Winans v. Emeritus Corporation
Filing
53
ORDER granting in part and denying in part 32 Motion to Dismiss; denying 34 Motion to Strike ; granting 49 Motion for Leave to File Surreply (sclc1, COURT STAFF) (Filed on 3/5/2014)
1
2
3
4
5
6
7
IN THE UNITED STATES DISTRICT COURT
8
NORTHERN DISTRICT OF CALIFORNIA
10
Northern District of California
United States District Court
9
11
12
13
ARVILLE WINANS,
his guardian ad
MOULTON, on his
behalf of other
situated,
14
15
by and through
litem, RENEE
own behalf and on
similarly
Plaintiff,
v.
16
17
EMERITUS CORPORATION and DOES 1
through 100,
18
Defendants.
19
20
21
I.
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Case No. 13-cv-03962-SC
ORDER GRANTING IN PART AND
DENYING IN PART MOTION TO
DISMISS; DENYING MOTION TO
STRIKE
INTRODUCTION
Plaintiff Arville Winans ("Plaintiff") brings this action for
22
declaratory and injunctive relief and damages against Defendant
23
Emeritus Corporation ("Defendant") by and through his guardian ad
24
litem Renee Moulton.
25
assisted living facilities in Tracy, California.
26
Defendant has engaged in a scheme to defraud seniors by falsely
27
representing that it will provide sufficient staff to care for all
28
of its residents based on the residents' evaluations, "when in
Plaintiff is a resident of one of Defendant's
He alleges that
1
truth [Defendant] determines facility staffing based on labor
2
budgets set to meet profit margins established by corporate
3
headquarters."
4
Defendant now moves to dismiss and strike Plaintiff's FAC.
5
Nos. 32 ("MTD"), 34 ("MTS").
6
Nos. 43 ("MTS Opp'n"), 44 ("MTD Opp'n"), 46 ("MTS Reply"), 47 ("MTD
7
Reply"). 1
8
without oral argument per Civil Local Rule 7-1(b).
9
below, Defendant's motion to dismiss is GRANTED in part and DENIED
United States District Court
For the Northern District of California
10
ECF No. 24 (First Amended Complaint ("FAC")) ¶ 2.
ECF
Both motions are fully briefed.
ECF
The Court finds the matter appropriate for resolution
As explained
in part, and Defendant's motion to strike is DENIED.
11
12
II.
BACKGROUND
Defendant is the largest provider of assisted living for
13
14
senior citizens in the nation.
15
facilities in California alone, which have an aggregate of 5,000
16
residents.
17
room, board, and assistance for seniors in certain activities of
18
daily living.
19
units," which serve individuals with dementia and other cognitive
20
disorders.
21
resident of one of Defendant's facilities since October 2009.
22
¶ 8.
23
power of attorney in September 2009.
Id. ¶ 10.
It operates 72
Defendant's assisted living facilities offer
Id. ¶ 16.
Id. ¶ 17.
FAC ¶ 15.
These facilities also have "memory care
Plaintiff is a senior citizen and has been a
Id.
Ms. Moulton, his niece, is his agent, having been granted his
Id.
In its uniform contract with each resident, Defendant
24
25
26
27
28
1
Plaintiff has also filed an administrative motion for leave to
file a surreply to address new choice-of-law arguments raised in
Defendant's reply brief. ECF No. 49 ("Admin. Mot."), 49-1
("Surreply"). Defendant has opposed the administrative motion.
ECF No. 52. The Court GRANTS the motion, but the surreply does not
change the ultimate disposition of the motion to dismiss.
2
1
represents that it will evaluate the resident prior to admission
2
and assign the resident a "Level of Care" from 1 to 7, with higher
3
monthly charges imposed for higher levels of care. 2
4
The uniform contract also represents that Defendant will
5
periodically re-evaluate each resident to determine if he or she
6
requires additional assistance.
7
assign the resident a higher Level of Care and collect additional
8
monthly charges.
9
evaluations using its "wE Care" system, which was previously called
United States District Court
For the Northern District of California
10
"Vigilan."
Id.
Id. ¶ 23.
Id. ¶¶ 21-22.
If so, Defendant may
Defendant conducts these periodic re-
Id.
Using the wE Care system, Defendant has repeatedly increased
11
12
Plaintiff's Level of Care, along with his monthly rate.
13
September 2010, Defendant assigned Plaintiff a Level of Care of "3"
14
and placed him in the Alzheimer's and Memory Care Unit.
15
Defendant increased Plaintiff's Level of Care to "4" in September
16
2012, and then to a "5" in May 2013.
17
Plaintiff's Level of Care has resulted in a new agreement, signed
18
by Ms. Moulton on behalf of Plaintiff, and a higher monthly rate.
19
Id. ¶¶ 55-58.
20
Plaintiff's monthly rate has increased from approximately $1,200 to
21
$2,800.
Id. ¶¶ 56-57.
In
Id. ¶ 55.
Each change to
Since his arrival at Defendant's facility in 2009,
Id. ¶ 58.
Defendant touts the wE Care system through its marketing
22
23
materials.
24
"[t]he ability to provide the most comprehensive and consistent
25
2
26
27
28
See id. ¶ 27-32.
Defendant's website states that
Defendant argues that its contracts are not uniform, MTD at 1,
but at the pleading stage, the Court must take all well-pleaded
allegations as true. Defendant also contends that Plaintiff
concedes that the contracts are not uniform by alleging that each
resident negotiates an individual care plan. Id. However, this
does not preclude the possibility that Defendant makes uniform
representations in each of its contracts.
3
1
personal care services begins with the resident evaluation
2
process," that wE Care allows Defendant "to accurately evaluate and
3
monitor the personal care services of your loved one," and that wE
4
Care is used to determine the "staff required to deliver the
5
services."
6
states that Defendant's resident evaluation system will: "address
7
the time needed to complete care activities, how often those care
8
activities need to be done, any personal preferences that you . . .
9
may have, and the staff required to complete the activities."
United States District Court
For the Northern District of California
10
11
Id. ¶¶ 27-28.
Another unidentified marketing material
Id.
¶ 32.
Plaintiff alleges that these representations are false and
12
misleading because Defendant staffs its facilities based on profit
13
margins, without regard for resident need.
14
pleads: "Contrary to the express and implied representations in its
15
form contract and other uniform written statements, [Defendant]
16
does not staff its facilities to meet the aggregate assessed needs
17
of its residents, but instead determines staffing based on labor
18
budgets designed to meet profit objectives."
19
points to deposition testimony of Susan Rotella, Defendant's former
20
Vice President of Operations, who has sued Defendant for wrongful
21
termination.
22
assign residents a Level of Care and corresponding monthly rates,
23
but the portion of the software program that calculated how many
24
minutes per day of care and what number and type of staff were
25
necessary to provide that care were turned off at the facility
26
level.
27
28
Id. ¶ 36.
Specifically, Plaintiff
Id. ¶ 33.
Plaintiff
Rotella testified that wE Care was used to
Id. ¶ 37.
In support of his understaffing allegations, Plaintiff also
alleges that, in or around January 2011, he was attacked by another
4
1
resident when they were left unsupervised in a dining area.
2
59.
3
and bruises to his face and head, and the facility was issued a
4
deficiency for inadequate staff and insufficient resident
5
supervision by the Community Care Licensing ("CCL") division of the
6
California Department of Social Services ("CDSS").
7
information and belief, Plaintiff alleges that a number of
8
Defendant's other facilities have also been cited for inadequate
9
staffing by CDSS.
United States District Court
As a result of the attack, Plaintiff suffered multiple cuts
Id.
On
Id. ¶ 60.
Plaintiff filed this action in state court on July 29, 2013.
10
For the Northern District of California
Id. ¶
11
ECF No. 1 Ex. A.
Defendant subsequently removed to federal court
12
on diversity grounds.
13
to dismiss, Plaintiff amended his complaint.
14
FAC asserts claims for (1) violation of the California Consumers
15
Legal Remedies Act ("CLRA"), Cal. Civ. Code § 1750 et seq.; (2)
16
violation of the California Unfair Competition Law ("UCL"), id. §
17
17200 et seq.; and (3) elder financial abuse, Cal. Welf. & Inst.
18
Code § 15610.30.
19
seeks restitution, punitive damages, and an injunction prohibiting
20
Defendant from "promising elders, dependent adults, and their
21
family members that [Defendant] will provide the care and personal
22
services needed by each resident as assessed in their comprehensive
23
evaluation and from charging its residents based on this false
24
promise."
25
"requiring Defendant to budget for and provide adequate aggregate
26
staffing that is sufficient to meet its residents' assessed needs."
27
Id.
28
who resided at one of Defendant's California assisted living
ECF No. 1.
FAC ¶¶ 73-114.
Id. pg. 30.
After Defendant filed a motion
ECF Nos. 18, 24.
The
Among other things, Plaintiff
Plaintiff also seeks an injunction
Plaintiff, through Ms. Moulton, seeks to represent all persons
5
1
2
facilities from July 29, 2009 through the present.
Id. ¶ 62.
Defendant now moves to dismiss pursuant to Federal Rule of
3
Civil Procedure 12(b)(6), as well as to strike Plaintiff's class
4
action allegations pursuant to Rule 12(f).
5
6
III. MOTION TO DISMISS
7
A.
8
A motion to dismiss under Federal Rule of Civil Procedure
9
Legal Standard
12(b)(6) "tests the legal sufficiency of a claim."
Navarro v.
United States District Court
For the Northern District of California
10
Block, 250 F.3d 729, 732 (9th Cir. 2001).
11
on the lack of a cognizable legal theory or the absence of
12
sufficient facts alleged under a cognizable legal theory."
13
Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.
14
1988).
15
should assume their veracity and then determine whether they
16
plausibly give rise to an entitlement to relief."
17
Iqbal, 556 U.S. 662, 679 (2009).
18
must accept as true all of the allegations contained in a complaint
19
is inapplicable to legal conclusions.
20
elements of a cause of action, supported by mere conclusory
21
statements, do not suffice."
22
Twombly, 550 U.S. 544, 555 (2007)).
23
"Dismissal can be based
"When there are well-pleaded factual allegations, a court
Ashcroft v.
However, "the tenet that a court
Threadbare recitals of the
Id. (citing Bell Atl. Corp. v.
Claims sounding in fraud are subject to the heightened
24
pleading requirements of Federal Rule of Civil Procedure 9(b),
25
which requires that a plaintiff alleging fraud "must state with
26
particularity the circumstances constituting fraud."
See Kearns v.
27
Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009).
"To satisfy
28
Rule 9(b), a pleading must identify the who, what, when, where, and
6
1
how of the misconduct charged, as well as what is false or
2
misleading about [the purportedly fraudulent] statement, and why it
3
is false."
4
Inc., 637 F.3d 1047, 1055 (9th Cir. 2011) (quotation marks and
5
citations omitted).
United States ex rel Cafasso v. Gen. Dynamics C4 Sys.,
6
B.
Plaintiff's Claims for Equitable Relief
7
Citing to California law, Defendant argues that the Court
8
should abstain from adjudicating Plaintiff's claims for equitable
9
relief because they require the Court to assume the functions of
United States District Court
For the Northern District of California
10
CDSS.
11
Cal. App. 4th 1292 (Cal. Ct. App. 2007)).
12
courts may abstain from deciding UCL claims where: (1) they
13
implicate complex economic or policy decisions best handled by the
14
legislature or an administrative agency; or (2) granting injunctive
15
relief would impose an undue burden on the trial court.
16
Alvarado, 153 Cal. App. 4th at 1298.
17
federal law controls here, not California law.
18
Specifically, Plaintiff contends that the Court should apply the
19
abstention doctrine set forth in Colorado River Water Conservation
20
District v. United States, 424 U.S. 800, 813, 817 (1976), which
21
provides that federal courts have a "virtually unflagging
22
obligation to exercise jurisdiction," and that courts should only
23
abstain in extraordinary and narrow circumstances.
24
Plaintiff further argues that, even under California law, the Court
25
should decline from abstaining.
26
MTD at 4 (citing Alvarado v. Selma Convalescent Hosp., 153
Under California law,
See
Plaintiff contends that
MTD Opp'n at 5.
Id. at 5-6.
Id. at 7-8.
As set forth below, the Court finds that (1) choice of law
27
principles require it to consider the California abstention
28
doctrine, and (2) the California abstention doctrine bars
7
1
Plaintiff's claims for equitable relief.
1.
2
3
Choice of Law
Under Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938), a federal
4
court sitting in diversity jurisdiction applies state substantive
5
law and federal procedural law.
6
"concerned with judicial administration, such as the methods of
7
presenting facts to a court or the way a jury operates."
8
Snowboards, Inc. v. Kelly, 863 F.2d 643, 645 (9th Cir. 1988).
9
issue is substantive if it is "concerned with the legal rights of
Sims
An
United States District Court
For the Northern District of California
10
the parties."
11
procedural law is not always clear, the intent of Erie is to ensure
12
that, in diversity cases, "the outcome of the litigation in the
13
federal court should be substantially the same, so far as legal
14
rules determine the outcome of a litigation, as it would be if
15
tried in a State court."
16
(1945).
17
Id.
An issue is procedural if it is
While the distinction between substantive and
Guar. Trust Co. v. York, 326 U.S. 99, 109
In Sims, the Ninth Circuit addressed the issue of whether a
18
California anti-injunction statute was procedural or substantive.
19
863 F.2d at 645.
20
bars an injunction to prevent the breach of a personal service
21
contract, unless the contract guarantees annual payments of at
22
least $6,000.
23
were applicable, Federal Rule of Civil Procedure 65 allowed the
24
grant of temporary injunctive relief.
25
Circuit reversed.
26
did not conflict because the former "merely sets out the procedural
27
requirements for injunctions and restraining orders," while the
28
latter "expressly prohibits the issuance of injunctions in this
The statute, California Civil Code section 3423,
The district court found that, even if section 3423
Id. at 646.
The Ninth
The court found that Rule 65 and section 3423
8
1
type of contract dispute."
2
of lack of conflict, Erie "require[d] the application of state law
3
over federal law if the state law is outcome-determinative."
4
The Court concluded that section 3423 was outcome-determinative
5
because an injunction would accomplish what California law
6
prohibited, and that California policy should be respected by
7
federal courts sitting in diversity.
8
9
Id.
The court then held that because
Id.
Id. at 647.
Plaintiff argues that Sims is inapposite because the Ninth
Circuit did not "consider generally whether injunctive relief is a
United States District Court
For the Northern District of California
10
substantive or procedural issue."
11
so, but Sims does hold that federal courts sitting in diversity
12
must defer to state law on issues of injunctive relief where the
13
state law is outcome-determinative.
14
doctrine has the potential to determine the outcome of Plaintiff's
15
claims for equitable relief.
16
federal court applying California law could grant an injunction,
17
where a California court applying California law could not.
18
is plainly contrary to Sims, as well as Erie.
19
Defendant removed to federal court should not affect the remedies
20
available to Plaintiff.
21
MTD Surreply at 2.
That may be
Here, California's abstention
Moreover, under Plaintiff's theory, a
This
The fact that
Plaintiff further argues that, unlike the anti-injunction
22
statute in Sims, the California judicial abstention doctrine does
23
not mandate that the Court abstain from granting equitable relief.
24
This argument is also unavailing.
25
the application of the abstention doctrine is discretionary, see
26
Alvarado, 153 Cal. App. 4th at 1298, that does not mean the
27
doctrine is not substantive or outcome-determinative.
28
Ninth Circuit nor the Supreme Court has enunciated the rule
While Plaintiff is correct that
9
Neither the
1
Plaintiff is advocating here: that an issue is necessarily
2
procedural where it turns on the application of a discretionary
3
rule.
4
Plaintiff's reliance on Travelers Casualty v. W.P. Rowland
Ariz. May 15, 2012), is also misplaced.
7
case is not binding on this court and, in any event, it is
8
distinguishable.
9
rather than state law because the issue presented was purely
10
United States District Court
Constructors Corp., No. CV 12–00390–PHX–FJM, 2012 WL 1718630 (D.
6
For the Northern District of California
5
procedural: should the court apply Rule 65 or Arizona law to
11
determine the appropriate standard for granting a preliminary
12
injunction.
13
distinguished Sims because both federal and Arizona law permitted
14
it to issue the type of injunctive relief requested by the
15
plaintiff.
16
abstention doctrine imposes limits on equitable relief not present
17
in the federal Colorado River abstention doctrine.
18
The
In Travelers, the court applied federal law
2012 WL 1718630, at *2.
Id.
See Surreply at 3.
Indeed, the court
In contrast, in this action, California's
Plaintiff's final argument conflates federal and state
19
abstention doctrines.
Plaintiff cites to AXA Corporate Solutions
20
v. Underwriters Reinsurance Corp., where the Seventh Circuit
21
addressed whether the trial court had erred in applying an Illinois
22
statute allowing a Defendant to move to dismiss if there is another
23
action pending between the same parties for the same cause.
24
F.3d 272, 276 (7th Cir. 2003) (citing 735 Ill. Comp. Stat. § 5/2-
25
619(a)(3)).
26
the Colorado River abstention doctrine and the Illinois statute
27
were sufficient to require the court to follow the state law.
28
at 276.
347
The trial court reasoned that the differences between
The Seventh Circuit reversed, finding that the state
10
Id.
problem addressed by the state law was closely akin to topics such
3
as forum non conveniens and venue statutes, which were matters of
4
judicial organization.
5
abstention doctrine is significantly different from the Illinois
6
and federal abstention doctrines.
7
require the Court to abstain from exercising jurisdiction or
8
hearing a case altogether.
9
that a Plaintiff may assert based on a balancing of the equities.
10
United States District Court
statute was procedural.
2
For the Northern District of California
1
Id. at 278.
See Acosta v. Brown, 213 Cal. App. 4th 234, 246-47 (Cal. Ct. App.
11
2013).
12
procedural in nature. 3
Id.
The court reasoned that the
AXA is inapposite because California's
The California doctrine does not
It merely limits the types of claims
Accordingly, the California abstention doctrine is not
For these reasons, the Court finds that California law
13
14
controls the issue of whether Plaintiff is entitled to the
15
equitable relief it seeks.
2.
16
Abstention
As California law controls, the Court must determine to what
17
18
extent, if any, the California judicial abstention doctrine bars
19
Plaintiff's claims.
20
abstain from deciding UCL claims and other claims for equitable
21
relief.
22
applies to UCL claims); see also Acosta v. Brown, 213 Cal. App. 4th
23
at 249 ("The absence of [a UCL] claim does not diminish the force
24
of the principles upon which Alvarado rests because . . . the
25
relief sought in this case . . . is in the nature of equitable
The doctrine gives courts the discretion to
See Alvarado, 153 Cal. App. 4th at 1297 (abstention
26
27
28
3
Plaintiff's position is also contrary to its own authority. See
Wehlage v. EmRes Healthcare, Inc., 791 F. Supp. 2d 774 (N.D. Cal.
2011) (considering the merits of the defendant's California
abstention argument).
11
1
relief.").
However, the abstention doctrine may not be used to
2
refrain from adjudicating legal claims.
3
Healthcare, 798 F. Supp. 2d 1073, 1085 (N.D. Cal. 2011).
4
Accordingly, the doctrine only implicates Plaintiff's UCL claim, as
5
well as the equitable remedies sought in connection with
6
Plaintiff's CLRA claim. 4
7
money damages.
See Walsh v. Kindred
It does not affect Plaintiff's claims for
8
Judicial abstention is appropriate where (1) "the lawsuit
9
involves determining complex economic policy, which is best handled
United States District Court
For the Northern District of California
10
by the Legislature or an administrative agency," or (2) "granting
11
injunctive relief would be unnecessarily burdensome for the trial
12
court to monitor and enforce given the availability of more
13
effective means of redress." 5
14
Abstention is warranted under the first ground when "granting the
15
requested relief would require a trial court to assume the
16
functions of an administrative agency, or to interfere with the
17
functions of an administrative agency."
18
on the second ground when the equitable relief requested would
19
result in a network of injunctions that "would have the cumulative
20
effect of a statutory regulation, administered by the . . . courts
21
through the medium of contempt hearings."
22
Cal. App. 3d 588, 599 (Cal. Ct. App. 1970).
Alvarado, 153 Cal. App. 4th at 1298.
Id.
Courts have abstained
Diaz v. Kay-Dix Ranch, 9
23
24
25
26
27
28
4
Plaintiff argues that the abstention doctrine does not reach its
claims under the CLRA and the Elder Abuse Act because those claims
are legal causes of action. MTD Opp'n at 7. However, Plaintiff
fails to mention that he is seeking both legal and equitable
remedies through his CLRA claim.
5
California courts may also abstain "when federal enforcement of
the subject law would be more orderly, more effectual, [or] less
burdensome to the affected interests," Alvarado, 153 Cal. App. 4th
at 1298; however, that scenario is not relevant here.
12
a.
1
Complex economic policy
As to the first prong of the abstention doctrine, Defendant
2
3
argues that Plaintiff is asking the Court to assume the functions
4
of CDSS.
5
understaffing allegations are predicated on a California
6
regulation, 22 Cal. Code Regs. § 87411(a), that requires
7
residential care facilities for the elderly ("RCFE") to employ
8
staff in sufficient numbers, "and competent to provide the services
9
necessary to meet resident needs."
MTD at 5.
Defendant argues that Plaintiff's
Id.
Defendant contends that
United States District Court
For the Northern District of California
10
determining whether its facilities comply with section 87411(a)
11
requires expertise and case-by-case evaluation that are better left
12
to CDSS.
13
changing requirements of the residents served by [Defendant's]
14
communities would mean virtually continuous court scrutiny over
15
potentially tens of thousands of staffing decisions each and every
16
day."
17
Id.
Moreover, according to Defendant, "[t]he constantly
Id. at 7.
In support, Defendant cites to the California Court of
18
Appeal's decision in Alvarado.
In that case, the plaintiff
19
asserted a UCL claim based on the defendant's alleged failure to
20
provide sufficient direct nursing care for the residents of its
21
skilled nursing facilities ("SNF") in violation of California
22
Health & Safety Code section 1276.5(a).
23
4th at 1296.
24
that section 1276.5(a) was a regulatory statute that the
25
legislature intended the Department of Health Services ("DHS") to
26
enforce.
27
equipped to evaluate compliance with the statute's 3.2 nursing-
28
hours-per-patient-per-day ("NHPPD") requirement, which implicated a
Alvarado, 153 Cal. App.
The court held that abstention was proper, reasoning
Id. at 1304.
The court also found that DHS was better
13
1
host of specialized determinations, including whether the facility
2
at issue was a special treatment program service unit, whether
3
certain employees' hours counted toward the requirement, and what
4
formula should be used to calculate nursing hours.
5
Defendant contends that Plaintiff's claims would require an even
6
higher level of agency expertise since section 87411(a) does not
7
set forth objective standards, such as staff per resident per hour,
8
but merely requires a "sufficient number[]" of "competent" staff.
9
MTD at 6-7.
United States District Court
For the Northern District of California
10
Id. at 1305-06.
Plaintiff responds that Alvarado's holding was subsequently
11
limited by Shuts v. Covenant Holdco LLC, 208 Cal. App. 4th 609
12
(Cal. Ct. App. 2012).
13
relied on Alvarado in sustaining the defendant's demurrer to the
14
plaintiff's claims for violations of section 1276.5(a)'s NHPPD
15
requirement.
16
reversed because the plaintiff's claims were based on California
17
Health and Safety Code section 1430, a statute which was never
18
invoked by the plaintiff in Alvarado.
19
that section 1430(b) conferred a private right of action for the
20
violation of a SNF resident's right to reside in a facility with an
21
adequate number of qualified personnel.
22
also found that Alvarado's concern with rendering complex economic
23
policy decisions was no longer pertinent.
24
Alvarado was decided, DHS's successor agency "ha[d] made
25
significant progress in providing administrative guidance on the
26
3.2 NHPPD standard, and how it should be calculated."
27
Plaintiff's reliance on Shuts is misplaced.
28
MTD Opp'n at 8.
In Shuts, the trial court
208 Cal. App. 4th at 618-19.
The court of appeal
Id. at 619.
The court found
Id. at 619-20.
The court
Id. at 622.
Since
Id.
Shuts's outcome
turned on the court's interpretation of section 1430(b), which
14
1
provides a private right of action for residents of SNFs, but not
2
for residents of the RCFEs at issue here.
3
California may have provided significant administrative guidance
4
with respect to section 1276.5(a)'s NHPPD requirement, no such
5
guidance exists as to section 87411(a).
6
CDSS determines whether a RCFE is sufficiently staffed in
7
accordance with the statute, and the Court is ill-equipped to
8
develop its own framework for making such a determination.
9
Further, while
It is entirely unclear how
Plaintiff suggests that the Court can use Defendant's wE Care
United States District Court
For the Northern District of California
10
system to determine compliance with section 87411(a)'s staffing
11
requirements.
12
injunction by blindly relying on the outputs of the wE Care system.
13
It would need to make an independent determination of whether the
14
staffing levels provided by wE Care were sufficient to meet the
15
needs of Defendant's residents.
16
Court's expertise.
17
MTD Opp'n at 9.
But the Court could not enforce an
Such a determination is beyond the
Accordingly, the Court abstains from Plaintiff's claims for
18
equitable relief to the extent that they are predicated on alleged
19
violations of section 87411(a).
20
his UCL and CLRA claims are not predicated on section 87411(a), and
21
that the Court should not abstain from deciding those aspects of
22
his claims.
23
case is that Defendant represents that it staffs its facilities to
24
meet the aggregate needs of its residents, but it actually
25
determines staffing levels based on profit objections.
26
Plaintiff reasons that establishing liability for these
27
misrepresentation claims does not require regulatory interpretation
28
or proof that Defendant violated section 87411(a).
MTD Opp'n at 7.
Plaintiff argues some aspects of
He contends that the gravamen of this
15
Id.
Id.
Thus,
Defendant
1
responds that the abstention doctrine "addresses whether the remedy
2
for a violation should be devised, monitored[,] and enforced
3
administratively by [an agency] or judicially by the courts, not
4
whether the applicable regulations determine liability in the first
5
place."
6
further argues that the Court could not administer the remedy
7
without assuming CDSS's role in determining whether staffing is
8
sufficient to meet resident needs.
9
Reply at 4 (internal quotations omitted).
The Court agrees with Defendant.
Defendant
As Plaintiff concedes in his
United States District Court
For the Northern District of California
10
opposition brief, his claims stem from the allegation that
11
Defendant fails to staff its facilities to meet the aggregate
12
assessed needs of its residents.
13
is no way for the Court to craft an equitable remedy without first
14
establishing what those aggregate assessed needs are.
15
question necessarily requires an analysis of section 87411(a).
16
put it another way, Plaintiff essentially alleges that Defendant
17
represented that it would comply with 87411(a) by staffing its
18
facilities to meet the aggregate needs of its residents, but has
19
failed to do so.
20
by Defendant's standard contracts -- that residents "will receive[]
21
the services appropriate to [their] individual needs" -- is
22
identical to the requirements of section 87411(a) -- that
23
"[f]acility personnel shall at all times be sufficient in numbers,
24
and competent to provide the services necessary to meet resident
25
needs."
26
cannot enforce the contractual promise through an injunction
27
without assuming the role of a state regulatory agency.
28
See FAC ¶ 33.
See MTD Opp'n at 7.
Thus, there
This
To
The promise allegedly encompassed
Cal. Code Regs. tit. 22, § 87411(a).
Thus, the Court
In short, the Court is ill-equipped to make complex policy
16
1
determinations about the aggregate assessed needs of Defendant's
2
residents.
3
determinations, and the Court declines to second-guess its
4
judgment.
CDSS has already been tasked with making such
b.
5
Undue burden on the trial court
Abstention is also warranted here because "injunctive relief
6
7
would place an unnecessary burden on the court because of the
8
existence of other, more effective remedies."
9
App. 4th at 1302.
Alvarado, 153 Cal.
As Defendant points out, CDSS already has the
United States District Court
For the Northern District of California
10
tools and authority necessary to address what Plaintiff asks the
11
Court to regulate by injunction.
12
request an inspection of an RCFE.
13
1569.35.
14
exists and the deficiency is not corrected by the date specified by
15
CDSS, the RCFE may be fined up to $150 per day until the deficiency
16
is corrected.
17
certain instances, CDSS may also revoke the license of a RCFE if a
18
deficiency is not corrected. 6
Id.
By statute, any person may
Cal. Health & Safety Code §
If a state investigator determines that a deficiency
Cal. Code Regs. tit. 22, §§ 87759, 87761.
In
Id. § 87775.
By comparison, it would be unduly burdensome for the Court to
19
20
establish a system for regulating Defendant's seventy-two
21
California facilities.
22
dwarf that of any monitor the Court could appoint.
23
appointed monitor might need to respond to resident complaints, as
24
well as set aggregate staffing levels for each individual facility,
25
levels which change constantly.
26
6
27
28
The staff and resources of CDSS presumably
The court-
Such regulatory activities are
This process has already been invoked at the facility where
Plaintiff currently resides. After Plaintiff was attacked by
another resident in January 2011, CDSS investigated and issued a
deficiency for understaffing. FAC ¶ 59.
17
1
beyond the scope of the Court's expertise.
2
prepared to assume responsibility for ensuring that the needs of
3
Defendant's 5,000 California residents are being met on a daily
4
basis.
3.
5
The Court is not
Conclusion
For these reasons, and the reasons set forth above, the Court
6
7
abstains from adjudicating Plaintiff's UCL claim.
8
abstains from adjudicating Plaintiff's CLRA claim, but only to the
9
extent that Plaintiff seeks equitable relief in connection with
United States District Court
For the Northern District of California
10
that claim.
11
The Court also
The Court does not abstain from adjudicating
Plaintiff's claims for legal relief. 7
12
C.
CLRA
13
Defendant argues that the Court should dismiss the remainder
14
of Plaintiff's CLRA claim because: (1) Plaintiff cannot couch a
15
routine breach of contract claim as a CLRA claim to obtain extra-
16
contractual remedies, (2) the misrepresentations identified by
17
Plaintiff are non-actionable puffery, and (3) Plaintiff has failed
18
to plead affirmative misrepresentations or omissions with
19
sufficient particularity.
20
Defendant's first argument is predicated on principles
21
developed in the UCL context that are sometimes applied to CLRA
22
claims.
23
form the predicate for a UCL claim, but only if the breach also
24
constitutes conduct that is unlawful, unfair, or fraudulent.
25
v. Kaiser Found. Health Plan, Inc., 181 Cal. App. 4th 471, 489
26
7
27
28
California courts have held that a breach of contract may
Arce
The Court recognizes that Plaintiff's CRLA claim, to the extent
that it seeks legal relief, is also based understaffing allegations
that may implicate issues of complex economic policy. However, as
set forth above, California's judicial abstention doctrine does not
allow the Court to abstain from hearing such a claim.
18
1
(Cal. Ct. App. 2010).
With respect to the unfairness prong of the
2
UCL, "a systematic breach of certain types of contracts (e.g.,
3
breaches of standard consumer or producer contracts involved in a
4
class action) can constitute an unfair business practice under the
5
UCL."
6
CLRA prohibits "unfair methods of competition and unfair or
7
deceptive acts or practices undertaken by any person in a
8
transaction intended to result or which results in the sale or
9
lease of goods or services to any consumer."
Id. (internal quotations omitted).
Similar to the UCL, the
Cal. Civ. Code §
United States District Court
For the Northern District of California
10
1770(a).
11
of contract is not actionable under the CLRA without proof of more,
12
for example, where a defendant knowingly sells a defective product.
13
Baba v. Hewlett-Packard Co., C 09-05946 RS, 2010 WL 2486353 (N.D.
14
Cal. June 16, 2010).
15
Applying UCL principles, Courts have held that a breach
The Court finds that Plaintiff has alleged something more than
16
a breach of contract here.
Specifically, Plaintiff has alleged
17
that Defendant publicly touted its ability to meet the individual
18
needs of its residents, even though staffing decisions were based
19
on profit margins.
20
of Defendant's standard resident contracts.
21
Defendant's allegedly standardized contracts, the compromised
22
capacities of many of Defendant's residents, the fact that many of
23
these residents are dependent on Defendant for basic services and
24
may not be in a position to complain once they are under
25
Defendant's care, and the difficulties associated with
26
transitioning to a different RCFE, the Court finds that Plaintiff
27
has alleged sufficient facts to state a claim for a violation of
28
the CLRA.
Plaintiff has also alleged a systematic breach
In light of
In short, Plaintiff has sufficiently alleged that
19
1
Defendant engaged in unfair competition by making
2
misrepresentations to a vulnerable class of consumers.
As to its second argument, Defendant contends that the alleged
3
4
misrepresentations underlying Plaintiff's CLRA claim are non-
5
actionable puffery.
6
advertising, blustering, and boasting upon which no reasonable
7
buyer would rely."
8
F.3d 1134, 1145 (9th Cir. 1997).
9
characteristics of puffery are vague, highly subjective claims as
MTD at 11-12.
Puffery is "exaggerated
Southland Sod Farms v. Stover Seed Co., 108
"The distinguishing
United States District Court
For the Northern District of California
10
opposed to specific, detailed factual assertions."
11
Time, Inc., 857 F. Supp. 1392, 1399 (E.D. Cal. 1994).
12
representation "that amounts to 'mere' puffery is not actionable."
13
Id.
14
in the FAC are puffery, including the representations that the wE
15
Care system is "state of the art," and that Defendant's services
16
are "high quality."
17
claim is also based on allegations that Defendant represents that
18
it uses the wE Care system to determine staffing levels, and that
19
Defendant provides "enough staff to care for all of the residents
20
at its facilities based on the residents' evaluations."
21
id. ¶¶ 21, 30.
22
their truth can be objectively determined.
23
declines to dismiss Plaintiff's CLRA claims on puffery grounds.
24
Haskell v.
A
The Court agrees that a few of the representations mentioned
See FAC ¶¶ 26, 27.
However, Plaintiff's CLRA
See e.g.,
These statements are not vague or generalized, and
Accordingly, the Court
Defendant's third argument is that Plaintiff's CLRA claim
25
should be dismissed for failure to comply with the heightened
26
pleading standard of Rule 9(b), which requires that the
27
circumstances constituting fraud be pleaded with particularity.
28
MTD at 17.
Defendant considers several allegations in isolation,
20
1
while ignoring others.
2
trees.
3
upon the complaint as a whole.
4
2d 1000, 1007 (C.D. Cal. 2010).
5
whole, the FAC asserts sufficient facts to support a claim under
6
the CLRA.
7
Defendant has lost the forest for the
The sufficiency of Plaintiff's allegations must be based
Lima v. Gateway, Inc., 710 F. Supp.
The Court finds that, taken as a
Defendant argues that Plaintiff failed to plead that he saw or
8
relied on Defendant's website and marketing materials.
9
MTD at 21.
However, the absence of such allegations is not fatal to
United States District Court
For the Northern District of California
10
Plaintiff's claim because Plaintiff does allege that he read and
11
relied on Defendant's standard contract.
12
Defendant's argument that Plaintiff has failed to allege that he
13
would have behaved differently had the omitted information been
14
disclosed.
15
have chosen a different assisted living facility had he known about
16
the actual staffing practices at Defendant's facilities.
See MTD at 23.
Also lacking merit is
It is plausible that Plaintiff would
Defendant also argues that Plaintiff has not established
17
18
that it had any duty to disclose the manner in which it staffs its
19
facilities.
20
contracts, Defendant represents that it will provide different
21
levels of care depending on a resident's needs, that it will
22
develop a service plan based on the resident's evaluation, and that
23
residents will receive services appropriate to their individual
24
needs.
25
Defendant allegedly failed to disclose: that Defendant does not use
26
evaluations to set staffing levels, but sets them using
27
predetermined corporate labor budgets.
28
allegations are sufficient to support a duty to disclose.
Id. at 22.
FAC ¶ 21.
The Court disagrees.
In its form
These representations are contradicted by facts
21
Id. ¶ 33.
These
See
1
Donahue v. Apple, Inc., 871 F. Supp. 2d 913, 925 (N.D. Cal. 2012)
2
(actionable omission must be contrary to the representation made by
3
the defendant).
4
a consistent staffing policy, FAC ¶¶ 33-41, it is also plausible
5
that Defendant was aware of the omitted facts at the time it made
6
the representations.
7
8
9
United States District Court
For the Northern District of California
10
Based on Plaintiff's allegation that Defendant had
Accordingly, the Court declines to dismiss Plaintiff's CLRA
claim to the extent that it does not seek equitable relief.
D.
Elder Financial Abuse
Defendant moves to dismiss Plaintiff's third and final claim
11
for elder financial abuse.
12
a person or entity "takes, secretes, appropriates, obtains, or
13
retains real or personal property of an elder."
14
Code § 15610.30(a)(1).
15
when an elder "is deprived of any property right, . . . regardless
16
of whether the property is held directly or by a representative of
17
an elder or dependent adult."
18
Financial abuse of an elder occurs when
Cal. Welf. & Inst.
A person or entity engages in elder abuse
Id. § 15610.30(c).
Defendant argues that Plaintiff's claim fails because Ms.
19
Moulton, who is not an elder, represented Plaintiff as his agent
20
via power of attorney in the relevant transactions.
21
The fundamental problem with this argument is that Ms. Moulton did
22
not have anything to do with Plaintiff's initial contract for
23
services with Defendant.
24
his own.
25
Defendant contends that Plaintiff's claims are not based on his
26
original contract, but the amendments to his service plan signed by
27
Ms. Moulton that increased his Level of Care.
28
aspects of Plaintiff's claims pre-date Ms. Moulton's involvement,
MTD at 14-15.
Plaintiff entered into that contract on
See ECF No. 33 Ex. 1 ("Resident Agreement") at 23.
22
MTD at 15.
But many
1
including his general allegation that Defendant does not staff its
2
facilities to meet the aggregate needs of its residents.
3
event, Plaintiff's allegations support a plausible inference that
4
Plaintiff expected that Defendant's services would increase with
5
his assigned Level of Care when he initially entered Defendant's
6
facility.
In any
Next, Defendant argues that a standard breach of contract
7
8
claim cannot support a claim for financial elder abuse.
9
This argument is substantially similar to an argument the Court
United States District Court
For the Northern District of California
10
addressed and rejected regarding Plaintiff's CLRA claim.
11
III.C supra.
12
MTD at 16.
unavailing.
For the reasons set forth above, the Court finds it
Accordingly, the Court declines to dismiss Plaintiff's claim
13
14
See §
for financial elder abuse.
15
16
17
IV.
MOTION TO STRIKE
Defendant moves to strike Plaintiff's class allegations
18
pursuant to Federal Rule of Civil Procedure 12(f).
Rule 12(f)
19
provides that a court may, on its own or on a motion, "strike from
20
a pleading an insufficient defense or any redundant, immaterial,
21
impertinent, or scandalous matter."
22
generally disfavored ... [and] are generally not granted unless it
23
is clear that the matter sought to be stricken could have no
24
possible bearing on the subject matter of the litigation."
25
v. Citibank, 133 F.Supp.2d 1177, 1180 (N.D. Cal. 2001).
Motions to strike "are
Rosales
26
Class allegations typically are tested on a motion for class
27
certification, not at the pleading stage. See Collins v. Gamestop
28
Corp., C10–1210–TEH, 2010 WL 3077671, at *2 (N.D. Cal. Aug. 6,
23
1
2010).
2
pleadings to determine whether the interests of the absent parties
3
are fairly encompassed within the named plaintiff's claim."
4
Tel. Co. of Sw. v. Falcon, 457 U.S. 147, 160 (1982).
5
courts have struck class allegations where it is clear from the
6
pleadings that class claims cannot be maintained.
7
Apple Inc., 672 F. Supp. 2d 978, 991 (N.D. Cal. 2009).
8
9
However, "[s]ometimes the issues are plain enough from the
Gen.
Thus, some
E.g., Sanders v.
Defendant's lead argument is that the facts of this case are
similar to those in Dennis F. v. Aetna Life Insurance, 12–cv–02819–
United States District Court
For the Northern District of California
10
SC, 2013 WL 5377144 (N.D. Cal. Sept. 25, 2013), where the
11
undersigned recently denied class certification.
12
F. is distinguishable.
13
represent a class of adolescents who had been denied insurance
14
coverage for care at residential treatment centers.
15
5377144, at *2.
16
that Plaintiff's claims were predicated on medical necessity
17
determinations unique to each individual class member.
18
In contrast, this case turns on whether Defendant misrepresented
19
the staffing levels maintained at its facilities.
20
MTS at 5.
Dennis
In that case, the plaintiff sought to
2013 WL
The Court denied class certification on the ground
Id. at *4.
Next, Defendant argues that Plaintiff's claim that
21
understaffing endangered or resulted in substantial harm to the
22
class is not appropriate for class adjudication.
23
may be so, but as Defendant concedes, Plaintiff "does not seek
24
recovery for personal injuries, emotional distress or bodily harm
25
that may have been caused by Defendant or by inadequate staffing at
26
Defendant's facilities."
27
Plaintiff is not seeking to recover for the alleged personal
28
injuries, those allegations should be struck from the complaint.
FAC ¶ 64.
24
MTS at 10.
That
Defendant contends that if
1
MTS at 13.
However, Defendant cannot credibly contend that these
2
allegations are irrelevant.
3
Defendant's facilities may help support Plaintiff's claims that
4
those facilities are understaffed.
5
properly allege facts that do not directly support a claim for
6
relief where they provide necessary or informative background.
Evidence of personal injuries at
In any event, pleadings may
Defendant further argues that Plaintiff does not and cannot
7
8
satisfy the typicality or adequacy requirements of Rule 23(a).
9
at 13-15.
Here, Defendant rehashes a number of arguments from its
United States District Court
10
For the Northern District of California
Id.
motion to dismiss.
The Court declines to revisit those arguments
11
again.
12
not appropriate for determination at the pleadings stage.
In any event, typicality and adequacy raise factual issues
Finally, Defendant argues that the proposed class is not
13
14
ascertainable because it includes every resident of Defendant's
15
California communities, including those who have received all of
16
the services they contracted for with Defendant.
17
Once again, Defendant raises factual questions not appropriate for
18
resolution at the pleading stage.
19
Defendant's argument has merit, the Court need not deny class
20
certification altogether.
21
narrower class than the one proposed by Plaintiff.
22
this is feasible or necessary is a question for another day.
Id. at 16-17.
Moreover, to the extent that
Instead, it could potentially certify a
Whether or not
In sum, the Court finds that Defendant's motion to strike
23
24
Plaintiff's class allegations is premature.
25
in its entirety.
26
///
27
///
28
///
25
The motion is DENIED
1
2
V.
CONCLUSION
For the reasons set forth above, Defendant's motion to dismiss
3
is GRANTED in part and DENIED in part.
The Court abstains from
4
adjudicating Plaintiff's UCL claim, as well as the equitable
5
remedies sought through his CLRA claim.
6
remain undisturbed.
Plaintiff's other claims
Defendant's motion to strike is DENIED.
7
8
IT IS SO ORDERED.
9
United States District Court
For the Northern District of California
10
March 5, 2014
11
UNITED STATES DISTRICT JUDGE
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
26
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?