St. Joseph Hospital of Orange v. PCM, Inc. Welfare Benefit Plan, et al

Filing 21

MINUTES (IN CHAMBERS) ORDER REMANDING CASE FOR LACK OF SUBJECT MATTER JURISDICTION AND DENYING MOTION TO DISMISS AS MOOT (Doc. 8) by Judge Josephine L. Staton: Accordingly, the Court hereby REMANDS this Case to the Orange County Superior Court, Case No. 30-02016-00894580-CU-BC-CJC. Plaintiffs Motion to Dismiss (Doc. 8) is DENIED AS MOOT. Refer to order. Case Terminated. Made JS-6 (es)

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:17-cv-00487-JLS-KES
Date: June 14, 2017
Title: St. Joseph Hospital of Orange v. PCM, Inc. Welfare Benefit Plan, et al.

Present: Honorable JOSEPHINE L. STATON, UNITED STATES DISTRICT JUDGE
Terry Guerreo
Deputy Clerk
ATTORNEYS PRESENT FOR PLAINTIFF:

Not Present

N/A
Court Reporter
ATTORNEYS PRESENT FOR DEFENDANT:

Not Present

PROCEEDINGS: (IN CHAMBERS) ORDER REMANDING CASE FOR LACK
OF SUBJECT MATTER JURISDICTION AND DENYING
MOTION TO DISMISS AS MOOT (Doc. 8)
“[C]ourts . . . have an independent obligation to determine whether subject-matter
jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y&H
Corp., 546 U.S. 500, 514 (2006). Generally, subject matter jurisdiction is based on the
presence of complete diversity between the parties, see 28 U.S.C. § 1332, or on the
presence of an action arising under federal law, see 28 U.S.C. § 1331.
In its Notice of Removal, PCM, Inc. Welfare Benefit Plan alleged that “Plaintiff’s
claims against the Plan fall within the scope of ERISA and are completely preempted.”
(Notice of Removal ¶ 14, Doc. 1.) But then, in its Motion to Dismiss, Defendant asserted
“Complete preemption is a jurisdictional doctrine that is not at issue in this motion to
dismiss. Instead, this motion implicates the substantive defense of conflict preemption
. . . .” (Mem. at 7 n.2, Doc. 15.) As a result, this Court issued an Order to Show Cause
why this suit should not be remanded for lack of subject matter jurisdiction. In response,
Plaintiffs provided two bases for jurisdiction, neither of which has merit. (OSC, Doc.
17.)
First, the Plan claims the parties are completely diverse because “the Plan is
principally maintained and maintained by PCM in Ohio, with benefits self-funded
through a fund and/or trust established and maintained by PCM in Ohio, and, thus, is a
citizen of the State of Ohio.” (Response to OSC at 2, Doc. 19.) But, as the Court noted
in its OSC (OSC at 1 n.1), the Supreme Court has recently clarified that a statutory trust,
at least when sued in its own name, takes the citizenship of all of its members. Americold
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____________________________________________________________________________
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:17-cv-00487-JLS-KES
Date: June 14, 2017
Title: St. Joseph Hospital of Orange v. PCM, Inc. Welfare Benefit Plan, et al.

Realty Trust v. Conagra Foods, Inc., 136 S. Ct. 1012, 1015 (2016). Thus, the
Declaration provided by Defense Counsel (Doc. 19-1) does not establish diversity
jurisdiction.
Second, the Plan renews its assertion that complete preemption serves as a basis
for removal, notwithstanding the Plan’s conscious decision not to bring a motion to
dismiss based on the doctrine. (Response at 4-8.) To establish complete preemption, the
Plan must demonstrate, (1) “a plaintiff seeking to assert a state-law claim ‘at some point
in time, could have brought [the] claim under ERISA § 502(a)(1)(B)’” and (2) “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, 947, 949 (9th Cir. 2009)
(quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 210 (2004). The Plan half-heartedly
argues that Plaintiff could have brought its claims under § 502(a)(1)(B), but it seems to
be conflating Davila’s first and second prong: In its Complaint, the Hospital advances
claims for (1) breach of an implied-in-fact contract, (2) quantum merit, (3) open book
account, (4) promissory estoppel, and (5) estoppel. (Compl. ¶¶ 98-150.) See Marin Gen.
Hosp., 581 F.3d at 947 (finding that a hospital’s complaint for breach of an implied
contract, breach of an oral contract, negligent misrepresentation, quantum meruit, and
estoppel was not completely preempted). Even if these claims are meritless or subject to
a conflict preemption defense, complete preemption would not provide a basis for
jurisdiction here because all of its claims are premised on the Hospital’s alleged
relationship with the Plan, not what was owed to the patient under the ERISA policy. See
id. at 948. Although the Plan references an assignment of the patient’s claims that the
Hospital secured, unless and until the Hospital seeks to bring a claim based on the
assignment, this agreement does not provide a basis for jurisdiction. See Blue Cross of
California v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d 1045, 1052 (9th Cir.
1999) (“[W]e find no basis to conclude that the mere fact of assignment converts the
Providers’ claims into claims to recover benefits under the terms of an ERISA plan.”);
Marin Gen. Hosp., 581 F.3d at 947-48 (affirming that Blue Cross’s reasoning is
consistent with Davila’s first prong).
If this were a mere procedural defect that was waived by Plaintiff’s Counsel, the
Court would allow Defense Counsel to amend the Notice of Removal. But there was—
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____________________________________________________________________________
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No. 8:17-cv-00487-JLS-KES
Date: June 14, 2017
Title: St. Joseph Hospital of Orange v. PCM, Inc. Welfare Benefit Plan, et al.

and still is—no jurisdictional basis for removing this Case. Accordingly, the Court
hereby REMANDS this Case to the Orange County Superior Court, Case No. 30-0201600894580-CU-BC-CJC. Plaintiff’s Motion to Dismiss (Doc. 8) is DENIED AS MOOT.

Initials of Preparer: tg_

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