Michael Grossman et al v. Directors Guild of America Inc et al

NOTICE OF MOTION AND MOTION to Dismiss Case

C.D. Cal.September 23, 2016

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 TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) 28838051v.1 SEYFARTH SHAW LLP Kevin J. Lesinski (SBN 110862) E-mail: klesinski@seyfarth.com 333 South Hope Street, Suite 3900 Los Angeles, CA 90071-1406 Phone: (213) 270-9600 Fax: (213) 270-9601 Attorneys for Defendant TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA MICHAEL GROSSMAN, MICHAEL LUDIN, AND ALL SIMILARLY SITUATED MEMBERS AND COVERED BENEFICIARIES OF DEFENDANT’S HEALTH PLAN, Plaintiffs, v. DIRECTORS GUILD OF AMERICA, INC. AND TRUSTEES OF THE DGA PRODUCER HEALTH PLAN Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 5:16-CV-01840-GW-SP Honorable George H. Wu DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT UNDER FED. R. CIV. P. 12(B)(6) Memorandum of Points and Authorities and Declaration of Kevin J. Lesinski filed concurrently; [Proposed] Order lodged concurrently Date: November 7, 2016 Time: 8:30 a.m. Department: 10 Complaint filed: August 26, 2016 Discovery Cutoff: None set Pre-trial Conference: None set Trial Date: None set PLEASE TAKE NOTICE that on November 7, 2016, at 8:30 a.m., or as soon thereafter as counsel may be heard, in Courtroom 10 of the above-entitled Case 5:16-cv-01840-GW-SP Document 13 Filed 09/23/16 Page 1 of 2 Page ID #:275 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 -2- DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S NOTICE OF MOTION AND MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) 28838051v.1 Court, located at 312 N. Spring Street, Los Angeles, California, Defendant Trustees of the Directors Guild of America-Producer Health Plan (“Defendant” or “Trustees”) (improperly named in the Complaint as the Trustees of the DGA- Producer Health Plan) will and hereby does move for an order dismissing the Complaint of Plaintiffs Michael Grossman and Michael Ludin (“Plaintiffs”) pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that (1) Plaintiffs’ First and Second Claims do not state a legally cognizable claim; and (2) Plaintiffs’ Third, Fourth, Fifth and Sixth Claims are preempted by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). This motion is made following the conference the Trustees’ counsel had with Plaintiff Michael Ludin pursuant to Local Rule 7-3, which conference took place on September 14, 2016. See Declaration of Kevin J. Lesinski, ¶2, filed concurrently. This Motion is based upon this Notice, the accompanying Memorandum of Points and Authorities and Declaration of Kevin J. Lesinski, and upon such further argument this Court may consider at the hearing on this Motion. Dated: September 23, 2016 Respectfully submitted, SEYFARTH SHAW LLP By: /s/ Kevin J. Lesinski Kevin J. Lesinski Attorneys for Defendant Trustees of the Directors Guild of America-Producer Health Plan Case 5:16-cv-01840-GW-SP Document 13 Filed 09/23/16 Page 2 of 2 Page ID #:276 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 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) SEYFARTH SHAW LLP Kevin J. Lesinski (SBN 110862) E-mail: klesinski@seyfarth.com 333 South Hope Street, Suite 3900 Los Angeles, CA 90071-1406 Phone: (213) 270-9600 Fax: (213) 270-9601 Attorneys for Defendant TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA MICHAEL GROSSMAN, MICHAEL LUDIN, AND ALL SIMILARLY SITUATED MEMBERS AND COVERED BENEFICIARIES OF DEFENDANT’S HEALTH PLAN, Plaintiffs, v. DIRECTORS GUILD OF AMERICA, INC. AND TRUSTEES OF THE DGA PRODUCER HEALTH PLAN Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 5:16-CV-01840-GW-SP Honorable George H. Wu MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA- PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER FED. R. CIV. P. 12(B)(6) Notice of Motion and Declaration of Kevin J. Lesinski filed concurrently; [Proposed] Order lodged concurrently Date: November 7, 2016 Time: 8:30 a.m. Department: 10 Complaint filed: August 26, 2016 Discovery Cutoff: None set Pre-trial Conference: None set Trial Date: None set Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 1 of 24 Page ID #:277 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 i MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) TABLE OF CONTENTS I. INTRODUCTION...........................................................................................1 II. FACTS ALLEGED IN THE COMPLAINT...................................................2 III. LEGAL STANDARD UNDER RULE 12(B)(6)............................................6 IV. ARGUMENT ..................................................................................................7 A. Plaintiffs’ ACA Claims Fail As A Matter Of Law Because There Is No Private Right Of Action Under Section 2706 and 2719 of the ACA. ..................................................................................7 1. There Is No Private Right Of Action Under Section 2706 Of The ACA. ..............................................................................8 2. There Is No Private Right Of Action Under Section 2719(b) Of The ACA................................................................11 B. Plaintiffs’ Claim Under The Declaratory Judgment Act Fails As A Matter Of Law Because The Act Does Not Create A Stand- Alone Cause of Action........................................................................12 C. Plaintiffs’ Purported State Law Claims And Remedies Are Preempted By ERISA Section 514(a).................................................13 1. ERISA Section 514(a) Preempts All Claims That Relate To An Employee Benefit Plan..................................................13 a. Seminal United States Supreme Court Authorities Support A Finding Of ERISA Section 514(a) Preemption Here.............................................................13 b. Controlling Ninth Circuit Authorities Support A Finding of ERISA Section 514(a) Preemption Here. ...............................................................................14 c. Plaintiffs’ State Law Claims Relate To An ERISA Plan. ................................................................................16 V. CONCLUSION .............................................................................................17 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 2 of 24 Page ID #:278 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 ii MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) TABLE OF AUTHORITIES Page(s) Federal Cases Aetna Health Inc. v. Davila, 542 U.S. (2004) .................................................................................................... 9 Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030 (9th Cir. 2000)............................................................................ 14 Alexander v. Sandoval, 532 U.S. 275 (2001) ............................................................................................. 7 Anderson v. Angelone, 86 F.3d 932 (9th Cir. 1996) .................................................................................. 6 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................................................. 6 Balistreri v. Pacifica Police Dep’t., 901 F.2d 696 (9th Cir. 1990)................................................................................ 6 Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003 (9th Cir. 1998)............................................................................ 14 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ......................................................................................... 6, 7 Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994).......................................................................... 2 Bui v. Am. Tel. & Tel. Co. Inc., 310 F.3d 1143 (9th Cir. 2002)............................................................................ 14 California v. Sierra Club, 451 U.S. 287 (1981) ............................................................................................. 7 Cannon v. Univ. of Chi., 441 U.S. 677 (1979) ............................................................................................. 7 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 3 of 24 Page ID #:279 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 -iii- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992 (9th Cir. 2010)................................................................................ 6 Dominion Pathology Labs., P.C. v. Anthem Health Plans of Va., Inc., 111 F. Supp. 3d 731 (E.D. Va. 2015)................................................................... 8 Ellenburg v. Brockway, Inc., 763 F.2d 1091 (9th Cir. 1985)............................................................................ 15 Franchise Tax Bd. Of State of Cal. v. Constr. Laborers Vacation trust for S. California, 463 U.S. 1 (1983) .......................................................... 11 Freedom Watch, Inc. v. Obama, 807 F. Supp. 2d 28 (D.D.C. 2011) ....................................................................... 7 Gerritsen v. Warner Bros. Entertainment, Inc., 2015 WL 4069617 (C.D.Cal. Jan. 30, 2015)........................................................ 6 Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016) ...................................................................................13, 14 Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220 (9th Cir. 1998)............................................................................ 12 Graham v. U.S. Bank, Nat'l Assn., No. 3:15–cv–0990–AC, 2015 WL 10322087 (D. Or. Dec. 2, 2015)................. 12 Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812 (9th Cir. 1992).............................................................................. 14 Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) ......................................................................................... 1, 9 Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489 (9th Cir. 1988)........................................................................15, 16 Kidd v. American Reliable Insurance Co., No. 15-01720, 2016 WL 4502459 (C.D. Cal. Aug. 23, 2016)........................... 12 Lea v. Republic Airlines, Inc., 903 F.2d 624 (9th Cir. 1990).............................................................................. 15 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 4 of 24 Page ID #:280 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 -iv- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) .....................................................................................1, 9, 13 Olson v. General Dynamics Corp., 960 F.2d 1418 (9th Cir. 1991)............................................................................ 15 Papasan v. Allain, 478 U.S. 265 (1986) ............................................................................................. 6 Pilot Life Ins. Co. v. Dedeaux, 481 US 41 (1987) ........................................................................................... 9, 13 Shaw v. Delta Air Lines, 463 U.S. 85 (1983) ............................................................................................. 13 Southeastern Pennsylvania Transp. Authority v. Gilead Sciences, Inc., 102 F.Supp.3d 688 (E.D. Pa. 2015)................................................................ 9, 10 Tingey v. Pixley-Richards, 953 F.2d (9th Cir. 1992) ..................................................................................... 14 Touche Ross & Co. v. Redington, 442 U.S. 560 (1979) ............................................................................................. 7 Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) ............................................................................................. 2 Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (1979) ............................................................................................... 7 United States v. Ritchie, 342 F.3d 903 (9th Cir. 2003)................................................................................ 2 Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180 (9th Cir. 2010)................................................................14, 15, 16 Federal Statutes 28 U.S.C. § 2201(a) ............................................................................................. 5, 12 29 U.S.C. § 1002(1)................................................................................................. 16 29 U.S.C. § 1185d................................................................................................ 8, 11 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 5 of 24 Page ID #:281 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 -v- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Section 2706 of the ACA, 42 U.S.C. § 300gg-5 ..............................................passim Section 2719 of the ACA, 42 U.S.C. § 300gg-19 .......................................4, 6, 7, 11 42 U.S.C. § 300gg-22 ................................................................................................ 8 Section 1557 of the ACA, 42 U.S.C. § 18116..................................................... 9, 10 Employee Retirement Income Security Act of 1974........................................passim ERISA § 502, 29 U.S.C. § 1132........................................................................1, 8, 9 ERISA § 514, 29 U.S.C. § 1144...............................................................2, 12, 13 14 Rules RULE 12(b)(6)........................................................................................................... 6 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 6 of 24 Page ID #:282 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 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) I. INTRODUCTION Plaintiffs Michael Grossman and Michael Ludin (“Plaintiffs”) sue the Trustees of the Directors Guild of America-Producer Health Plan (“Trustees”) (improperly named in the Complaint as the Trustees of the DGA-Producer Health Plan) claiming the Trustees are liable under the following theories: two separate violations of the Affordable Care Act (“ACA”), two separate theories of breach of contract, fraud, declaratory relief, injunctive relief, and relief under the Declaratory Judgment Act. Plaintiffs also claim they are entitled to damages and attorneys’ fees and costs and that the lawsuit should be certified as a class action. The underlying allegations in support of Plaintiffs’ Complaint all stem exclusively from the Trustees’ decision to deny Plaintiff Ludin (“Mr. Ludin”) certain medical coverage under the Directors Guild of America-Producer Health Plan (the “Health Plan”), a multiemployer employee benefit plan that is governed by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Despite the extensive allegations and numerous causes of actions in the Complaint, this dispute is really nothing more than a garden-variety ERISA action following the denial of Mr. Ludin’s claim for health benefits. As explained by the Supreme Court, ERISA is a “comprehensive and reticulated statute,” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002) (quoting Mertens v. Hewitt Assoc., 508 U.S. 248, 251 (1993)), and ERISA Section 502, 29 U.S.C. §1132, provides the “exclusive federal cause of action for resolution of such [recovery of benefits] disputes,” Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987). The Court should thus dismiss the Complaint in its entirety and instruct Plaintiff Ludin to bring a claim for benefits pursuant to ERISA Section 502(a)(1)(B), 29 U.S.C. § 1132(a)(1)(B). Apart from this overarching defect in the Complaint, the individual claims for relief each fail as a matter of law for a number of reasons. First, with respect to Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 7 of 24 Page ID #:283 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 -2- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Plaintiffs’ specific claims for purported violations of the ACA, Plaintiffs fail to state a plausible claim for relief because the ACA does not provide a private right of action for them to sue the Trustees or any other entity. Second, with respect to Plaintiffs’ claim under the Declaratory Judgment Act, the Act does not create a stand-alone cause of action and therefore this claim cannot proceed. Third, even if Plaintiffs could remain in federal court, the remaining state law claims -- breach of contract, fraud, declaratory relief, injunctive relief, damages, and attorneys’ fees and costs -- unquestionably relate to an ERISA plan and are therefore preempted by ERISA Section 514(a), 29 U.S.C. § 1144(a). II. FACTS ALLEGED IN THE COMPLAINT1 Plaintiff Grossman (“Mr. Grossman”) is a director in the motion picture industry and a long-time member of the Directors Guild of America, Inc. (“DGA”). Compl. ¶ 12. As a working member of the DGA, Mr. Grossman participates in the Health Plan. Id. Mr. Ludin is Mr. Grossman’s husband and, as a member of Mr. Grossman’s immediate family, Mr. Ludin also participates in the Health Plan. Id. ¶ 14. The Health Plan is a multiemployer health plan governed by ERISA. Id. at ¶ 44; see also Ex. A, Health Plan, at 98-99 (providing information for the Health Plan as required under ERISA); Ex. B, Trust Agreement, at 9-14 (explaining Trustees’ authority to be consistent with ERISA); see also Ex. A at vi (stating that the Health Plan, together with the Trust Agreement, is the Plan Document).2 1 For the purposes of this motion only, the Trustees assume, as they must, the facts (but not the conclusions and arguments) alleged in Plaintiffs’ Complaint are true. 2 While the Court is generally limited in its review on a motion to dismiss to the facts alleged in the complaint, it may consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); see also United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“A court may, however, consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment.”); Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994) (overruled on other grounds) (document is not “outside” complaint where its authenticity is not Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 8 of 24 Page ID #:284 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 -3- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Beginning in 2014, Mr. Ludin began receiving medical care through licensed naturopathic doctors. Compl. ¶ 18. He initially received treatment from a licensed naturopathic doctor in Carlsbad, California and then, beginning in July 2014, began treatment with licensed naturopathic doctors in Portland, Oregon. Id. ¶ 22. He has not been to the naturopathic doctor in Portland since 2015. Id. ¶ 26. The Health Plan paid for the medical care costs from the Portland facility from approximately July through October 2014. Id. ¶ 28. In October 2014, the Health Plan stopped paying for naturopathic care and denied Mr. Ludin’s continued claims for benefits because it concluded that naturopathic care was not provided for under the Health Plan. Id. ¶ 29. The Health Plan also collected overpayments from the previously granted claims by offsetting those amounts against incoming claims. Id. ¶ 33. Mr. Ludin submitted a written request for an internal appeal, arguing that the Health Plan was violating Section 2706 of the ACA, 42 U.S.C. § 300gg-5(a), which provides certain non-discrimination obligations with respect to coverage against any health care provider who is acting within the scope of that provider’s license. Compl. ¶ 29. The Trustees partially reversed their decision to deny benefits and (1) approved coverage only for Mr. Ludin’s Portland office visits, but (2) denied coverage for procedures and treatments performed by the naturopathic doctor. Id. ¶ 31. The Trustees have consistently denied Mr. Ludin’s claims for naturopathic treatments and procedures going forward. Id. ¶ 34. Mr. Ludin submitted written requests for internal appeals for these denials. Id. questioned and complaint references it). Throughout the Complaint, Plaintiffs make repeated references to the Health Plan. Compl. ¶¶ 12-16, 27-33, 40-41, 44, 48-49, 54-56, 70, 74-76, 84, 94, 106. Plaintiffs also bring two separate breach of contract causes of action, which are based on allegations that the Trustees breached the “contract,” which in this case is the Plan Document. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 9 of 24 Page ID #:285 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 -4- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) In August of 2015, the Trustees, on behalf of the Health Plan, notified Mr. Ludin that his challenge to the denial of benefits was subject to the Health Plan’s external review procedure. Id. ¶ 40. As part of the external review process, Mr. Ludin allegedly received incomplete documents in response to a request to receive copies of documents relevant to his claim. Compl. ¶ 41. Based on the above factual allegations, Plaintiffs bring the following causes of action: (1) Violation of Section 2706 of the ACA. By denying Mr. Ludin’s claim for benefits, specifically for treatment and procedures performed by Mr. Ludin’s naturopathic doctors, Plaintiffs allege that Defendants discriminated against Mr. Ludin “with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State Law.” Id. ¶ 46 (quoting Section 2706 of the ACA, 42 U.S.C. § 300gg-5(a)). (2) Violation of Section 2719 of the ACA. As part of the external review process provided under the Health Plan, Mr. Ludin received documents that were allegedly “materially incomplete” and therefore he claims he could not “meaningfully serve his role in pursuing the external review.” See id. ¶¶ 52, 55, 57. In addition, “[b]y secretively changing the ‘question presented’ to the truism: was this consistent with the Plan’s language . . . , the Plan [allegedly] pre-determined the outcome of the external reviewer, and made the external review process pointless and meaningless.” Id. ¶ 58. Plaintiffs claim that these actions violated Section 2719 of the ACA, 42 U.S.C. § 300gg-19(b). Id. ¶ 52. (3) Breach of Contract. Defendants allegedly breached their contract with Plaintiffs by refusing to cover, and pay for, treatment and procedures performed by naturopathic doctors. Id. ¶ 64. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 10 of 24 Page ID #:286 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 -5- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) (4) Breach of Contract/Third Party Beneficiary. Defendants allegedly breached their contract with “numerous producers,” who are third party beneficiaries, by refusing to cover, and pay for, treatment and procedures performed by naturopathic doctors. Id. ¶¶ 68, 69, 71. (5) Fraud. The Plan stated that Mr. Ludin was “‘entitled to receive, upon request, and free of charge . . . copies of all documents and other information’ relevant to his claim,” and “it [allegedly] did not do so.” Id. ¶ 74. Plaintiffs claim that Defendant knew, at the time it made this statement, that the statement was false, id. ¶ 76, and by relying on this fraudulent statement, Mr. Ludin allegedly suffered and incurred damages, most especially not being able to “meaningfully participate in the external review process, and making the process itself a waste of time for him and the external reviewer.” Id. ¶ 81. (6) Declaratory relief. Because there is allegedly “a real and immediate dispute between the parties regarding the proper interpretation of their contract,” Plaintiffs ask the Court to declare certain parts of the contract and practices of the Health Plan are in violation of the ACA. Id. ¶¶ 83, 84. (7) Injunctive relief. Plaintiffs seek a “permanent injunction, enjoining Defendants from denying coverage and payment for medical procedures performed by licensed naturopathic doctors.” Id. ¶ 87. (8) Damages. Plaintiffs generally seek damages, attorneys’ fees, expenses, and costs. Id. ¶¶ 105, 108-110. (9) Relief under the Declaratory Judgment Act. Plaintiffs request a declaratory judgment be entered under 28 U.S.C. § 2201(a) for, among other things, a declaration stating that procedures and treatment by naturopathic doctors are covered under the Health Plan. Id. ¶ 106. (10) Class Certification. Plaintiffs also seek to certify this lawsuit as a class action for “members/beneficiaries of the Defendants, and their spouses, Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 11 of 24 Page ID #:287 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 -6- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) dependents, and domestic partners, who are covered by, or could have been covered by, the Defendant health plan and who are treated by licensed naturopathic doctors.” Id. ¶ 94. III. LEGAL STANDARD UNDER RULE 12(b)(6) A motion under Rule 12(b)(6) tests the legal sufficiency of the claims stated in a complaint. Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (emphasis added). “Determining whether a complaint states a plausible claim for relief will … be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679. “[A] complaint attacked by a Rule 12(b)(6) motion to dismiss “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555. In evaluating the motion, the Court accepts as true the facts alleged in the complaint, Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996), but is “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). “In deciding a motion to dismiss [under Rule 12(b)(6)], the court can consider only the pleadings and documents that are incorporated by reference therein or are properly the subject of judicial notice.” Gerritsen v. Warner Bros. Entertainment, Inc., 2015 WL 4069617, at *4 (C.D. Cal. Jan. 30, 2015) (citing U.S. v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003)); see also Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). Dismissal is appropriate if there is a “lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 12 of 24 Page ID #:288 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 -7- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990); Twombly, 550 U.S. at 555. IV. ARGUMENT A. Plaintiffs’ ACA Claims Fail As A Matter Of Law Because There Is No Private Right Of Action Under Section 2706 and 2719 of the ACA. Plaintiffs assert two distinct causes of action under two different provisions of the ACA: (1) by denying Mr. Ludin’s claim for benefits, specifically for treatment and procedures performed by Mr. Ludin’s naturopathic doctors, Defendants allegedly discriminated against him “with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider’s license or certification under applicable State Law,” id. ¶ 46 (quoting Section 2706(a) of the ACA, 42 U.S.C. § 300gg-5(a)); and (2) as part of the external review process provided under the Health Plan, Mr. Ludin received documents that were allegedly “materially incomplete” and therefore he could not “meaningfully serve his role in pursuing the external review,” which was in violation of Section 2719(b) of the ACA, 42 U.S.C. § 300gg-19(b).3 Id. ¶ 52, 55, 57. The mere “fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person.” Cannon v. Univ. of Chi., 441 U.S. 677, 688 (1979). “[P]rivate rights of action to enforce federal law must be created by Congress.” Alexander v. Sandoval, 532 U.S. 275, 286 (2001); see also California v. Sierra Club, 451 U.S. 287, 293 (1981); Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979); Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16 (1979). As such, “a plaintiff 3 42 U.S.C. § 300gg-19 provides that a group health plan offering group health insurance coverage shall implement an effective appeals process for appeals of coverage determinations and claims and elaborates on specific minimum standard for appeals. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 13 of 24 Page ID #:289 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 -8- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) must demonstrate that the statute under which it is attempting to proceed reflects Congressional intent to create a private remedy.” Freedom Watch, Inc. v. Obama, 807 F. Supp. 2d 28, 32 (D.D.C. 2011) (internal citation omitted). Where a plaintiff cannot demonstrate a congressional intent to create a cause of action to enforce a statutory right, Article III of the Constitution requires dismissal of the claim. Id. 1. There Is No Private Right Of Action Under Section 2706 Of The ACA. In 2010, Congress passed the ACA, which included the following provision effective January 1, 2014: A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider's license or certification under applicable State law. This section shall not require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer. Nothing in this section shall be construed as preventing a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures. Section 2706(a) of ACA, 42 U.S.C. § 300gg-5(a). Section 2706 was adopted without meaningful discussion in the legislative history.4 4 Of importance, the departments charged with enforcing Section 2706 received over 1,500 comments when considering updated guidance on that provision, and they ultimately stated that no enforcement action will be taken against a group health plan under Section 2706 as long as the plan is “using a good faith, reasonable interpretation of the statutory provision.” FAQs About Affordable Care Act Implementation at 4 (May 26, 2015), https://www.cms.gov/CCIIO/Resources/Fact-Sheets-and- FAQs/Downloads/ACA-FAQs-Part-XXVII-MOOP-2706-FINAL.pdf. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 14 of 24 Page ID #:290 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 -9- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Section 2706 does not provide for any independent private right of action to enforce its provisions. See Dominion Pathology Labs., P.C. v. Anthem Health Plans of Va., Inc., 111 F. Supp. 3d 731, 736 (E.D. Va. 2015) (stating that Section 2706 does not create a private right of action). Rather, with respect to commercial health insurers, enforcement is limited to the states and the Secretary of Health and Human Services. See 42 U.S.C. § 300gg-22. Section 2706 is also one of the ACA provisions that is incorporated into ERISA. See 29 U.S.C. § 1185d. Therefore, Section 2706 is enforceable only in accordance with ERISA’s remedial scheme. Specifically, ERISA Section 502, 29 U.S.C. §1132, provides a civil enforcement mechanism described as the “exclusive federal cause of action for resolution of such [recovery of benefits] disputes.” Taylor, 481 U.S. at 63. ERISA Section 502, 29 U.S.C. §1132, provides several bases for claims and type of relief, including claims to recover benefits or enforce rights under an ERISA plan and relief for breach of a fiduciary duty or violations of reporting requirements. These various bases are limited to narrow and specific types of actions and remedies. See Knudson, 534 U.S. at 209 (noting the Court’s reluctance “’to tamper with [the] enforcement scheme’ embodied in the statute by extending remedies not specifically authorized by its text” due to “strong evidence that Congress did not intend to authorize other remedies that it simply forgot to incorporate expressly”); Pilot Life Ins. Co. v. Dedeaux, 481 US 41, 54 (1987) (“The deliberate care with which ERISA's civil enforcement remedies were drafted and the balancing of policies embodied in its choice of remedies argue strongly for the conclusion that ERISA's civil enforcement remedies were intended to be exclusive”); Aetna Health Inc. v. Davila, 542 U.S. at 200, 215 (2004) (“The limited remedies available under ERISA are an inherent part of the careful balancing between ensuring fair and prompt enforcement of rights under a plan and the encouragement of the creation of such plans.”). Accordingly, Plaintiffs are limited Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 15 of 24 Page ID #:291 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 -10- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) to ERISA’s enforcement scheme under Section 502, 29 U.S.C. § 1132, and cannot bring an independent cause of action under Section 2706 of the ACA. Plaintiffs cite Southeastern Pennsylvania Transp. Authority v. Gilead Sciences, Inc., 102 F.Supp.3d 688, 698 (E.D. Pa. 2015), in support of an allegation that the ACA provides beneficiaries of medical insurance with an implicit private right of action to enforce the Act’s non-discrimination provisions. Compl. ¶ 47. There, the court discussed whether an implicit private right of action existed under Section 1557 of the ACA, which contains a separate and distinct anti- discrimination provision that “an individual shall not, on [the basis of any protected ground], be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any health program or activity, any part of which is receiving Federal financial assistance, including credits, subsidies, or contracts of insurance.” 42 U.S.C. § 18116. Protected grounds include race, color, national origin, sex, age, and disability. Id. (citing to Title VI of the Civil Rights Act of 1964, Title IX of the Education Amendments of 1972, the Age Discrimination Act of 1975, and Section 504 of the Rehabilitation Act of 1973). First, this matter does not involve any allegations under 42 U.S.C. § 18116 and therefore the court’s holding is irrelevant. Second, the court’s underlying reasoning does not translate to Section 2706. There, the court supported its conclusion that Section 1557 created a private right of action because Section 1557: (1) expressly incorporates four federal civil rights statutes and includes the kind of “rights-creating language” found in those statues; (2) expressly cross-references those four federal civil rights statutes to provide the classes of those protected by the statute’s non-discrimination provision; and (3) expressly provides that the “enforcement mechanisms provided for and available under such title VI, title IX, section 504, or such Age Discrimination Act shall apply for purposes of violations of this subsection.” Gilead Sciences, 102 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 16 of 24 Page ID #:292 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 -11- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) F.Supp.3d at 698. The court explained that the “cross-reference to these statutes and the use of similar rights-creating terms manifest Congressional intent to create a private right” and that the express incorporation of the enforcement mechanisms from those statutes is probative of Congressional intent to provide both a private right and a private remedy for violations of Section 1557. Id. Here, Section 2706(a) does not reference or cross-reference any other federal statute or enforcement mechanism. Not only is the holding inapplicable, but also the reasoning does not apply. 2. There Is No Private Right Of Action Under Section 2719(b) Of The ACA Section 2719(b), which provides for an external review process, states: A group health plan and a health insurance issuer offering group or individual health insurance coverage-- (1) shall comply with the applicable State external review process for such plans and issuers that, at a minimum, includes the consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners and is binding on such plans; or (2) shall implement an effective external review process that meets minimum standards established by the Secretary through guidance and that is similar to the process described under paragraph (1)-- (A) if the applicable State has not established an external review process that meets the requirements of paragraph (1); or (B) if the plan is a self-insured plan that is not subject to State insurance regulation (including a State law that establishes an external review process described in paragraph (1)). Section 2719(b) of ACA, 42 U.S.C. § 300gg-19(b). There are no cases that discuss whether there is a private right of action under Section 2719 and therefore this is a matter of first impression for the Court. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 17 of 24 Page ID #:293 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 -12- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Section 2719 is also incorporated by reference into ERISA. 29 U.S.C. § 1185d. Just as Section 2706 does not create a private right of action, Section 2719 also does not create a private right of action for the same reasons. B. Plaintiffs’ Claim Under The Declaratory Judgment Act Fails As A Matter Of Law Because The Act Does Not Create A Stand-Alone Cause of Action It is well-settled that the Declaratory Judgment Act does not create a stand- alone cause of action. See Franchise Tax Bd. Of State of Cal. v. Constr. Laborers Vacation Trust for S. California, 463 U.S. 1, 15 (1983) (“‘[T]he operation of the Declaratory Judgment Act is procedural only.’”) (quoting Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 70 S.Ct. 876, 94 L.Ed. 1194 (1950)). Specifically, the Declaratory Judgment Act provides that in “a case of actual controversy,” a district court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). Actions under the Declaratory Judgment Act “must first present an actual case or controversy within the meaning of Article III” and must also meet “statutory jurisdictional prerequisites.” Gov't Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222–23 (9th Cir. 1998). The availability of declaratory judgments, therefore, depends on the presence of an underlying legally-cognizable cause of action. Kidd v. American Reliable Insurance Co., No. 15-01720, 2016 WL 4502459, at *3 (C.D. Cal. Aug. 23, 2016); see also Graham v. U.S. Bank, Nat'l Assn., No. 3:15–cv–0990–AC, 2015 WL 10322087, at *13 (D. Or. Dec. 2, 2015) (“The Declaratory Judgment Act . . . does not create a cause of action; instead, it creates a remedy for existing causes of action.”). Because Plaintiffs do not have any viable stand-alone cause of action under federal law, Plaintiffs’ claim under the Declaratory Judgment Act fails as a matter of law. Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 18 of 24 Page ID #:294 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 -13- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) C. Plaintiffs’ Purported State Law Claims And Remedies Are Preempted By ERISA Section 514(a) Plaintiffs’ state law claims for breach of contract (on behalf of both themselves and third party beneficiaries), fraud, declaratory relief, injunctive relief, damages, and attorneys’ fees, expenses and costs, should be dismissed because these claims and remedies are preempted by ERISA Section 514(a), 29 U.S.C. § 1144(a). Plaintiffs’ state law claims rely entirely upon the existence of the Health Plan, because each claim depends on Plaintiffs’ allegations that they were inappropriately denied benefits under the Health Plan. Compl. ¶¶ 12-14, 28-36, 40- 41. Under long-standing and settled precedent, these claims and remedies are preempted by ERISA, and must be dismissed. 1. ERISA Section 514(a) Preempts All Claims That Relate To An Employee Benefit Plan. a. Seminal United States Supreme Court Authorities Support A Finding Of ERISA Section 514(a) Preemption Here. ERISA’s preemption clause, ERISA Section 514(a), 29 U.S.C. 1144(a), expressly provides that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan” governed by ERISA. 29 U.S.C. § 1144(a). In Pilot Life, the Supreme Court held that ERISA Section 514(a) preempts all state contract and tort claims—including fraud in the inducement—asserting improper processing of a claim for benefits under an employee benefit plan. 481 U.S. at 54; see also Taylor, 481 U.S. 58 (1987). In so holding, the Supreme Court characterized the scope of ERISA preemption as “deliberately expansive.” Pilot Life, 481 U.S. at 46; Shaw v. Delta Air Lines, 463 U.S. 85, 97-99 (1983) (Congress used words “relate to” in broad sense). Recently, in Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016), the Supreme Court reaffirmed that ERISA Section 514(a) is the broadest preemption Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 19 of 24 Page ID #:295 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 -14- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) clause ever enacted by Congress. There, the Supreme Court held that ERISA preempted a Vermont state law that required certain entities to report payments relating to health care claims and other information relating to health care services to a state agency for compilation in a database. Id. at 940. The Supreme Court concluded that Vermont’s law, which merely imposed a reporting requirement in hopes of controlling health care outcomes and costs, had an impermissible “connection with” ERISA, because, inter alia, it purported to “govern[] . . . a central matter of plan administration”—that of recordkeeping. Id. at 943. Gobeille emphasizes the view of ERISA Section 514(a) as perhaps the “most expansive express pre-emption provision in any federal statute.” Id. at 947 (Thomas, J., concurring); see also id. at 958 (Ginsburg, J., dissenting) (describing majority opinion as “retrieval” of “super-preemption” doctrine from “discard bin”). Even the dissent conceded that “ERISA’s domain is the design and administration of employee benefit plans: notably, prescriptions on the vesting of benefits, claims processing, and the designation of beneficiaries.” Id. at 953 (Ginsbug, J., dissenting) (emphasis added). b. Controlling Ninth Circuit Authorities Support A Finding of ERISA Section 514(a) Preemption Here. Numerous Ninth Circuit authorities support a finding here that ERISA Section 514(a) preempts Plaintiffs’ state law claims for breach of contract (on behalf of both themselves and third party beneficiaries), fraud, declaratory relief, injunctive relief, damages, and attorneys’ fees, expenses and costs. See, e.g., Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180 (9th Cir. 2010) (holding that where the existence of an ERISA plan “is a critical factor in establishing liability under a state cause of action, the state law claim is preempted” and dismissing plaintiff’s claims of fraud, negligence, and misrepresentation); Bui v. Am. Tel. & Tel. Co. Inc., 310 F.3d 1143, 1152 (9th Cir. 2002) (holding ERISA preempted plaintiff's Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 20 of 24 Page ID #:296 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 -15- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) breach of contract claims “because the contract allegedly breached is the ERISA plan itself”); Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030 (9th Cir. 2000) (holding that ERISA preempted beneficiary’s claims for breach of contract, bad faith, and fraud); Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003, 1008 (9th Cir. 1998) (holding that ERISA Section 514 barred all state claims); Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812, 817 (9th Cir. 1992) (explaining that “ERISA contains one of the broadest preemption clauses ever enacted by Congress” and holding all state law claims preempted); Tingey v. Pixley-Richards, 953 F.2d at 1124 (9th Cir. 1992) (holding plaintiffs’ causes of action for breach of contract, breach of the duty of good faith and fair dealing, intentional infliction of emotional distress, and violations of the Arizona Insurance Code were preempted by ERISA); Lea v. Republic Airlines, Inc., 903 F.2d 624, 632 (9th Cir. 1990) (state claims for negligence, breach of contract, fraud, and equitable estoppel relating to an ERISA plan were preempted); Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, 494 (9th Cir. 1988) (holding that ERISA preempts all state law claims against a plan administrator); Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir. 1985) (stating that under Ninth Circuit law, ERISA preempts all common law theories, including breach of implied contract, promissory estoppel, estoppel by conduct, fraud, and breach of contract). For example, in Olson v. General Dynamics Corp., the Ninth Circuit considered whether ERISA preempted a state law fraud claim that was based on a representation regarding the level of benefits Olson would receive upon retirement. 960 F.2d 1418, 1419-20 (9th Cir. 1991). In holding that ERISA preempted Olson’s fraud claim, the Ninth Circuit remarked that “it is difficult to see how Olson’s fraud claim could be found not to ‘relate to’ an employee benefit plan.” Id. at 1421. This holding—that ERISA preempted Olson’s fraud claim based on an misrepresentation about the general level of retirement benefits—compels the Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 21 of 24 Page ID #:297 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 -16- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) conclusion that ERISA likewise preempts Plaintiffs’ fraud claim alleging misrepresentations about documents provided to Mr. Ludin and external reviewers in connection with the administrative appeals process. Moreover, Plaintiffs actually cite to the Health Plan’s provisions on which they rely in support of their fraud claim, Compl. ¶ 74, indicating that the claim is based on the terms of an ERISA plan. Additionally, as the Ninth Circuit explained in Wise, where “the existence of [an ERISA] plan is a critical factor in establishing liability” under a state law claim, the claim is preempted. 600 F.3d at 1190 (citing Ingersoll–Rand Co. v. McClendon, 598 U.S. 133, 136, 139-40 (1990)). Wise alleged her employer breached several state law duties in the course of its efforts to recruit her to return to work, and that its conduct constituted fraud, misrepresentation, and negligence. Id. at 1190. Wise sought damages to compensate her for the insurance benefits lost on account of her employer’s conduct. Id. The Ninth Circuit held these state law claims were preempted, because the complaint “necessarily referenced” an ERISA plan. Id. The state law claims “all depended on the existence of an ERISA-covered plan to demonstrate that Wise suffered damages: the loss of insurance benefits.” Id. c. Plaintiffs’ State Law Claims Relate To An ERISA Plan. Here, Plaintiffs admit that benefits sought were provided pursuant to a multiemployer health plan provided as a benefit of Mr. Grossman’s employment. Compl. ¶¶ 12, 44. Specifically, Mr. Grossman and his husband, Mr. Ludin, were provided health care benefits under the Health Plan, which was adopted by the Trustees pursuant to the Trust Agreement. See Ex. B, Trust Agreement at 3 (“The term ‘Health Plan’ as used herein shall mean and include the plan of health eligibilities and benefits adopted by the Plan Trustees pursuant to this agreement.”). The Plan meets all the criteria for an ERISA plan, namely it is: “(1) a Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 22 of 24 Page ID #:298 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 -17- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) plan, fund, or program (2) [that has been] established or maintained (3) . . . by an employee organization, (4) for the purpose of providing ... benefits . . . (5) to participants or their beneficiaries.” Kanne v. Conn. Gen. Life Ins. Co., 867 F.2d 489, 491-92 (9th Cir. 1988), cert. denied, 492 U.S. 906 (1989); see also 29 U.S.C. § 1002(1). The Ninth Circuit generally considers the employee organization’s involvement in a group insurance plan sufficient enough to constitute an employee benefit plan subject to ERISA. Kanne, 867 F.2d at 492 (excluding claims where all requirements for a plan were met). See also Ex. A at 17, 88, 90, 95, 98, 99, 102, 103, and Ex. B at 3, 13, 14, 19, 22, 23, 27, 31, referencing ERISA throughout. The remedies Plaintiffs seek hinge on the interpretation of this ERISA- governed health plan, i.e., whether the Trustees properly interpreted the Health Plan when denying coverage for Mr. Ludin’s naturopathic services. Plaintiffs’ claims are thus preempted by ERISA. Under the well-established the Ninth Circuit authorities cited above, each of Plaintiffs’ state law claims are preempted by ERISA. V. CONCLUSION Defendant Trustees of the Directors Guild of America-Producer Health Plan respectfully requests that the Court grants this Motion and dismiss Plaintiffs’ Complaint in its entirety. Dated: September 23, 2016 Respectfully submitted, SEYFARTH SHAW LLP By: /s/ Kevin J. Lesinski Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 23 of 24 Page ID #:299 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 -18- MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS COMPLAINT UNDER Fed. R. Civ. P. 12(b)(6) Kevin J. Lesinski Attorneys for Defendant Trustees of the Directors Guild of America-Producer Health Plan 28838126v.5 Case 5:16-cv-01840-GW-SP Document 13-1 Filed 09/23/16 Page 24 of 24 Page ID #:300 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 [PROPOSED] ORDER GRANTING DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA- PRODUCER HEALTH PLAN’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT 28838410v.1 SEYFARTH SHAW LLP Kevin J. Lesinski (SBN 110862) E-mail: klesinski@seyfarth.com 333 South Hope Street, Suite 3900 Los Angeles, CA 90071-1406 Phone: (213) 270-9600 Fax: (213) 270-9601 Attorneys for Defendant TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA MICHAEL GROSSMAN, MICHAEL LUDIN, AND ALL SIMILARLY SITUATED MEMBERS AND COVERED BENEFICIARIES OF DEFENDANT’S HEALTH PLAN, Plaintiffs, v. DIRECTORS GUILD OF AMERICA, INC. AND TRUSTEES OF THE DGA PRODUCER HEALTH PLAN Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 5:16-CV-01840-GW-SP Honorable George H. Wu [PROPOSED] ORDER GRANTING DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA- PRODUCER HEALTH PLAN’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT Date: November 7, 2016 Time: 8:30 a.m. Department: 10 Complaint filed: August 26, 2016 Discovery Cutoff: None set Pre-trial Conference: None set Trial Date: None set Case 5:16-cv-01840-GW-SP Document 13-2 Filed 09/23/16 Page 1 of 2 Page ID #:301 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 -2- [PROPOSED] ORDER GRANTING DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA- PRODUCER HEALTH PLAN’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT 28838410v.1 [PROPOSED] ORDER Defendant Trustees of the Directors Guild of America-Producer Health Plan’s Motion to Dismiss Plaintiffs’ Complaint Under Fed. R. Civ. P. 12(b)(6) came on for hearing on November 7, 2016, at 8:30 a.m., in the above-entitled Court. The Court, having considered all materials filed in support of and in opposition to the Motion and the arguments of the parties and of counsel, and good cause appearing, hereby GRANTS the Motion. Plaintiffs Michael Grossman and Michael Ludin’s Complaint fails to state a claim on which relief can be granted under Fed. R. Civ. P. 12(b)(6). The Complaint is hereby DISMISSED. IT IS SO ORDERED Date: Hon. George H. Wu Case 5:16-cv-01840-GW-SP Document 13-2 Filed 09/23/16 Page 2 of 2 Page ID #:302