Hu v. The Guardian Life Insurance Company of America

Filing 20

Order by Judge Lucy H. Koh Sua Sponte Remanding Case and Denying as Moot 6 Motion to Dismiss.(lhklc2, COURT STAFF) (Filed on 10/24/2017) (Additional attachment(s) added on 10/24/2017: # 1 Certificate/Proof of Service) (iym, COURT STAFF).

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 SAN JOSE DIVISION United States District Court Northern District of California 11 12 JASON HU, Plaintiff, 13 16 ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS v. 14 15 Case No. 17-CV-04098-LHK THE GUARDIAN LIFE INSURANCE COMPANY OF AMERICA, Defendant. 17 18 Plaintiff Jason Hu (“Plaintiff”), proceeding pro se, brings an action for violation of Cal. 19 Ins. Code § 10277(b) against The Guardian Life Insurance Company of America (“Defendant”). 20 ECF No. 1-1 at 3–7. Before the Court is Defendant’s motion to dismiss. ECF No. 6. The Court 21 finds this matter suitable for decision without oral argument under Civil Local Rule 7-1(b) and 22 hereby VACATES the motion hearing set for November 2, 2017 at 1:30 p.m. and the case 23 management conference set for November 22, 2017 at 2:00 p.m. Having considered the 24 submissions of the parties, the relevant law, and the record in this case, the Court hereby ORDERS 25 that this case be remanded to Santa Clara County Superior Court for lack of subject matter 26 jurisdiction. Accordingly, the Court DENIES as moot Defendant’s motion to dismiss. 27 I. 28 BACKGROUND 1 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS On June 20, 2017, Plaintiff filed a Claim and Order to Go to Small Claims Court 1 2 (“Complaint”) against Defendant in Santa Clara County Superior Court. ECF No. 1-1 at 3–7. 3 Plaintiff alleged that Defendant violated Cal. Ins. Code § 10277(b) by failing to give Plaintiff 4 advance notice that under Plaintiff’s group health insurance policy issued by Defendant, coverage 5 of Plaintiff’s dependent son would be terminated on May 30, 2016. Id. at 4. Plaintiff sought 6 $1525.00—the “doctor’s bill” for two claims—in damages. Id. Defendant timely removed this case to federal court on July 20, 2017.1 ECF No. 1 7 8 (“Notice of Removal”). Then, on July 26, 2017, Defendant filed the instant motion to dismiss. 9 ECF No. 6. Plaintiff failed to timely file a consent or declination to proceed before a magistrate judge, and to timely respond to Defendant’s motion to dismiss. Thus, on August 11, 2017, 11 United States District Court Northern District of California 10 Magistrate Judge Nathanael Cousins ordered Plaintiff to “show cause why the action should not be 12 dismissed for failure to prosecute” and to “consent[] to or declin[e] the jurisdiction of a magistrate 13 judge” by August 25, 2017. ECF No. 9. Plaintiff failed to timely respond to Judge Cousins’s 14 August 11, 2017 order to show cause. On August 28, 2017, Judge Cousins requested that this case 15 be randomly reassigned to a District Court Judge and recommended “that the newly assigned 16 judge dismiss this case unless [Plaintiff] demonstrates an interest in pursuing his case.” ECF No. 17 10 at 1. The next day, on August 29, 2017, this case was reassigned to this Court. ECF No. 11. On 18 19 September 7, 2017, within the 14-day period for Plaintiff to file objections to Judge Cousins’s 20 recommendation, a letter from Plaintiff dated September 3, 2017 was filed. ECF No. 13. In the 21 letter, Plaintiff (1) asked this Court not to dismiss his case; (2) stated that Plaintiff could not 22 respond to Judge Cousins’s August 11, 2017 order to show cause by the August 25, 2017 deadline 23 because Plaintiff did not receive the order to show cause until August 30, 2017; and (3) requested 24 “this case [] be returned to” Santa Clara County Superior Court. ECF No. 13. Because Plaintiff’s 25 letter “demonstrate[d] an interest in pursuing his case,” this Court declined to adopt Judge 26 27 28 1 Exhibit 1 to Defendant’s Notice of Removal states that service of process on Defendant was completed on June 22, 2017. ECF No. 1-1 at 2. 2 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS 1 Cousins’s recommendation to dismiss Plaintiff’s case for failure to prosecute. ECF No. 14 at 2. Subsequently, on September 13, 2017, Defendant filed a “Reply to Plaintiff’s September 3, 2 3 2017 Letter.” ECF No. 15. On September 28, 2017, Plaintiff filed a “Response” to Defendant’s 4 reply. ECF No. 19. 5 II. LEGAL STANDARD A suit may be removed from state court to federal court only if the federal court would 7 have had subject matter jurisdiction over the case. 28 U.S.C. § 1441(a); see Caterpillar Inc. v. 8 Williams, 482 U.S. 386, 392 (1987) (“Only state-court actions that originally could have been filed 9 in federal court may be removed to federal court by the defendant.”). “In civil cases, subject 10 matter jurisdiction is generally conferred upon federal district courts either through diversity 11 United States District Court Northern District of California 6 jurisdiction, 28 U.S.C. § 1332, or federal question jurisdiction, 28 U.S.C. § 1331.” Peralta v. 12 Hispanic Bus., Inc., 419 F.3d 1064, 1068 (9th Cir. 2005). If it appears at any time before final 13 judgment that the federal court lacks subject matter jurisdiction, the federal court must remand the 14 action to state court. 28 U.S.C. § 1447(c). The party seeking removal bears the burden of establishing federal jurisdiction. Provincial 15 16 Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir.2009). “The removal 17 statute is strictly construed, and any doubt about the right of removal requires resolution in favor 18 of remand.” Moore–Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir.2009) (citing 19 Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992)). 20 III. 21 DISCUSSION Federal courts “are obligated to consider sua sponte whether [they] have subject matter 22 jurisdiction.” Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir.2004). This “independent 23 obligation” exists “even if the issue is neglected by the parties.” Allstate Ins. Co. v. Hughes, 358 24 F.3d 1089, 1093 (9th Cir.2004). Here, Plaintiff has not filed a motion to remand, but has 25 requested in his September 3, 2017 letter to the Court that “this case [] be returned to” Santa Clara 26 County Superior Court. ECF No. 13. The Court concludes, for the reasons stated below, that it 27 lacks subject matter jurisdiction over this action. Accordingly, the Court must remand this action 28 3 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS 1 2 to Santa Clara County Superior Court and deny as moot Defendant’s motion to dismiss. A. Subject Matter Jurisdiction 3 Defendant removed this case from state court on the basis of federal question jurisdiction. 4 Notice of Removal at 2. For the Court to have federal question jurisdiction over a complaint, the 5 complaint must arise under federal law. 28 U.S.C. § 1331. Generally speaking, “[a] cause of 6 action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of 7 federal law.” Hansen v. Blue Cross of Cal., 891 F.2d 1384, 1386 (9th Cir. 1989). “The well- 8 pleaded complaint rule is the basic principle marking the boundaries of the federal question 9 jurisdiction of the federal district courts.” Met. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987) (internal quotation marks omitted). Plaintiff's FAC, like Plaintiff's Complaint, asserts only state 11 United States District Court Northern District of California 10 law claims. Generally, a complaint that asserts only state law claims does not arise under federal 12 law. Id. 13 Here, Plaintiff’s Complaint asserts only one claim against Defendant—a state law cause of 14 action for violation of Cal. Ins. Code § 10277(b). However, Defendant argues that Plaintiff’s state 15 law claim is completely preempted by the Employee Retirement Income Security Act (“ERISA”) 16 of 1974, and cites 29 U.S.C. § 1132(a). Notice of Removal at 3. In rare circumstances, “Congress 17 may so completely pre-empt a particular area [of law]” that a state law claim arising from this area 18 of law “is necessarily federal in character.” Met. Life Ins., 481 U.S. at 63–64. Thus, a completely 19 preempted state law claim inherently arises under federal law, conferring federal question 20 jurisdiction and allowing removal from state court to federal court. The Court thus considers 21 whether Plaintiff’s state law cause of action for violation of Cal. Ins. Code § 10277(b) is 22 completely preempted by ERISA under 29 U.S.C. § 1132(a). 23 ERISA is a “comprehensive legislative scheme” intended to protect the interests of 24 participants in employee benefit plans and their beneficiaries. Aetna Health Inc. v. Davila, 542 25 U.S. 200, 208 (2004). One distinctive feature of ERISA is the integrated enforcement mechanism 26 provided under 29 U.S.C. § 1132(a), which provides ten “carefully integrated civil enforcement 27 provisions.” Id. (quoting Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54 (1987)). Congress 28 4 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS 1 “clearly manifested an intent to completely preempt causes of action within the scope of § 2 1132(a), thereby making such causes of action removable to federal court.” Met. Life Ins., 481 3 U.S. at 66. 4 Under Davila, however, a state law cause of action is completely preempted under 29 5 U.S.C. § 1132(a) only “if (1) ‘an individual, at some point in time, could have brought [the] claim 6 under [§ 1132(a)(1)(B)],’ and (2) ‘where there is no other independent legal duty that is implicated 7 by a defendant’s actions.’” Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 8 946 (9th Cir. 2009) (alteration in original) (quoting Davila, 542 U.S. at 210). Because Davila’s 9 two-pronged test is stated “in the conjunctive,” a state law cause of action is preempted “only if 10 United States District Court Northern District of California 11 both prongs of the test are satisfied.” Id. at 947. At a minimum, here, the second prong is not satisfied. As in Marin General Hospital, 12 Plaintiff’s claim does not “rely on, and [is] independent of, any duty under an ERISA plan.” 581 13 F.3d at 949. Again, Plaintiff asserts that Defendant violated Cal. Ins. Code § 10277(b). Section 14 10277(b) states that if a “group health insurance policy . . . provides that coverage of a dependent 15 child of an employee or other member of the covered group” will terminate when the dependent 16 child reaches a “limiting age . . . specified in the policy,” the insurer “shall notify the employee or 17 member” of such coverage termination “at least 90 days prior to the date the child attains the 18 limiting age.” Cal. Ins. Code § 10277(a)–(b). Thus, § 10277(b) creates “some other independent 19 legal duty beyond that imposed by” Plaintiff’s insurance policy with Defendant—namely, a duty 20 to provide advance notice of certain coverage terminations. Marin Gen. Hosp., 581 F.3d at 949. 21 As a result, Plaintiff’s claim “based on that duty is not completely preempted under [29 U.S.C. § 22 1132(a)].” 23 In its Notice of Removal and “Reply to Plaintiff’s September 3, 2017 Letter,” Defendant 24 characterizes Plaintiff’s action as a “claim for [] benefits” and “essentially” a claim “for improper 25 denial of Plan benefits.” Notice of Removal at 2; ECF No. 15 at 4. The Court disagrees with 26 Defendant’s characterization of Plaintiff’s claim. Although it is true that Plaintiff appears to seek 27 damages in an amount equal to certain benefits provided by the insurance policy that Defendant 28 5 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS issued, see ECF No. 1-1 at 4, Plaintiff does not assert that he is entitled to those damages because 2 Defendant improperly denied benefits under the insurance policy and therefore breached a duty 3 imposed by the policy. Instead, Plaintiff alleges that he is entitled to those damages because 4 Defendant breached a statutory duty that was independent of any duty imposed by the insurance 5 policy. As the Ninth Circuit explained in Marin General Hospital, under Davila’s second prong, 6 “we ask only whether ‘there is no other independent legal duty that is implicated’ by a defendant’s 7 actions. We do not ask whether that legal duty provides for a similar remedy, such as the payment 8 of money.” 581 F.3d at 950 (quoting Davila, 542 U.S. at 210). Thus, the fact that Plaintiff seeks a 9 remedy similar to what one would seek in a claim for breach of insurance contract has no bearing 10 on whether the second prong of Davila is met in this case. Instead, the fact that Plaintiff’s claim is 11 United States District Court Northern District of California 1 based on a statutory duty that is independent of any duties imposed by the insurance policy 12 demonstrates that Davila’s second prong has not been satisfied. 13 Accordingly, the Court finds that Defendant has not carried its burden to show that 14 Plaintiff’s complaint arises under federal law. As there is no original federal jurisdiction under 28 15 U.S.C. § 1331, removal jurisdiction was improperly exercised and the action must be remanded to 16 state court. 28 U.S.C. § 1447(c). 17 B. Motion to Dismiss As the Court lacks subject matter jurisdiction over this action, the Court must deny as moot 18 19 Defendant’s motion to dismiss. See Alderman v. Pitney Bowes Mgmt. Servs., 191 F. Supp. 2d 20 1113, 1116 (N.D. Cal. 2002) (explaining that a “court’s decision to remand renders moot [a 21 defendant’s] motion to dismiss”). 22 IV. 23 CONCLUSION For the foregoing reasons, the Court hereby ORDERS that this case be remanded to Santa 24 Clara County Superior Court for lack of subject matter jurisdiction. The Court also DENIES as 25 moot Defendant’s motion to dismiss. 26 IT IS SO ORDERED. 27 28 6 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS 1 2 3 Dated: October 24, 2017 ______________________________________ LUCY H. KOH United States District Judge 4 5 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 Case No. 17-CV-04098-LHK ORDER SUA SPONTE REMANDING CASE AND DENYING AS MOOT MOTION TO DISMISS

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