Rollins v. Dignity Health et al

Filing 102

Order by Hon. Thelton E. Henderson denying 85 Motion for interlocutory appeal and for stay pending appeal. (tehlc1, COURT STAFF) (Filed on 3/17/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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STARLA ROLLINS,
Plaintiff,

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v.

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DIGNITY HEALTH, et al.,
Defendants.

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Case No. 13-cv-01450-TEH
ORDER DENYING DEFENDANTS’
MOTION FOR INTERLOCUTORY
APPEAL AND FOR STAY PENDING
APPEAL

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This matter came before the Court on February 24, 2014, on Defendants’ motion to

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United States District Court
Northern District of California

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certify for interlocutory appeal, the Court’s December 12, 2013 order denying Defendants’

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motion to dismiss, and for a stay pending such appeal. Having considered the arguments

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of the parties and the papers submitted, the Court now DENIES Defendants’ motion for

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the reasons set forth below.

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BACKGROUND
In this putative class action, Plaintiff Starla Rollins (“Rollins”) alleges that

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Defendant Dignity Health (“Dignity”)1 violates the Employee Retirement Income Security

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Act (“ERISA”), 29 U.S.C. §§ 1001 et seq., by failing to conform its benefits plan with

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ERISA’s various funding, reporting, disclosure and fiduciary requirements. Complaint

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(“Compl.”) ¶¶ 75, 105-161. Dignity moved to dismiss, arguing that its benefit plan is a

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“church plan” exempt from ERISA, and that Rollins had therefore failed to state a claim

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for relief. On December 12, 2013, the Court denied Dignity’s motion, concluding that

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based on the relevant portions of ERISA’s text, structure, and history, only a church can

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establish an ERISA-exempt church plan. Rollins v. Dignity Health, C13-1450 TEH, 2013

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The Defendants in this case are Dignity Health, Herbert J. Vallier, a former Dignity
Health official, and members of Dignity Health’s Retirement Plans Sub-Committee. For
convenience, the Court refers to the Defendants collectively as “Dignity.”

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WL 6512682, at *7 (N.D. Cal. Dec. 12, 2013). “Because Dignity is not a church,” the

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Court held, the plan it established could not be a church plan exempt from ERISA. Id.

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Dignity now moves to certify the Court’s December 12, 2013 order for interlocutory

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appeal pursuant to 28 U.S.C. § 1292(b), and for a stay pending such appeal.

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LEGAL STANDARD
Section 1292(b) permits a district court to certify an order for interlocutory review

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where the order involves (1) a “controlling question of law”; (2) “as to which there is

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substantial ground for difference of opinion”; and (3) where an immediate appeal may
“materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b); see

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United States District Court
Northern District of California

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also In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1981).

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“Section 1292(b) is a departure from the normal rule that only final judgments are

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appealable, and therefore must be construed narrowly.” James v. Price Stern Sloan, Inc.,

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283 F.3d 1064, 1067 n. 6 (9th Cir. 2002). Section 1292(b) certifications are granted in

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“rare circumstances” and the “court of appeals . . . has discretion to reject . . . interlocutory

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appeal[s], and does so quite frequently.” Id. In seeking interlocutory appeal, a movant has

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a heavy burden to show that “exceptional circumstances justify a departure from the basic

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policy of postponing appellate review until after the entry of a final judgment.” Coopers &

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Lybrand v. Livesay, 437 U.S. 463, 475 (1978).

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DISCUSSION
Keeping in mind the “exceptional circumstances” standard, the Court first considers

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whether the issue Dignity seeks to appeal presents a “controlling question of law.”

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Although there is no explicit definition for what constitutes a “controlling question of

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law,” examples include who are proper parties, whether a court has jurisdiction, and

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whether state or federal law should apply. In re Cement Antitrust Litig., 673 F.2d at 1026

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(citing United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959)). For an issue to be

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considered “controlling,” its reversal need not terminate the litigation, but its resolution
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should “materially affect the outcome of litigation in the district court.” In re Cement

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Antitrust Litig., 673 F.2d at 1026.

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Here, Dignity’s proposed interlocutory appeal challenges the Court’s interpretation

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of the portions of the ERISA statute governing the church plan exemption. Dignity asserts

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that the next step in this litigation would be to consider Dignity’s compliance with ERISA,

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and if the Ninth Circuit were to later hold that Dignity is exempt from ERISA, that entire

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evaluation of Dignity’s ERISA compliance would have been unnecessary. Therefore,

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Dignity argues, the Court’s interpretation should be reviewed on interlocutory appeal

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instead. Dignity’s argument, however, oversimplifies the myriad paths this litigation could
take. If the Ninth Circuit were to reverse, either on interlocutory appeal or in the regular

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United States District Court
Northern District of California

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course, on remand the Court would be charged with applying the Ninth Circuit’s

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interpretation of the statute to Dignity’s plan and again determining if Dignity’s plan is

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exempt. If Dignity’s plan were not exempt, the Court would still have to consider

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Dignity’s ERISA compliance. And if the Dignity plan was held to be exempt, the Court

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would then have to consider Rollins’s claim regarding the constitutionality of such an

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exemption. Given these complicated, possibly divergent, and even potentially convergent

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paths the litigation could take, the Court agrees with Dignity that an interlocutory appeal

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could significantly alter the course the litigation would take. Nevertheless, the Court

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concludes that the issue proposed for appeal would not so materially affect the entire

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nature of the litigation, or its outcome, to justify interlocutory review.

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The issue here, in the Court’s view, “involves nothing as fundamental as the

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determination of . . . whether state or federal law should be applied.” See In re Cement

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Antitrust Litig. 673 F.2d 1020, 1026-27 (citing United States v. Woodbury, 263 F.2d 784,

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787 (9th Cir. 1959)). A difference in ruling on which law to apply could require a

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complete repeat of the litigation and a resulting duplication of efforts and waste of

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resources. Similarly, a different ruling as to whether a court has jurisdiction, see id., could

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invalidate an entire district court proceeding. In contrast, the matter at issue here is not of

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such high stakes. At most, if this issue were presented on interlocutory appeal, and was
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reversed, some time could be saved at the district court. That “would not materially affect

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the outcome of this litigation, but only its duration” and the Ninth Circuit has squarely

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rejected construing a question as controlling merely because “it is one the resolution of

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which may appreciably shorten the time, effort, or expense of conducting a lawsuit.” In re

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Cement Antitrust Litig., 673 F.2d at 1027 (“Congress could easily have chosen only to

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require that a question materially advance the litigation in order for it to be immediately

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reviewable. Since Congress chose to add the additional requirement that the issue for

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which review is sought must be a ‘controlling question of law,’ it would be improper for us

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to construe the statute as though these two requirements were interchangeable.”). In fact,

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given that the appeal could still be followed by further, more complicated litigation, there

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United States District Court
Northern District of California

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is no evidence an interlocutory appeal would even “materially advance the termination of

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the litigation” – § 1292(b)’s third prong.

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To be sure, a contrary ruling by the Ninth Circuit could obviate the need for

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discovery and litigation on particular issues; however, a similar argument could be made

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for countless other denials of motions to dismiss that are routinely appealed in the regular

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course. There are no extenuating circumstances here that support the need for an

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immediate decision versus a later ruling. See, e.g., United Air Lines, Inc. v. Wiener, 286

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F.2d 302, 306 (9th Cir. 1961) (deciding on interlocutory appeal whether to grant plaintiff’s

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request to have the same jury decide issues of liability and damages – an issue which could

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not wait, as its reversal in the regular course would be impossible to effectuate); Lear

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Siegler, Inc. v. Adkins, 330 F.2d 595, 598 (9th Cir. 1964) (finding § 1292(b)’s

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requirements met where party sought appeal of district court’s stay order, which while in

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effect would have halted proceedings entirely, and reversal of which would have

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compelled proceeding with the action).

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Finally, Dignity argues that the issue is a controlling question of law because

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interlocutory review could also benefit other pending cases involving the same statutory

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provision. The Court is not persuaded by this argument because those other cases Dignity

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refers to are outside this Circuit and the Ninth Circuit’s ruling would not be controlling in
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those cases.
The Court concludes that the issue presented does not rise to the level of a

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“controlling question of law” justifying interlocutory review and because this first prong of

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§ 1292(b) has not been met, the Court declines to further discuss the other requirements.

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While the Court appreciates the significance of its ruling on Dignity’s motion to dismiss,

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§ 1292(b) “was not intended merely to provide review of difficult rulings in hard cases.”

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U.S. Rubber Co. v. Wright, 359 F.2d 784, 785 (9th Cir. 1966). Based on the facts and

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circumstances of this case, and respecting the high bar imposed, the Court sees no reason

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to view the instant issue as an “exceptional situation” warranting interlocutory appeal. In

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re Cement Antitrust Litig., 673 F.2d at 1026.

United States District Court
Northern District of California

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CONCLUSION
For the foregoing reasons, Defendants’ motion for interlocutory appeal pursuant to
28 U.S.C. § 1292(b) and for a stay pending such appeal is DENIED.

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IT IS SO ORDERED.

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Dated: 3/17/14

_____________________________________
THELTON E. HENDERSON
United States District Judge

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