Wehlage v. EmpRes Healthcare Inc et al

Filing 46

ORDER GRANTING DEFENDANTS REQUEST FOR LEAVE TO FILE ADDITIONAL AUTHORITY, DENYING WITHOUT PREJUDICE EMPRES ENTITIES RULE 12(B)(2) MOTION TO DISMISS, GRANTING EMPRES ENTITIES AND EVERGREEN ENTITIES RULE 12(B)(6) MOTION TO DISMISS, AND GRANTING IN PART AND DENYING IN PART DEFENDANT EVERGREEN AT LAKEPORTS MOTION TO DISMISS(Docket Nos. 22, 23, 25 and 45). Case Management Statement due by 7/19/2011. Further Case Management Conference set for 7/26/2011 02:00 PM. Signed by Judge Claudia Wilken on 5/25/2011. (ndr, COURT STAFF) (Filed on 5/25/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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4
5

PHYLLIS WEHLAGE, on behalf of herself
and on behalf of others similarly
situated,

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United States District Court
For the Northern District of California

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Plaintiff,
v.
EMPRES HEALTHCARE, INC.; EHC
MANAGEMENT, LLC; EHC FINANCIAL
SERVICES, LLC; EVERGREEN CALIFORNIA
HEALTHCARE, LLC; EVERGREEN AT ARVIN,
LLC; EVERGREEN AT BAKERSFIELD, LLC;
EVERGREEN AT LAKEPORT, LLC; EVERGREEN
AT HEARTWOOD, LLC; EVERGREEN AT
SPRINGS ROAD, LLC; EVERGREEN AT
TRACY, LLC; EVERGREEN AT OROVILLE,
LLC; EVERGREEN AT PETALUMA, LLC; and
EVERGREEN AT GRIDLEY (SNF), LLC,
Defendants.
/

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No. C 10-05839 CW
ORDER GRANTING
DEFENDANTS’
REQUEST FOR LEAVE
TO FILE
ADDITIONAL
AUTHORITY,
DENYING WITHOUT
PREJUDICE EMPRES
ENTITIES’ RULE
12(B)(2) MOTION
TO DISMISS,
GRANTING EMPRES
ENTITIES AND
EVERGREEN
ENTITIES’ RULE
12(B)(6) MOTION
TO DISMISS, AND
GRANTING IN PART
AND DENYING IN
PART DEFENDANT
EVERGREEN AT
LAKEPORT’S MOTION
TO DISMISS
(Docket Nos. 22,
23, 25 and 45)

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Plaintiff Phyllis Wehlage brings claims against Defendants

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EmpRes Healthcare, Inc., et al., under California law for their

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alleged failure to provide sufficient staffing at skilled nursing

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facilities (SNFs).

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Management, LLC; EHC Financial Services, LLC; and Evergreen

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California Healthcare, LLC (collectively, EmpRes Entities) and

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Defendants Evergreen at Arvin, LLC; Evergreen at Bakersfield, LLC;

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Evergreen at Heartwood Avenue, LLC, erroneously sued as Evergreen

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at Heartwood, LLC; Evergreen at Springs Road, LLC; Evergreen at

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Defendants EmpRes Healthcare, Inc.; EHC

Tracy, LLC; Evergreen at Oroville, LLC; Evergreen at Petaluma, LLC;

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and Evergreen at Gridley (SNF), LLC (collectively, Evergreen

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Entities) move to dismiss the claims Plaintiff brought against

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them.1

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Evergreen Lakeport), on other grounds, moves to dismiss Plaintiff’s

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complaint.

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Evergreen Lakeport’s motion.

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2011.

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notice regarding the Ninth Circuit’s April 25, 2011 decision in

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United States District Court
For the Northern District of California

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Reudy v. Clear Channel Outdoor, Inc., a case cited by Evergreen

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Lakeport in connection with its motion to dismiss.

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considered oral argument and the papers submitted by the parties,

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the Court GRANTS Defendants’ motion for leave and the EmpRes and

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Evergreen Entities’ motion to dismiss, and GRANTS in part Evergreen

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Lakeport’s motion to dismiss and DENIES it in part.

Defendant Evergreen at Lakeport, LLC (hereinafter,

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The motions were heard on April 7,

On April 26, 2011, Defendants moved for leave to file a

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The EmpRes Entities and Evergreen Entities join

Having

BACKGROUND
I.

Factual Allegations and Procedural History
Plaintiff is a California resident.

EmpRes Healthcare, Inc.,

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is a Washington corporation with a principal place of business in

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Washington.

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Evergreen California Healthcare, LLC, are Washington limited

EHC Management, LLC; EHC Financial Services, LLC; and

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1

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The EmpRes Entities also filed a Rule 12(b)(2) motion to
dismiss for lack of personal jurisdiction, which was to be heard on
April 7, 2011. (Docket No. 22.) However, pursuant to stipulation,
the hearing on that motion was continued to July 14, 2011. (Docket
No. 38.) The Court DENIES without prejudice the EmpRes Entities’
Rule 12(b)(2) motion to dismiss. (Docket No. 22.) As explained
below, Plaintiff’s claims against the EmpRes Entities are dismissed
with leave to amend. If Plaintiff brings claims against the EmpRes
Entities in an amended pleading, the EmpRes Entities may renew
their Rule 12(b)(2) motion, if appropriate.

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2

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25
26

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liability companies that have EmpRes Healthcare as their sole

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member.

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Washington limited liability companies that have Evergreen

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California Healthcare, LLC, as their sole member.

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allegations are contained in Plaintiff’s complaint.

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Evergreen Lakeport and the Evergreen Entities are

The following

Plaintiff resides at Evergreen Lakeport Healthcare (Lakeport

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Facility), an SNF run by Evergreen Lakeport.

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adult,” as defined by California Welfare and Institutions Code

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section 15610.23, and a “disabled person,” as defined by California

United States District Court
For the Northern District of California

10
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She is a “dependent

Civil Code section 1761(g).2
Evergreen Lakeport did not maintain statutorily-mandated

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nursing staff levels at the Lakeport Facility.

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Plaintiff suffered several “indignities and other harms,” including

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a lack of or delayed responses to her call light and a lack of

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assistance with grooming, bathing and eating.

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Plaintiff was admitted to the Lakeport Facility, Evergreen Lakeport

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did not disclose that it did not comply with staffing requirements.

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Plaintiff lost money because of this non-disclosure.

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As a result,

Compl. ¶ 44.

When

The EmpRes Entities own and operate Evergreen Lakeport and the

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2

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25
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27
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Welfare and Institutions Code section 15610.23(a) provides:

“Dependent adult” means any person between the ages of 18
and 64 years who resides in this state and who has
physical or mental limitations that restrict his or her
ability to carry out normal activities or to protect his
or her rights, including, but not limited to, persons who
have physical or developmental disabilities, or whose
physical or mental abilities have diminished because of
age.
Civil Code section 1761(g) provides, “‘Disabled person’ means any
person who has a physical or mental impairment that substantially
limits one or more major life activities.”
3

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Evergreen Entities, and “make or approve key decisions” and

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“procure labor, services and/or merchandise” for them.

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¶ 23.

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and employees, and “operate as a joint venture, single enterprise,

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are agents of one another, are alter egos, and/or conspire to

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increase profits by ignoring California’s minimum staffing

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requirements.”

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Evergreen Entities communicated with the state department of health

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services for the benefit of the EmpRes Entities.

United States District Court
For the Northern District of California

10

Compl.

All of the Defendants have overlapping officers, directors

Id. ¶ 25.

Further, Evergreen Lakeport and the

Plaintiff brings three claims against Defendants:

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(1) violation of California Health and Safety Code § 1430(b);

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(2) violation of California’s Unfair Competition Law (UCL), Cal.

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Bus. & Prof. Code §§ 17200, et seq.; and (3) violation of the

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California Consumers Legal Remedies Act (CLRA), Cal. Civ. Code

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§§ 1750, et seq.

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class comprised of residents of all SNFs operated by Evergreen

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Lakeport and the Evergreen Entities.

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She intends to bring these claims on behalf of a

Plaintiff filed her lawsuit in Sonoma County Superior Court.

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It was subsequently removed based on the Class Action Fairness Act

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of 2005.

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II.

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Statutory and Regulatory Background
Plaintiff’s action rests in large part on California Health

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and Safety Code section 1265.5(a), which provides that, subject to

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an exception that evidently does not apply here, “the minimum

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number of actual nursing hours per patient required in a skilled

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nursing facility shall be 3.2 hours.”

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section 1276.5(a), is defined to mean “the number of hours of work

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4

Nursing hours, as used in

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performed per patient day by aides, nursing assistants, or

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orderlies plus two times the number of hours worked per patient day

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by registered nurses and licensed vocational nurses (except

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directors of nursing in facilities of 60 or larger capacity).”

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Cal. Health & Saf. Code § 1276.5(b)(1).

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In October 2010, legislation was enacted that amended the

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California Welfare and Institutions Code by adding section

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14126.022.

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Section 14126.022 requires the California Department of Public

See generally S.B. 853, 2010 Cal. Stat. Ch. 717, at 5.

United States District Court
For the Northern District of California

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Health (CDPH) to impose, beginning in the 2010-2011 fiscal year,

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administrative penalties on skilled nursing facilities that fail

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“to meet the nursing hours per patient per day requirements

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pursuant to Section 1276.5 of the Health and Safety Code.”

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Welf. & Inst. Code § 14126.022(f)(2)(A).

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Cal.

On January 31, 2011, CDPH provided skilled nursing facilities

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with the guidelines it will use “during state audits for compliance

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with the 3.2 nursing hour per patient day (NHPPD) staffing

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requirements.”

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(RJN), Ex. 5, at 2.3

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NHPPD staffing requirement “does not assure that any given patient

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receives 3.2 hours of nursing care; it is the total number of

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nursing hours performed by direct caregivers per patient day

Evergreen Lakeport’s Request for Judicial Notice
In the guidelines, CDPH noted that the 3.2

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3

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Evergreen Lakeport asks the Court to take judicial notice of
letters sent by CDPH pursuant to its authority under California
Welfare and Institutions Code section 14126.022. Because Plaintiff
does not oppose the request and because the fact that CDPH sent the
letters is “capable of accurate and ready determination by resort
to sources whose accuracy cannot reasonably be questioned,” the
Court GRANTS Evergreen Lakeport’s request. Fed. R. Evid. 201.

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5

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divided by the average patient census.”

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3

Id.

LEGAL STANDARD
A complaint must contain a “short and plain statement of the

4

claim showing that the pleader is entitled to relief.”

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Civ. P. 8(a).

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claim is appropriate only when the complaint does not give the

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defendant fair notice of a legally cognizable claim and the grounds

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on which it rests.

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(2007).

Fed. R.

Dismissal under Rule 12(b)(6) for failure to state a

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

In considering whether the complaint is sufficient to

United States District Court
For the Northern District of California

10

state a claim, the court will take all material allegations as true

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and construe them in the light most favorable to the plaintiff.

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Indus., Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).

13

However, this principle is inapplicable to legal conclusions;

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“threadbare recitals of the elements of a cause of action,

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supported by mere conclusory statements,” are not taken as true.

16

Ashcroft v. Iqbal, ___ U.S. ___, 129 S. Ct. 1937, 1949-50 (2009)

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(citing Twombly, 550 U.S. at 555).

NL

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When granting a motion to dismiss, the court is generally

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required to grant the plaintiff leave to amend, even if no request

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to amend the pleading was made, unless amendment would be futile.

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Cook, Perkiss & Liehe, Inc. v. N. Cal. Collection Serv. Inc., 911

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F.2d 242, 246-47 (9th Cir. 1990).

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would be futile, the court examines whether the complaint could be

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amended to cure the defect requiring dismissal “without

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contradicting any of the allegations of [the] original complaint.”

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Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir. 1990).

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Leave to amend should be liberally granted, but an amended

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In determining whether amendment

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1

complaint cannot allege facts inconsistent with the challenged

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pleading.

Id. at 296-97.

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DISCUSSION
I.

EmpRes and Evergreen Entities’ Rule 12(b)(6) Motion to Dismiss
A.

Claims under California Health and Safety Code Section
1430(b)

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Plaintiff brings claims against the EmpRes and Evergreen
7
Entities under California Health and Safety Code section 1430(b),
8
which provides,
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14

A current or former resident or patient of a skilled
nursing facility . . . may bring a civil action against
the licensee of a facility who violates any rights of the
resident or patient as set forth in the Patients Bill of
Rights in Section 72527 of Title 22 of the California
Code of Regulations, or any other right provided for by
federal or state law or regulation. . . . The licensee
shall be liable for up to five hundred dollars ($500),
and for costs and attorney fees, and may be enjoined from
permitting the violation to continue.

15

The EmpRes Entities argue that Plaintiff’s section 1430(b)

United States District Court
For the Northern District of California

10
11
12
13

16

claims against them must be dismissed because they are not

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licensees of skilled nursing facilities.

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contend that Plaintiff cannot bring section 1430(b) claims against

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them because she is not a current or former resident of their

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facilities.

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are not licensees of SNFs.

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current or former resident of any of the Evergreen Entities’ SNFs.

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Instead, she argues that she may assert claims against Defendants

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because Evergreen Lakeport and the EmpRes and Evergreen Entities

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are agents for and alter egos of each other.

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Defendants are a single entity that is a licensee for multiple

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SNFs, including the one in which she resides, and are thus jointly

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The Evergreen Entities

Plaintiff does not dispute that the EmpRes Entities
Nor does she claim that she is a

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Her theory is that

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2

responsible for her alleged injuries.
Plaintiff does not plead sufficient facts to support her

3

theory.

4

that Evergreen Lakeport, the licensee of the SNF in which she

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resides, is the agent for the EmpRes or Evergreen Entities.

6

Plaintiff argues that her mere allegation of agency is sufficient

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to meet her pleading burden.

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not accept as true “a legal conclusion couched as a factual

9

allegation.”

United States District Court
For the Northern District of California

10
11

First, Plaintiff offers no factual basis for her assertion

This is incorrect.

The Court need

Iqbal, 129 S. Ct. at 1950 (citation and internal

quotation marks omitted).
Second, Plaintiff’s allegations do not support invocation of
To avail herself of the doctrine,4

12

the alter ego doctrine.

13

Plaintiff must allege two elements: “First, there must be such a

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unity of interest and ownership between the corporation and its

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equitable owner that the separate personalities of the corporation

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and the shareholder do not in reality exist.

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an inequitable result if the acts in question are treated as those

18

of the corporation alone.”

19

83 Cal. App. 4th 523, 526 (2000).

20

consider include “the commingling of funds and assets of the two

21

entities, identical equitable ownership in the two entities, use of

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the same offices and employees, disregard of corporate formalities,

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identical directors and officers, and use of one as a mere shell or

Second, there must be

Sonora Diamond Corp. v. Superior Court,
Factors that the court may

24
25

4

27

As noted above, Defendants are organized under Washington
law. However, they did not take the position that Washington law
controls in this case. For the purposes of this motion, the Court
assumes that California’s alter ego doctrine, which is more lenient
than Washington’s, applies.

28

8

26

1

conduit for the affairs of the other.”

2

Inc., 171 Cal. App. 4th 1305, 1342 (2009).

3

may apply between a parent and a subsidiary or, “under the single

4

enterprise rule, . . . between sister or affiliated companies.”

5

Id. at 1341 (citation and internal quotation and editing marks

6

omitted).

7

allegations that the EmpRes Entities make decisions for Evergreen

8

Lakeport and the Evergreen Entities, that Evergreen Lakeport and

9

the Evergreen Entities “use . . . the [EmpRes] Entities to procure

Troyk v. Farmers Group,
The alter ego doctrine

As to the first prong, Plaintiff provides general

United States District Court
For the Northern District of California

10

labor, services and/or merchandise” for the SNFs and that

11

Defendants share officers, directors and employees.

12

These broad allegations are not sufficient to show a unity of

13

interest and ownership.

14

satisfy the second prong; she fails to allege facts to suggest that

15

an inequitable result will occur if the EmpRes and Evergreen

16

Entities are not held liable for her injuries.

17

Compl. ¶ 23.

Even if they were, Plaintiff does not

Plaintiff argues that, even if she does not have individual

18

claims against the EmpRes or Evergreen Entities, she nevertheless

19

should be able to assert claims against them for injuries they may

20

have caused putative class members.

21

link” doctrine and this Court’s decision in Cady v. Anthem Blue

22

Cross Life and Health Insurance Company, 583 F. Supp. 2d 1102 (N.D.

23

Cal. 2008).

24

analyses of adequacy and typicality, as required by Federal Rule of

25

Civil Procedure 23; it does not “apply to standing questions at the

26

pleading stage.”

27

*5-*8 (N.D. Cal.) (citing Forsythe v. Sun Life Fin., Inc., 417 F.

28

She invokes the “juridical

However, as Cady states, that doctrine pertains to the

Siemers v. Wells Fargo & Co., 2006 WL 3041090, at

9

Supp. 2d 100, 119 n.19 (D. Mass. 2006); Henry v. Circus Circus

2

Casinos, Inc., 223 F.R.D. 541, 544 (D. Nev. 2004)).

3

allegations that she suffered injury fairly traceable to the EmpRes

4

or Evergreen Entities’ conduct, Plaintiff lacks standing to bring

5

claims against them.

6

Co., 598 F.3d 1115, 1122 (9th Cir. 2010) (discussing requirements

7

for Article III standing) (citing Lujan v. Defenders of Wildlife,

8

504 U.S. 555, 560-61 (1992)).

9

not plead a sufficient factual basis for her assertion that her

10
United States District Court
For the Northern District of California

1

injuries were the result of any act by the EmpRes or Evergreen

11

Entities.

Absent

See Chandler v. State Farm Mut. Auto. Ins.

As explained above, Plaintiff does

12

Accordingly, the Court grants the EmpRes and Evergreen

13

Entities’ motion to dismiss Plaintiff’s section 1430(b) claims.

14

Plaintiff’s section 1430(b) claims against the EmpRes Entities are

15

dismissed with leave to amend to plead facts showing that they are

16

alter egos of Evergreen Lakeport.

17

Entities are dismissed without leave to amend.

Her claims against the Evergreen

18

B.

19

California's Unfair Competition Law (UCL) prohibits any

UCL Claims

20

“unlawful, unfair or fraudulent business act or practice.”

21

Bus. & Prof. Code § 17200.

22

treats violations of those laws as unlawful business practices

23

independently actionable under state law.

24

Life Ins. Co., 225 F.3d 1042, 1048 (9th Cir. 2000).

25

almost any federal, state or local law may serve as the basis for a

26

UCL claim.

27

838-39 (1994).

28

Cal.

The UCL incorporates other laws and

Chabner v. United Omaha
Violation of

Saunders v. Superior Court, 27 Cal. App. 4th 832,
In addition, a business practice may be “unfair or
10

1

fraudulent in violation of the UCL even if the practice does not

2

violate any law.”

3

827 (2003).

4

show that they “suffered an injury in fact” and “lost money or

5

property as a result of the unfair competition.”

6

Code § 17204.

7

standing for those who have not engaged in any business dealings

8

with would-be defendants.”

9

Cal. 4th 310, 317 (2011).

Olszewski v. Scripps Health, 30 Cal. 4th 798,

To have standing to bring a UCL claim, plaintiffs must

Cal. Bus. & Prof.

The purpose of section 17204 is to “eliminate

Kwikset Corp. v. Superior Court, 51

United States District Court
For the Northern District of California

10

Plaintiff’s UCL claims fail for the reasons stated above.

11

has not alleged that the EmpRes or Evergreen Entities caused her an

12

injury in fact.

13

business dealings with these Defendants.

14

Cal. App. 3d 169 (1972), and People v. Bestline Products, Inc., 61

15

Cal. App. 3d 879 (1976), are distinguishable and do not warrant a

16

different conclusion.

17

attorney general, who is not constrained by the standing

18

requirement contained in section 17204.

19

She

Her allegations do not suggest that she had any
People v. Witzerman, 29

These cases were brought by the California

Accordingly, the Court grants the EmpRes and Evergreen

20

Entities’ motion to dismiss Plaintiff’s UCL claims.

21

UCL claims against the EmpRes Entities are dismissed with leave to

22

amend to plead facts showing that they are alter egos of Evergreen

23

Lakeport.

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dismissed without leave to amend.

Plaintiff’s

Her UCL claims against the Evergreen Entities are

25

C.

26

“The CLRA makes unlawful certain ‘unfair methods of

27
28

CLRA Claims

competition and unfair or deceptive acts or practices’ used in the
11

1

sale of goods or services to a consumer.”

2

Group, Inc., 120 Cal. App. 4th 746, 753 (2003) (quoting Cal. Civ.

3

Code § 1770(a)).

4

plaintiffs to have standing to bring claims under the law.

5

1780(a) provides, “Any consumer who suffers any damage as a result

6

of the use or employment by any person of a method, act, or

7

practice declared to be unlawful by Section 1770 may bring an

8

action” under the CLRA.

9

must have been “exposed to an unlawful practice” and “some kind of

Like the UCL, the CLRA has a provision requiring

10
United States District Court
For the Northern District of California

Wilens v. TD Waterhouse

damage must result.”

11

Section

Thus, to pursue a CLRA claim, plaintiffs

634, 641 (2009).

Meyer v. Sprint Spectrum L.P., 45 Cal. 4th

12

Plaintiff has not alleged that the EmpRes or Evergreen

13

Entities deceived her in the sale of services to her and that she

14

suffered damages as a result.

15

EmpRes and Evergreen Entities’ motion to dismiss Plaintiff’s CLRA

16

claims.

17

dismissed with leave to amend to plead facts showing that they are

18

alter egos of Evergreen Lakeport.

19

Evergreen Entities are dismissed without leave to amend.

20

II.

21

Accordingly, the Court grants the

Plaintiff’s CLRA claims against the EmpRes Entities are

Her CLRA claims against the

Evergreen Lakeport’s Motion to Dismiss
Evergreen Lakeport argues that Plaintiff’s case should not be

22

adjudicated, in part or in whole.

23

asserts that the Court should abstain from hearing all of

24

Plaintiff’s claims or, in the alternative, stay her case pursuant

25

to California’s primary jurisdiction doctrine.

26

is heard, Evergreen Lakeport asserts that her claims under section

27

California Health and Safety Code section 1430(b) and the CLRA must

28

12

First, Evergreen Lakeport

If Plaintiff’s case

1

be dismissed.

2

A.

3

Evergreen Lakeport argues that California’s equitable

4

abstention doctrine requires the Court to abstain from hearing

5

Plaintiff’s case.

6

California’s Equitable Abstention Doctrine

The judicially-created equitable abstention doctrine gives

7

courts discretion to abstain from deciding a UCL claim.

8

Healthcare Dist. v. PacifiCare FHP, Inc., 94 Cal. App. 4th 781, 795

9

(2001); see also Alvarado v. Selma Convalescent Hosp., 153 Cal. App

Desert

United States District Court
For the Northern District of California

10

4th 1292, 1297-98 (2007).

11

remedies available under the UCL, namely injunctions and

12

restitution, are equitable in nature.”

13

App. 4th at 795.

14

if: (1) resolving the claim requires “determining complex economic

15

policy, which is best handled by the legislature or an

16

administrative agency;” (2) “granting injunctive relief would be

17

unnecessarily burdensome for the trial court to monitor and enforce

18

given the availability of more effective means of redress;” or

19

(3) “federal enforcement of the subject law would be more orderly,

20

more effectual, less burdensome to the affected interests.”

21

Alvarado, 153 Cal. App. 4th at 1298 (citations and internal

22

quotation marks omitted).

23
24

Courts have such discretion “because the

Abstention under the doctrine may be appropriate

In Alvarado, the state appellate court concluded that, for two
reasons, the trial court did not abuse its discretion when it

25
26
27
28

Desert Healthcare, 94 Cal.

13

1

abstained from hearing the plaintiff’s UCL claims,5 which were

2

based on numerous skilled nursing facilities’ alleged failures to

3

satisfy section 1276.5(a)’s staffing requirements.

4

appellate court held that adjudicating Alvarado’s UCL claims “would

5

require the trial court to assume general regulatory powers over

6

the health care industry through the guise of enforcing the UCL, a

7

task for which the courts are not well-equipped.”

8

4th at 1304 (citation omitted).

9

of section 1276.5(a), according to Alvarado, demonstrate that it

First, the

153 Cal. App.

The language and statutory context

United States District Court
For the Northern District of California

10

“is a regulatory statute, which the Legislature intended the

11

[Department of Health Services] to enforce.”6

12

appellate court reasoned that determining compliance with the

13

staffing requirement, in a class action, would require a trial

14

court to make several determinations “better accomplished by an

15

administrative agency.”

16

court would need to “determine on a class-wide basis whether a

17

particular skilled nursing or intermediate care facility is

18

governed by section 1276.5 or 1276.9.”

19

trial court would be required to “calculate nursing hours for each

20

facility involved in this case,” which would entail classifying the

Id. at 1306.

Id. at 1304.

The

For instance, the trial

Id. at 1305.

Then, the

21
5

22
23
24
25
26
27
28

Alvarado brought three claims: “(1) unlawful business
practice in violation of Business and Professions Code section
17200; (2) unfair and fraudulent business practice in violation of
Business and Professions Code section 17200; and, (3) false
advertising in violation of Business and Professions Code [section]
17500.” Alvarado, 153 Cal. App. 4th at 1296.
6

Under the California Public Health Act of 2006, which took
effect in July 2007, some of the responsibilities of the former
Department of Health Services (DHS) were transferred to the newlyestablished CDPH. See generally S.B. 162 § 1, 2006 Cal. Legis.
Serv. Ch. 241.
14

1

employees of that facility.

2

1276.5(b) provides a different formula for skilled nursing

3

facilities with a capacity of sixty or more residents, “the court

4

would have to determine on a class-wide basis the size,

5

configuration and licensing status of skilled nursing and

6

intermediate care facilities.”

7

Id.

In addition, because section

Id. at 1306.

The second reason supporting abstention was the manageability
of injunctive relief.

9

trial court found various SNFs in violation of section 1276.5(a),

10
United States District Court
For the Northern District of California

8

“it would have to decide whether to issue networks of injunctions

11

across the State of California” and then “monitor and enforce

12

them.”

13

administering such relief would be “unnecessarily burdensome” for a

14

trial court.

15

petitioned for a writ of mandamus, compelling the administrative

16

agency to enforce section 1276.5(a)’s staffing requirement.

17

1306 n.5.

18

enforce of section 1276.5(a) on a class-wide basis and because

19

granting injunctive relief would be unnecessarily burdensome, the

20

Alvarado court concluded that the trial court acted within its

21

discretion to abstain.

22
23

The Alvarado court concluded that, if the

153 Cal. App. 4th at 1306.

Id.

According to Alvarado,

The court noted that the plaintiff could have

Id. at

Because an administrative agency was better suited to

Contrary to Evergreen Lakeport’s argument, Alvarado does not
mandate abstention.7

The court made clear that the issue before it

24
25
26
27
28

7

Reudy v. Clear Channel Outdoor, Inc., 2011 WL 1542978 (9th
Cir.), also does not require abstention. Reudy, which is not
precedential, merely reiterates that a court “may abstain from
employing the relief permitted by the UCL” under certain
circumstances. Id. at *1.
15

1

was whether “the trial court abused its discretion by abstaining

2

from adjudicating the alleged controversy,” not whether it would be

3

an abuse of discretion not to abstain.

4

at 1297.

5

district attorneys can bring claims against SNFs for alleged

6

violations of section 1276.5(a), id. at 1297 n.3, which suggests

7

that abstention is not mandatory.

8

same concerns of manageability posed by Alvarado’s suit.

9

Alvarado, 153 Cal. App. 4th

Indeed, Alvarado leaves open the possibility that

Such actions would raise the

Here, abstention is not currently warranted.

The analyses

United States District Court
For the Northern District of California

10

required to adjudicate Plaintiff’s UCL claim against Evergreen

11

Lakeport have not been shown to be overly complex, nor is there any

12

indication that enforcing injunctive relief against Evergreen

13

Lakeport would be unduly burdensome.

14

Even if abstention were appropriate as to Plaintiff’s UCL

15

claims, the equitable abstention doctrine does not afford the Court

16

discretion to abstain from hearing Plaintiff’s claims for damages

17

under section 1430(b) or the CLRA, which are legal remedies.

18

noted above, courts have discretion to abstain from UCL claims

19

because of its equitable remedies.

20

authority granting the Court discretion to decline jurisdiction

21

with respect to Plaintiff’s section 1430(b) and CLRA claims.

22

Accordingly, Evergreen Lakeport’s motion to dismiss

23

Plaintiff’s action based on California’s equitable abstention

24

doctrine is denied without prejudice to renewal if the

25

circumstances change.

As

Evergreen Lakeport offers no

26

B.

27

Under the primary jurisdiction doctrine, federal and state

28

16

Primary Jurisdiction Doctrine

1

courts may exercise discretion to stay an action pending “referral”

2

of the issues to an administrative body.8

3

1051; Farmers Ins. Exch. v. Superior Court, 2 Cal. 4th 377, 386-390

4

(1992).

5

cognizable in the courts, but is also subject to a regulatory

6

scheme that is enforced by an administrative body of special

7

competence.”

8

California state courts, ‘no rigid formula exists for applying the

9

primary jurisdiction doctrine.’”

Chabner, 225 F.3d at

The doctrine applies “when a claim is originally

Chabner, 225 F.3d at 1051.

“In federal and

Id. (quoting Farmers Ins., 2 Cal.

United States District Court
For the Northern District of California

10

4th at 391) (editing marks omitted).

11

“1) whether application will enhance court decision-making and

12

efficiency by allowing the court to take advantage of

13

administrative expertise; and 2) whether application will help

14

assure uniform application of regulatory laws.”

15

at 1051.

16

A court may consider

Chabner, 225 F.3d

Evergreen Lakeport does not establish that a stay under the

17

primary jurisdiction doctrine is necessary.

18

Plaintiff’s claims do not pose any novel issues or suggest a need

19

for the CDPH’s expertise.

20

case would not threaten the uniform application of California’s

21

regulatory laws.

22

Lakeport satisfies its obligation under section 1276.5(a)’s

23

staffing requirement does not appear to implicate technical or

The matters raised by

Furthermore, adjudication of Plaintiff’s

A judicial determination as to whether Evergreen

24
8

27

Although courts use the word “referral” to explain the
primary jurisdiction doctrine, this word “is perhaps not the most
accurate term to describe this process, as most statutes do not
authorize courts to require an agency to issue a ruling.” Clark v.
Time Warner Cable, 523 F.3d 1110, 1115 n.9 (9th Cir. 2008) (citing
Reiter v. Cooper, 507 U.S. 258, 268 n.3 (1993)).

28

17

25
26

1

policy determinations usually reserved to an administrative agency.

2

Clark, 523 F.3d at 1114.

3

CDPH is currently considering whether Evergreen Lakeport meets

4

nurse staffing requirements, or that it will do so in the future.

5
6
7

Finally, there is no evidence that the

Accordingly, Evergreen Lakeport’s motion to dismiss under the
primary jurisdiction doctrine is denied.
C.

Claim Under California Health and Safety Code Section
1430(b)

8
As stated above, section 1430(b) gives current or former
9
residents of an SNF a right to sue the licensee of that SNF for
United States District Court
For the Northern District of California

10
violations of “any rights of the resident or patient as set forth
11
in the Patients Bill of Rights in Section 72527 of Title 22 of the
12
California Code of Regulations, or any other right provided for by
13
federal or state law or regulation.”
14
Evergreen Lakeport argues that Plaintiff’s section 1430(b)
15
claim against it, to the extent it is based on allegations that
16
Evergreen Lakeport violated section 1276.5(a)’s minimum staffing
17
requirement, should be dismissed.

According to Evergreen Lakeport,

18
the minimum staffing requirement does not provide a right of action
19
under state law and, as a result, cannot give rise to a claim under
20
section 1430(b).
21
The parties cite no California authority addressing directly
22
which state laws or regulations create rights enforceable under
23
section 1430(b).

Lu v. Hawaiian Gardens, 50 Cal. 4th 592 (2010),

24
and Moradi-Shalal v. Fireman’s Fund Insurance Companies, 46 Cal. 3d
25
287 (1988), are not entirely on point.

Both cases address whether

26
certain state statutes give rise to private causes of action.
27
28

18

See

1

Lu, 50 Cal. 4th at 596; Moradi-Shalal, 46 Cal. 3d at 305.

2

Plaintiff asserts a cause of action under section 1430(b) to

3

enforce a right she claims to exist under section 1276.5(a); she

4

does not bring a cause of action under section 1276.5(a).

5

cases interpreting claims under 42 U.S.C. § 1983 are instructive on

6

this point.9

7

mechanism for enforcing individual rights ‘secured’ elsewhere.”

8

Gonzaga Univ. v. Doe, 536 U.S. 273, 285 (2002).

9

itself does not protect anyone against anything.’”

United States District Court
For the Northern District of California

10
11

Here,

Federal

Like section 1430(b), section 1983 “merely provides a

Section 1983 “‘by
Id. (quoting

Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 617 (1979)).
“A court’s role in discerning whether personal rights exist in

12

the § 1983 context should . . . not differ from its role in

13

discerning whether personal rights exist in the implied right of

14

action context.”

15

“whether a private right of action can be implied from a particular

16

statute” and whether a federal statute confers an right enforceable

17

under § 1983 share the common question of whether the legislature

18

“intended to confer individual rights upon a class of

19

beneficiaries.”

20

and structure of the statute and the legislative history.

21

also Lu, 50 Cal. 4th at 596 (discussing analysis of whether state

22

statute contains private right of action).

23

Gonzaga, 536 U.S. at 285.

Id.

The inquiries into

Such intent could be gleaned from the text
Id.; see

Plaintiff does not argue that section 1276.5(a) contains

24
9

25
26
27
28

Plaintiff argues that § 1983 cases are inapposite because
they address concerns over federalism. Although determining
whether Congress intended to confer a federal right may require an
analysis of the impact on the states, these cases’ teachings that
legislative intent must be considered do not rely on federalism
concerns.
19

1

explicit language conferring rights on SNF residents.

2

asserts that the “any other right” language contained in section

3

1430(b) is directed at any statute or regulation that pertains to

4

“patient care standards or resident welfare issues,” and that

5

section 1276.5(a) is such a statute.

6

Mot. to Dismiss 10:12.

7

which states that residents of SNFs have rights “as specified in

8

Health and Safety Code, Section 1599.1.”

9

§ 72527(24).

Instead, she

Opp’n to Evergreen Lakeport’s

She cites the Patients Bill of Rights,

Cal. Code Regs., tit. 22,

That statute provides several rights that are couched

United States District Court
For the Northern District of California

10

as obligations of an SNF, such as, “The facility shall employ an

11

adequate number of qualified personnel to carry out all of the

12

functions of the facility.”

13

Plaintiff also cites a legislative committee report on AB 2791, the

14

2004 assembly bill that amended section 1430(b) by, among other

15

things, adding the “any other right” language to the statute.

16

generally Pl.’s RJN, Ex. C.10

17

the inclusion of this language.

18

raise the statutory penalty for violations of section 1430(b) from

19

$500 to $5,000, in order to provide further financial incentives

20

for residents to enforce their rights through civil actions.11

Cal. Health & Safety Code § 1599.1(a).

See

The report, however, does not discuss
It addresses only a proposal to

This

21
10

22
23
24
25

Plaintiff asks the Court to take judicial notice of a
summary by the California Assembly Committee on Health of AB 2791,
which amended California Health and Safety Code section 1470(b).
Because Defendants do not oppose the request and the fact that the
committee issued the report is “capable of accurate and ready
determination by resort to sources whose accuracy cannot reasonably
be questioned,” the Court GRANTS Plaintiff’s request. Fed. R.
Evid. 201.

26

11

27

According to the author, this bill is necessary because,

28

In relevant part, the report states,

20

1
2

proposal was never adopted.
The Patients Bill of Rights and the legislative history of the

3

2004 amendments indicate that section 1276.5(a) may be enforced

4

through a civil action under section 1430(b).

5

resident of an SNF has a right to the facility employing “an

6

adequate number of qualified personnel” to perform the facility’s

7

functions.

8

1276.5(a) provides an objective measure of what constitutes

9

“adequate.”

As noted above, a

Cal. Health & Safety Code § 1599.1(a).

Section

Further, the 2004 amendments were intended to expand

United States District Court
For the Northern District of California

10

private enforcement of residents’ rights based on the bill author’s

11

concern that enforcement by CDPH would be constrained by financial

12

and demographic pressures in the coming years.

13

C, at AP12.

14

not preclude residents from doing so.

15
16

See Pl.’s RJN, Ex.

Thus, that the CDPH may enforce section 1276.5(a) does

Evergreen Lakeport argues that section 1276.5(a) does not
confer an individual right because it does not have an individual

17
18
19
20
21
22
23
24
25
26
27
28

despite numerous deficiencies reported by the Department
of Health Services every year and thousands of unresolved
complaints received by the Ombudsman, SNF residents have
not exercised their private right of action under current
law which limits a nursing home’s liability to $500. The
author states that current law intended to provide a
specific mechanism for an individual resident to enforce
his or her rights through a private right of
action. . . . The author notes that the State is facing
severe health care cost pressures that are likely to
continue and that the number of seniors in California is
expected to double in the next 15 years. With such cost
and demographic pressures, the author believes that state
functions such as licensing and certification of health
facilities may suffer, and it thus becomes more important
than ever to ensure that residents’ rights be respected
and enforced.
Pl.’s RJN, Ex. C, at AP11-12.
21

1

focus.

2

which confers rights on residents but is phrased, in part, as

3

obligations imposed on SNFs.

4

because section 1276.5(a) is regulatory in nature, it cannot confer

5

an enforceable right.

6

so-called “regulatory statute” confers rights depends on the intent

7

underlying the law.

8

353, 375 (2004) (“The question of whether a regulatory statute

9

creates a private right of action depends on legislative intent.”).

United States District Court
For the Northern District of California

10
11

This argument, however, is undermined by section 1599.1,

Evergreen Lakeport also argues that,

This is incorrect.

Determining whether a

Goehring v. Chapman Univ., 121 Cal. App. 4th

Accordingly, Evergreen Lakeport’s motion to dismiss
Plaintiff’s section 1430(b) claim is denied.

12

D.

13

As noted above, the CLRA prohibits “deceptive acts or

14

practices undertaken by any person in a transaction intended to

15

result or which results in the sale or lease of goods or services

16

to any consumer.”

17

contends that Plaintiff’s CLRA claim fails a matter of law because

18

the CLRA does not encompass services provided by an SNF.

19

the CLRA defines “services” to mean “work, labor, and services for

20

other than a commercial or business use, including services

21

furnished in connection with the sale or repair of goods.”

22

§ 1761(b).

23

definition.

24

life insurance coverage, mortgages, credit cards, computer

25

software, securities, and services related to real estate

26

transactions do not warrant a contrary conclusion.

27
28

CLRA Claim

Cal. Civ. Code § 1770(a).

Evergreen Lakeport

However,

Id.

Health services, provided by SNFs, fall within this
The cases cited by Evergreen Lakeport, which concern

Plaintiff, however, fails to plead her CLRA claim with
22

1

sufficient specificity.

2

subject to the heightened pleading requirements of Federal Rule of

3

Civil Procedure 9(b).

4

1125-26 (9th Cir. 2009).

5

the circumstances constituting fraud or mistake shall be stated

6

with particularity.”

7

must be “specific enough to give defendants notice of the

8

particular misconduct which is alleged to constitute the fraud

9

charged so that they can defend against the charge and not just

Because the claim sounds in fraud, it is

Kearns v. Ford Motor Co., 567 F.3d 1120,
“In all averments of fraud or mistake,

Fed. R. Civ. Proc. 9(b).

The allegations

United States District Court
For the Northern District of California

10

deny that they have done anything wrong.”

11

F.2d 727, 731 (9th Cir. 1985).

12

nature of the alleged fraudulent activities are sufficient, id. at

13

735, provided the plaintiff sets forth “what is false or misleading

14

about a statement, and why it is false.”

15

Secs. Litig., 42 F.3d 1541, 1548 (9th Cir. 1994).

16

averred generally, simply by saying that it existed.

17

see Fed. R. Civ. Proc. 9(b) (“Malice, intent, knowledge, and other

18

condition of mind of a person may be averred generally.”).

19

Allegations of fraud based on information and belief usually do not

20

satisfy the particularity requirements of Rule 9(b); however, as to

21

matters peculiarly within the opposing party’s knowledge,

22

allegations based on information and belief may satisfy Rule 9(b)

23

if they also state the facts upon which the belief is founded.

24

Wool v. Tandem Computers, Inc., 818 F.2d 1433, 1439 (9th Cir.

25

1987).

26
27
28

Semegen v. Weidner, 780

Statements of the time, place and

In re GlenFed, Inc.,
Scienter may be
Id. at 1547;

Plaintiff does not identify, with any specificity, the basis
of her CLRA claim.

She states generally that Evergreen Lakeport,
23

1

in “promotional materials, admission agreements, submissions made

2

to DHS and other materials disseminated to the public,” represents

3

that its facilities “provide sufficient and lawful staffing.”

4

Compl. ¶ 75; see also id. ¶¶ 37-38.

5

circumstances in which she viewed these materials or what was false

6

about them.

7

for failure to plead in accordance with Rule 9(b).

Accordingly, Plaintiff’s CLRA claim must be dismissed

8
9

She does not allege the

CONCLUSION
For the foregoing reasons, the Court GRANTS Defendants’ motion

United States District Court
For the Northern District of California

10

for leave to file the additional authority of Reudy v. Clear

11

Channel Outdoor, Inc. (Docket No. 46), DENIES without prejudice the

12

EmpRes Entities’ Rule 12(b)(2) motion to dismiss (Docket No. 22),

13

GRANTS the EmpRes and Evergreen Entities’ Rule 12(b)(6) motion to

14

dismiss (Docket No. 25) and GRANTS in part Evergreen Lakeport’s

15

motion to dismiss and DENIES it in part (Docket No. 23).

16

Plaintiff’s claims against the EmpRes Entities are dismissed with

17

leave to amend to plead facts showing that they are alter egos of

18

Evergreen Lakeport.

19

dismissed without leave to amend.

20

Evergreen Lakeport is dismissed with leave to amend to allege facts

21

as required by Rule 9(b).

22

Lakeport’s motion is denied.

23

Her claims against the Evergreen Entities are
Plaintiff’s CLRA claim against

In all other respects, Evergreen

If Plaintiff intends to file an amended complaint, she shall

24

do so within fourteen days from the date of this Order.

25

amended complaint is filed, the EmpRes Entities and Evergreen

26

Lakeport shall answer or move to dismiss it fourteen days after it

27

is filed.

28

If an

Plaintiff shall file her opposition to any motion to
24

1

dismiss fourteen days after it is filed.

2

shall be due seven days after Plaintiff files her opposition.

3

motion to dismiss will be decided on the papers.

4

Evergreen Lakeport, leave to amend is limited to Plaintiff’s CLRA

5

claim.

6

chooses to file one, may concern only Plaintiff’s CLRA claim.

7

Any reply, if necessary,
Any

With respect to

Accordingly, Evergreen Lakeport’s motion to dismiss, if it

Plaintiff’s section 1430(b) and UCL claims against Evergreen

8

Lakeport are cognizable.

9

Lakeport has to answer these claims.

The Court extends the time Evergreen
Evergreen Lakeport’s answer

United States District Court
For the Northern District of California

10

shall be due fourteen days after the Court enters an order on any

11

motion to dismiss a first amended complaint.

12

file an amended pleading, Evergreen Lakeport’s answer shall be due

13

twenty-eight days from the date of this Order.

14
15
16

If Plaintiff does not

The case management conference, currently set for July 14,
2011, is continued to July 26, 2011 at 2:00 p.m.
IT IS SO ORDERED.

17
18

Dated: 5/25/2011
CLAUDIA WILKEN
United States District Judge

19
20
21
22
23
24
25
26
27
28

25