state law that “relates to” an employee benefit plan. Courts have interpreted this statutory preemption provision to apply to state common law causes of action that relate, directly or indirectly, to an ERISA-governed benefit plan. As the existence of each of the contested claims Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 6 of 15 Page ID #:418 DB2/ 30569043.2 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO hinges on the Plan, ERISA also expressly preempts them. Pacific Life respectfully requests that the Court grant its motion and dismiss the First, Second, Fourth and Fifth Claims for Relief for failure to state a claim due to ERISA preemption. II. RELEVANT ALLEGATIONS AND PROCEDURAL HISTORY1 From 1976 until 1984, Ms. Gosper worked for Pacific Life in Newport Beach, California. Compl. ¶ 2. In 1984, Ms. Gosper was in a car accident, which rendered her quadriplegic. Id. ¶ 5. At the time of her accident, Ms. Gosper participated in the Plan, which was governed by ERISA as an employee welfare benefit plan under ERISA § 3(1), 29 U.S.C. § 1002(1), through which she received health care coverage.2 See id. ¶ 6. After the car accident, Ms. Gosper filed a lawsuit entitled Cynthia Gosper, et al. v. Toyota Motor Sales, U.S.A., Inc. et al., Case No. SWC 78496, in California state court against the manufacturer of her vehicle. Id. Ms. Gosper claims that Pacific Life was “brought into” the Gosper v. Toyota litigation when Pacific Life cancelled her health care coverage. Id. Pacific Life filed a cross-complaint against Ms. Gosper in federal court, seeking a declaration that pursuant to the third party responsibility provisions of the Plan, Ms. Gosper was required to reimburse it for recovered expenses relating to then-current and future medical benefits paid from the Plan. Id.; Compl. Exh. 1 (Settlement Agreement) ¶¶ A, B. On or around December 18, 1991, Pacific Life and Ms. Gosper entered into a settlement agreement (the “Settlement Agreement”). Compl. ¶ 2 and Exh. 1 (Agreement). Paragraph A of the Settlement Agreement states: 1 For the purposes of this motion only, Pacific Life assumes the truth of the facts properly alleged in the Complaint, as required by Federal Rule of Civil Procedure 12(b)(6). Pacific Life reserves the right to dispute and deny any of the Complaint’s allegations in the future. 2 At the time of Plaintiff’s accident, Pacific Life’s Employee Handbook served as the summary plan description (“SPD”) for the Plan and outlined the Plan’s key features. Compl. Exh. 2 (1984 SPD) at V. Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 7 of 15 Page ID #:419 DB2/ 30569043.2 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO On or about May 9, 1981, Pacific Mutual filed a Cross-Complaint for Declaratory Relief against Gosper in the United States District Court, Central District of California, designated case No. SA-CV-90-660 GLT (the “Action”), seeking a declaration that Gosper is required to reimburse Pacific Mutual for certain medical benefits paid on her behalf by Pacific Mutual’s welfare benefit plan for its eligible employees and former employees including Gosper (the “Plan”). Compl., Exh. 1 ¶ A. The Agreement goes on to state that: The parties hereto desire to settle all disputes relating to the subject matter of the Action as described in paragraph A above, as well as any claims or controversies related thereto or which were related or could have been revealed in discovery in the Action. Id. ¶ D (emphasis added). The Settlement Agreement resolved Pacific Life’s federal cross-claim for subrogation against Ms. Gosper. Id. ¶¶ A, D, 2. It obligated Ms. Gosper to reimburse 40 percent of any Plan benefits related to injuries sustained in the car accident. Id. ¶ 1. The Agreement also outlined the mechanism through which such reimbursement would occur in the future and for determining which of Ms. Gosper’s medical expenses related to the accident. Id. In 2011, Pacific Life began requiring premium payments for Plan coverage from Ms. Gosper. In 2011, 2012, and 2013, Pacific Life charged Ms. Gosper quarterly premiums for her Plan coverage. Compl. ¶ 14. In connection with the termination of the entire Plan, effective December 31, 2013, Pacific Life terminated Ms. Gosper’s Plan coverage. Id. ¶ 16. On May 23, 2016, Ms. Gosper commenced this action in the Superior Court of the State of California, Orange County. Dkt. No. 1, Exh. 1. Ms. Gosper alleged claims for Breach of Contract (Count I), Negligent Misrepresentation (Count II), Accounting (Count III), Breach of the Implied Covenant of Good Faith and Fair Dealing (Count IV), and Violation of California’s Business and Professions Code § 17200 et seq. (Count V). Compl. ¶¶ 17-53. On July 13, 2016, Pacific Life filed a Notice of Removal with this Court on the grounds that, with the exception of Count III, ERISA completely preempts Ms. Gosper’s claims. Dkt. No. 1. Ms. Gosper Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 8 of 15 Page ID #:420 DB2/ 30569043.2 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO filed a motion to remand this matter to state court on August 12, 2016. Dkt. No. 18. The Court struck that motion (Dkt. No. 20), and Ms. Gosper chose not to re-file it. Dkt. Nos. 21, 23. III. LEGAL STANDARD The Court should dismiss all of the Complaint’s claims other than Count III under Rule 12(b)(6) because they fail to allege plausible claims. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). A complaint containing state-law claims that are preempted fails to plead a cognizable claim. Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 55, 107 S. Ct. 1549, 95 L. Ed. 2d 39 (1987) (reversing judgment on tort law claims because ERISA expressly preempted them); Tingey v. Pixley-Richards West, Inc., 953 F.2d 1124 (9th Cir. 1992) (upholding dismissal of plaintiffs’ state-law allegations regarding disposition of his benefits because such claims fall squarely within ERISA). Such preempted claims should be dismissed. Parrino v. FHP, Inc., 146 F.3d 699, 703-04 (9th Cir. 1998) (plaintiff’s causes of action for breach of the implied covenant of good faith and fair dealing and civil conspiracy predicated upon alleged defects in defendant’s procedures for processing health benefits fall within the scope of ERISA, and, therefore, properly dismissed because of ERISA preemption). In ruling on this motion, the court should not accept “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.), amended by 275 F.3d 1187 (9th Cir. 2001). Further, if an allegation is contradicted by the terms of the documents allegedly giving rise to the claim, the contradicted allegations may be disregarded. Marder v. Lopez, 450 F.3d 445, 453 (9th Cir. 2006). Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 9 of 15 Page ID #:421 DB2/ 30569043.2 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO IV. LEGAL ARGUMENT A. The Common Law Claims Are Barred Under ERISA’s Complete and Express Preemption Doctrines. As the Ninth Circuit explained in Paulsen v. CNF Inc., 559 F.3d 1061 (9th Cir. 2009), “there are two strands of ERISA preemption: (1) ‘express’ preemption under ERISA § 514(a), 29 U.S.C. § 1144(a); and (2) [complete] preemption due to a ‘conflict’ with ERISA’s exclusive remedial scheme set forth in [ERISA 502(a)] 29 U.S.C. § 1132(a), notwithstanding the lack of express preemption.” 559 F.3d at 1081, citing Cleghorn v. Blue Shield of Cal., 408 F.3d 1222, 1225 (9th Cir. 2005). As an exception to the well-pleaded complaint rule, a claim can be preempted even if it is not affirmatively alleged under ERISA and even if it does not reference an employee benefit plan. Aetna Health Inc, v. Davila, 542 U.S. 200, 207-08, 124 S. Ct. 2488, 159 L. Ed. 2d 312 (2004) (“[D]istinguishing between pre-empted and non-pre-empted claims based on the particular label affixed to them would ‘elevate form over substance and allow parties to evade’ the preemptive scope of ERISA.”) (Internal citation omitted). The gravamen of the Common Law Claims concerns Ms. Gosper’s allegation that Pacific Life improperly cancelled her medical coverage under the Plan. Compl. ¶¶ 9-15, 19-20, 29-33, 42-44, 48-50. The Common Law Claims either challenge conduct pertaining to the Plan’s administration or seek benefits available, if at all, from the Plan. ERISA therefore preempts them. 1. ERISA Completely Preempts the Common Law Claims Because They Conflict with ERISA’s Exclusive Civil Enforcement Mechanisms. Complete preemption is a jurisdictional doctrine, whereas express preemption simply declares the primacy of federal law, regardless of the forum or the claim. See, e.g., Barbour v. United Automobile Workers, 594 F.3d 315, 327-28 (4th Cir. 2010). Only three regulatory schemes have been determined to be acts of complete preemption, which the Supreme Court expressly adopted into the ERISA Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 10 of 15 Page ID #:422 DB2/ 30569043.2 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO context in Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S. Ct. 1542, 95 L. Ed. 2d 55 (1987). There, the Court observed that Congress specifically intended to exert “extraordinary pre-emptive power” when it adopted the detailed provisions of ERISA’s civil enforcement mechanisms, and concluded that Congress meant to displace all other causes of action that relate to ERISA-governed plans. Metro. Life Ins., 481 U.S. at 64. Courts have federal question jurisdiction over a purported state-law cause of action if (1) the cause of action is based on a state law that ERISA preempts, and (2) the cause of action is “within the scope of the civil enforcement provisions” of ERISA § 502(a), 29 U.S.C. § 1132(a), which provides the exclusive bases for asserting claims under ERISA. Id. at 64-66; see also Cedars-Sinai Med. Ctr. v. Nat’l League of Postmasters of U.S., 497 F.3d 972 (9th Cir. 2007). “ERISA section 502(a) contains a comprehensive scheme of civil remedies to enforce ERISA’s provisions.” Cleghorn, 408 F.3d at 1225. Congress intended for ERISA’s civil enforcement provisions to be exclusive, “even when the state action purport[s] to authorize a remedy unavailable under the federal provision.” Pilot Life Ins. Co., 481 U.S. at 55. Relying on Davila, the Ninth Circuit has held that a state-law cause of action “is completely preempted if (1) ‘an individual, at some point in time, could have brought [the] claim under [ERISA]’ and (2) ‘where there is no other independent legal duty that is implicated by a defendant’s actions.’” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 946 (9th Cir. 2009) (quoting Davila, 542 U.S. at 210). ERISA completely preempts the Common Law Claims because each could be re-cast as either a claim for benefits under § 502(a)(1)(B) 3 or a claim for breach 3 ERISA § 502(a)(1)(B) provides that a participant or beneficiary in a plan may bring a civil action “to recover benefits due to him [or her] under the terms of the plan, to enforce his [or her] rights under the terms of the plan, or to clarify his [or her] rights to future benefits under the terms of the plan.” 29 U.S.C. § 1332(a)(1)(B). Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 11 of 15 Page ID #:423 DB2/ 30569043.2 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO of duty under § 502(a)(3). 4 Each of the Common Law Claims alleges that Pacific Life harmed Ms. Gosper by terminating her medical coverage. Compl. ¶¶ 19-20, 24, 28-33, 42-43. Ms. Gosper claims that Pacific Life “was obligated to continue providing medical coverage until either Plaintiff was deceased or pursuant to the terms of the Employee Handbook,” which served as the Plan’s SPD (supra, note 2). Compl. ¶¶ 9-13. Because these claims seek benefits under the Plan and do not implicate any other independent duty,5 Ms. Gosper could have brought them under ERISA § 502(a)(1)(B) as a claim for benefits. In addition to seeking benefits that could be pursued under ERISA § 502(a)(1)(B), the Second and Fourth Claims allege that Pacific Life violated its obligations by making misrepresentations to Ms. Gosper. The Supreme Court has held that “appropriate equitable relief” under ERISA § 502(a)(3) includes equitable estoppel where a participant relied to his or her detriment on an alleged misrepresentation. Cigna Corp. v. Amara, 131 S. Ct. 1866, 1881, 179 L. Ed. 2d 843 (2011); see also Varity Corp. v. Howe, 516 U.S. 489, 509-10, 116 S. Ct. 1065, 134 L. Ed. 2d 130 (1996) (holding that a participant or beneficiary has standing under ERISA § 502(a)(3) to seek individual recovery in the form of “appropriate equitable relief” for alleged misstatements relating to anticipated duration of benefit plan). Ms. Gosper alleges in her Second and Fourth Claims that Pacific Life misrepresented its alleged intention to provide medical coverage until age 65. Compl. ¶¶ 31 (alleging that cancelling medical coverage before age 65 “amounts to negligent and false representations” by Pacific Life), 43 (alleging that cancelling 4 ERISA § 502(a)(3) allows a plan participant or beneficiary to seek an injunction or “other appropriate equitable relief” against defendants who violate ERISA or the terms of a plan. 29 U.S.C. § 1132(a)(3). 5 Even if Plaintiff’s allegations related solely to the Settlement Agreement, which they do not, the Supreme Court has held that ERISA preempts claims for benefits that arise from an agreement that relies on an ERISA plan to determine the scope of coverage. See The District of Columbia v. The Greater Washington Board of Trade, 506 U.S. 125, 113 S. Ct. 580, 121 L. Ed. 2d 513 (1992) (holding that ERISA preempted claim for expanded health benefits for workers’ compensation recipient because the benefits at issue “[we]re set by reference to covered employee benefit plans”). Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 12 of 15 Page ID #:424 DB2/ 30569043.2 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO Plaintiff’s medical coverage before age 65 amounted to Pacific Life “effectively reneging on its obligations”). Therefore, each of these claims could have also been brought as a claim for equitable relief under ERISA § 502(a)(3). 2. ERISA’s Statutory Preemption Provision Also Preempts the Common Law Claims Because They Relate to an ERISA- Governed Plan. Ms. Gosper’s claims are also preempted by the doctrine of express preemption (sometimes called “ordinary” or “statutory” preemption). Congress enacted ERISA “to promote the interests of employees and their beneficiaries in employee benefit plans” and to “eliminate the threat of conflicting or inconsistent State and local regulation of employee benefit plans.” Operating Eng’rs Health & Welfare Trust Fund v. IWI Contracting Co., 135 F.3d 671, 676 (9th Cir. 1998) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90, 99 (1983)). To achieve such uniformity, Congress included a deliberately sweeping preemption provision within ERISA, providing that the Act “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan....” ERISA § 514(a), 29 U.S.C. § 1144(a) (emphasis added); see N.Y. State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 654, 655, 115 S. Ct. 1671, 131 L. Ed. 2d 695 (1995) (ERISA § 514(a) “is clearly expansive”); Greater Washington Board of Trade, 506 U.S. at 130 (holding that law was preempted under ERISA because it had a connection with or reference to an ERISA plan). Express preemption occurs when a state law “relate[s] to any employee benefit plan” within the meaning of ERISA § 514, 29 U.S.C. § 1144(a). See Ingersoll-Rand Co., v. McClendon, 498 U.S. 133, 138-39, 111 S. Ct. 478, 112 L. Ed. 2d 474 (1990). The Supreme Court recently held that such an impermissible connection occurs when state law governs a central matter of plan administration or interferes with nationally uniform plan administration. Gobeille v. Liberty Mutual Ins. Co., 136 S. Ct. 936, 194 L. Ed. 2d 20 (2016). The Court explained that “these Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 13 of 15 Page ID #:425 DB2/ 30569043.2 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO formulations ensure that the express pre-emption clause receives the broad scope Congress intended, while avoiding the clause’s susceptibility to limitless application.” Id. at 943. Ms. Gosper’s Common Law Claims “relate to” the Plan. Each ultimately is based on the alleged improper termination of Plan benefits to Ms. Gosper and the professed improper management of the Plan. Therefore, ERISA § 514, 29 U.S.C. § 1144(a), also expressly preempts the Common Law Claims. Pilot Life Ins. Co., 481 U.S. at 47-48 (holding that ERISA § 514 expressly preempted common law causes of action based on alleged improper processing of claim under an employee benefit plan). Accepting Ms. Gosper’s allegations as true, she cannot show that her Common Law Claims lack “enough of a relationship” to administration of the Plan to save them from preemption. See Dishman v. UNUM Life Ins. Co. of Am., 269 F.3d 974, 984 (9th Cir. 2001) (stating that plaintiff failed to show that her negligence claims are the sort of “garden variety torts which only peripherally impact daily plan administration” and would not be preempted). Indeed, Ms. Gosper’s claims go to the very heart of administration of an ERISA plan – the determination of whether to continue or terminate a plan. Compl. ¶¶ 19-20, 24, 28- 33, 42-43; Gobeille, 136 S. Ct. at 943. Because the Common Law Claims necessarily relate to the Plan and affect plan administration, ERISA § 514 expressly preempts them. B. ERISA Also Preempts the Fifth Cause of Action for Unfair/Unlawful Business Practices Under California Business & Professions Code § 17200, et seq. Ms. Gosper relies on California Insurance Code § 709.03 as the basis for her unfair/unlawful business practices claim. Compl. ¶ 47. Section 709.03 defines an unfair and deceptive action in the business of insurance as “[m]aking, issuing, circulating, or causing to be made, issued or circulated, any . . . statement misrepresenting the terms of any policy issued or to be issued or the benefits or advantages promised thereby . . . .” Id. Because the Plan at issue is self-funded Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 14 of 15 Page ID #:426 DB2/ 30569043.2 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MORGAN, LEWIS & BOCKIUS LLP ATTORNEYS AT LAW SAN FRANCISCO (Dkt. Nos. 1 at 17-18, 1-1 at 141), however, it is exempt from state insurance laws. ERISA has a statutory exception to its preemptive force; states may enact state laws regulating insurance as to insured plans. ERISA § 514(b)(2)(A), 29 U.S.C. § 1144(b)(2)(A). But the Supreme Court and the Ninth Circuit have expressly held that ERISA preempts state insurance laws to the extent that they would otherwise apply to self-funded plans, like the Plan. FMC Corp. v. Holliday, 498 U.S. 52, 61, 111 S. Ct. 403, 112 L. Ed. 2d 356 (1990) (holding that self-funded ERISA plans are exempt from state laws that “regulate insurance); see also PM Group Life Ins. Co. v. W. Growers Assur. Trust, 953 F.2d 543, 545 (9th Cir. 1992) (“State insurance regulation of insured plans is permissible, but state insurance regulation of self- funded plans is preempted.”); ERISA § 514(b)(2)(B), 29 U.S.C. § 1144(b)(2)(B) (“Neither an employee benefit plan described in section 1003(a) of this title … nor any trust established under such a plan, shall be deemed to be an insurance company or other insurer … for purposes of any law of any State purporting to regulate insurance companies…”). Therefore, because ERISA preempts the application of California Insurance Code § 709.03 to the Plan, the Fifth Cause of Action fails to state a claim as a matter of law and must be dismissed. V. CONCLUSION For the above reasons, the Court should grant Pacific Life’s Motion and dismiss the First, Second, Fourth, and Fifth Claims for Relief. DATED: September 6, 2016 MORGAN LEWIS AND BOCKIUS LLP By: /s/ Nicole A. Diller Nicole A. Diller Attorneys for Defendant Pacific Life Insurance Company Case 8:16-cv-01306-JLS-DFM Document 25-1 Filed 09/06/16 Page 15 of 15 Page ID #:427 [PROPOSED] ORDER RE DEFENDANT’S MOTION TO DISMISS COUNTS I, II, IV AND V CASE NO. 8:16-cv-01306-JLS-DFM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA SOUTHERN DIVISION CYNTHIA GOSPER, Plaintiff, Case No. 8:16-cv-01306_JLS-DFM v. PACIFIC LIFE INSURANCE CO. and DOES 1 through 10, Defendants. [PROPOSED] ORDER GRANTING DEFENDANT’S MOTION TO DISMISS CLAIMS ONE, TWO, FOUR, AND FIVE OF PLAINTIFF’S COMPLAINT Hearing Date: October 28, 2016 Time: 2:30 p.m. Ctrm: 10A Hon. Josephine L. Staton Case 8:16-cv-01306-JLS-DFM Document 25-2 Filed 09/06/16 Page 1 of 2 Page ID #:428 1 [PROPOSED] ORDER RE DEFENDANT’S MOTION TO DISMISS COUNTS I, II, IV AND V CASE NO. 8:16-cv-01306-JLS-DFM 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant Pacific Life Insurance Company’s (“Pacific Life”) Motion to Dismiss Counts I, II, IV, and V was heard on Friday, October 28 at 2:30 p.m. in Courtroom 10A of the United States District Court for the Central District of California before Honorable Josephine L. Staton. Upon review of the papers, authorities, and evidence submitted by the parties, as well as the arguments of counsel, and for good cause shown, the Court finds that Counts I, II, IV, and V are preempted by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and are dismissed. The Court ORDERS that Defendant Pacific Life’s Motion to Dismiss Counts I, II, IV and V is GRANTED. Plaintiff may amend the Complaint to assert claims under ERISA by filing an amended complaint on or before ________________________. IT IS SO ORDERED. Dated: , 2016 Hon. Josephine L. Staton United States District Judge Case 8:16-cv-01306-JLS-DFM Document 25-2 Filed 09/06/16 Page 2 of 2 Page ID #:429