Wickens v. Blue Cross of California, Inc. et al

Filing 26

ORDER Remanding Case to State Court. The Court Remands this case to state court for lack of subject matter jurisdiction. The hearing date set for July 17, 2015 is vacated. The Clerk of Court shall close the case. Signed by Judge Gonzalo P. Curiel on 7/14/2015. (CC: Superior Court, San Diego County, North Division) (srm)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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STEVE WICKENS, individually and
on behalf of others similarly situated,
vs.

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ORDER REMANDING CASE TO
STATE COURT

Blue Cross of California, Inc., d/b/a
Anthem Blue Cross; Anthem Blue
Cross Life and Health Insurance
Company,
Defendants.

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Plaintiff,

CASE NO. 15cv834-GPC(JMA)

Before the Court is an order to show cause why the case should not be remanded
for lack of subject matter jurisdiction. (Dkt. No. 22.) Defendants filed a response on
July 2, 2015. (Dkt. No. 23.) Plaintiff filed a reply on July 10, 2015. (Dkt. No. 24.)
Based on the reasoning below, the Court REMANDS the case to state court for lack of
subject matter jurisdiction.
Discussion
On March 16, 2015, Plaintiff Steve Wickens (“Plaintiff”) filed a class action
complaint against Defendants Blue Cross of California Inc. d/b/a Anthem Blue Cross;
and Anthem Blue Cross Life and Health Insurance Company in San Diego Superior
Court for state law causes of action based on Defendants’ failure to secure and
safeguard Plaintiff’s personal identifying information.
According to the complaint, on February 4, 2015, Anthem, Inc., a related entity,
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[15cv834-GPC(JMA)]

1 announced that cyber hackers had gained unauthorized access to its information
2 technology system exposing the name, personal information, birthday, Social Security
3 number, health care ID number, income data, employment data, street address, email
4 address, and other personal details of about 80 million current and former customers
5 and employees. (Dkt. No. 1-2, Compl. ¶ 4.) The class action complaint alleges causes
6 of action for breach of contract, violation of the California Records Act, violation of
7 the California unfair competition laws, negligence, invasion of privacy, public
8 disclosure of private facts, and unjust enrichment. (Dkt. No. 1-2, Compl.)
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On April 15, 2015, Defendants removed the case to this Court under the Class

10 Action Fairness Act, (“CAFA”). (Dkt. No. 1, Notice of Removal at 6.) On April 24,
11 2015, the case was transferred to the undersigned judge pursuant to the low number
12 rule. See Local Civ. R. 40.1. (Dkt. No. 7.) On May 5, 2015, Plaintiff filed a motion
13 to remand. (Dkt. No. 8.) On May 7, 2015, Defendants filed a motion to stay, or in the
14 alternative, for an extension of time to respond pending ruling on transfer motion
15 pursuant to 28 U.S.C. § 1407.1 (Dkt. No. 11.)
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On June 18, 2015, the Court denied Plaintiff’s motion to remand and granted

17 Plaintiff leave to file an amended complaint, and denied Defendants’ motion to stay as
18 moot.2 (Dkt. No. 20.) The Court concluded that while Defendants demonstrated that
19 there was minimal diversity to support CAFA jurisdiction because Plaintiff alleged
20 “residents” of California in the class description, the Court granted Plaintiff leave to
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28 U.S.C. § 1407 provides in relevant parts, “(a) When civil actions involving
one or more common questions of fact are pending in different districts, such actions
23 may be transferred to any district for coordinated or consolidated pretrial proceedings.
Such transfers shall be made by the judicial panel on multidistrict litigation authorized
24 by this section upon its determination that transfers for such proceedings will be for the
convenience of parties and witnesses and will promote the just and efficient conduct
25 of such actions.” 28 U.S.C. § 1407.
During the pendency of the motions, on June 8, 2015, the United States
Judicial Panel on Multidistrict Litigation (“JPML”) in the case of In Re: Anthem, Inc.
27 Customer Data Security Breach Litigation transferred 16 cases to the United States
District Court for the Northern District of California and assigned the case to District
28 Judge Luch H. Koh for coordinated or consolidated pretrial proceedings pursuant to
28 U.S.C. § 1407. (MDL Case No. 2617, Dkt. No. 262.)
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1 amend the complaint to change the term “residents” of California to “citizens” of
2 California in the class description. (Id. at 9.) While citizenship of the plaintiff class
3 is determined on the date the case became removable, the Court concluded that the
4 change from “resident” to “citizens” of California constituted a clarification and not an
5 amendment. (Id. at 11.)
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On June 19, 2015, Plaintiff filed an amended complaint changing the term

7 “residents” to “citizens” in the class description. (Dkt. No. 21.) On June 22, 2015, the
8 Court set an order to show cause hearing why the case should not be remanded for lack
9 of subject matter jurisdiction. (Dkt. No. 22.) Defendants present two arguments in
10 response.
11 A.

Complete Preemption

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First, Defendants argue the Court has subject matter jurisdiction because the

13 breach of contract claim is completely preempted by the exclusive civil enforcement
14 provisions of the Employee Retirement Income Security Act (“ERISA”) because
15 Plaintiff is insured under an ERISA plan. Plaintiff opposes arguing that Defendants’
16 new allegation of federal question is untimely and not proper. Moreover, even if the
17 Court considered the preemption argument, it is without merit since the claims assert
18 an independent legal duty irrespective of the ERISA plan.
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1.

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The Ninth Circuit has held that a defendant must state the basis for removal

Timeliness of New Allegation

21 jurisdiction in the petition for removal which must be filed within thirty days of
22 receiving the complaint. O’Halloran v. Univ. of Washington, 856 F.2d 1375, 1381 (9th
23 Cir. 1988) (citing Barrow Dev. Co. v. Fulton Ins. Co., 418 F.2d 316, 317 (9th Cir.
24 1969) (denying leave to amend the removal petition because a removal petition cannot
25 be thereafter amended to allege substantial changes and can only be amended to clarify
26 “‘defective allegations’ of jurisdiction previously made”)).
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Here, the notice of removal was timely filed on April 15, 2015. (Dkt. No. 1,

28 Notice of Removal ¶¶ 9-10.) Defendants removed the action under CAFA. (Id. ¶ 14.)
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1 Defendants now raise a new argument not raised in the notice of removal that the Court
2 has subject matter jurisdiction under ERISA. Based on the cases cited, Defendants
3 cannot now raise a new basis for the Court’s federal jurisdiction. Defendants’
4 argument as to ERISA preemption is without merit.
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Even if the Court were to consider Defendants’ preemption argument, it still

Merits of Complete Preemption

7 does not demonstrate that the Court has subject matter jurisdiction. Defendants argue
8 that the express and implied breach of contract claim are completely preempted3 by
9 ERISA as the claim seeks to enforce rights under an ERISA plan. Plaintiff contends
10 that his claims assert generally that when an entity acquires private personal
11 information of an individual, it has a duty to safeguard that information.
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§ 502(a)(1)(B) of ERISA provides:

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A civil action may be brought—(1) by a participant or beneficiary—.
. . (B) to recover benefits due to him under the terms of his plan, to
enforce his rights under the terms of the plan, or to clarify his rights to
future benefits under the terms of the plan.

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16 29 U.S.C. § 1132(a)(1)(B). ERISA’s preemption clause states that ERISA “shall
17 supersede any and all State laws insofar as they may now or hereafter relate to any
18 employee benefit plan . . . .” 29 U.S.C. § 1144(a).

The purpose of ERISA is to provide

19 a uniform regulatory regime over employee benefit plans. Aetna Health Inc. v. Davila,
20 542 U.S. 200, 208 (2004)
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The Ninth Circuit has adopted the two-prong “complete preemption” test

22 asserted in Davila. Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d
23 941, 946 (9th Cir. 2009). “Under Davila, a state-law cause of action is completely
24 preempted if (1) ‘an individual, at some point in time, could have brought [the] claim
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Defendants do not affirmatively assert they are arguing complete preemption
but because they cite to Aetna Health Inc. v. Davila, 542 U.S. 200, 208 (2004), the
27 Court assumes they are asserting complete preemption as opposed to conflict
preemption. See Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941,
28 944-45 (9th Cir. 2009) (noting a clear difference and different jurisdictional
consequences that result between the two kinds of preemption).
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1 under ERISA § 502(a)(1)(B),’ and (2) ‘where there is no other independent legal duty
2 that is implicated by a defendant’s actions.’” Id. (quoting Davila, 542 U.S. at 210.) A
3 state law cause of action is preempted by § 1132(a)(1)(B) only if both prongs of the test
4 are satisfied. Id. at 947.
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While Defendants cite to Davila, they do not address the two prong test.

6 Plaintiff addresses the two prong test although the argument on the first prong does not
7 address the issue of whether Plaintiff could have brought the claim under §
8 502(a)(1)(B). Because the Court concludes that the second prong has not been met, it
9 does not need to address the first prong. See Marin Gen. Hosp., 581 F.3d at 947 (since
10 two prong test is in the conjunctive, both prongs need to be satisfied).
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As to the second prong, Plaintiff asserts that his claims generally assert “that an

12 entity that acquires private personal information of an individual, as part of the entity’s
13 business, has a duty to safeguard that information. This obligation exists regardless of
14 whether an ERISA plan exists.” (Dkt. No. 24 at 12.) Therefore, he asserts a legal
15 obligation exists independent of the ERISA plan. The Court agrees.
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Plaintiff received his health insurance through Blue Cross and Blue Cross Life,

17 (Dkt. No. 21, FAC ¶ 1), and the parties do not dispute it is an ERISA plan. Plaintiff
18 asserts an express and implied breach of contract claim. (Dkt. No. 21, FAC ¶¶ 51-56.)
19 Although the breach of an express contract cause of action references the health
20 insurance plan provided by Defendants, it does not provide any provisions of the
21 contract that was breached. A careful look at Plaintiff’s claim reveals that it does not
22 relate to benefits under the plan and does not require an interpretation of the contract
23 for purposes of benefits. See Davila, 542 U.S. at 213.
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“No independent legal duty exists where interpretation of the terms of the

25 ERISA-regulated benefits plan forms an essential part of the claim and where the
26 defendant’s liability exists only due to its administration of the ERISA-regulated plan.”
27 Nielson v. Unum Life Ins. Co. of Amer., 58 F. Supp. 3d 1152, 1162 (W.D. Wash. 2014)
28 (quoting Davila, 542 U.S. at 213); Marin Gen. Hosp., 581 F.3d at 950 (“Since the
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1 state-law claims asserted in this case are in no way based on an obligation under an
2 ERISA plan, and since they would exist whether or not an ERISA plan existed, they
3 are based on ‘other independent legal dut[ies]’ within the meaning of Davila.”).
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§ 502(a) allows a party to “recover benefits due to him under the terms of his

5 plan, to enforce his rights under the terms of the plan, or to clarify his rights to future
6 benefits under the terms of the plan.” 29 U.S.C. § 1132(a)(1)(B). Here, Plaintiff does
7 not seek recovery regarding benefits under the plan. As to enforcing his rights under
8 the plan, Plaintiff does not allege any express provisions of the plan that were
9 breached. Lastly, Plaintiff does not seek to clarify his rights to future benefits under
10 the plan. Plaintiff’s breach of contract claim is not based on the interpretation of the
11 plan for benefits but based on an independent duty of an entity to protect the personal
12 information of individuals if such information is required to be provided to the entity.
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As stated by Plaintiff, the essence of the first amended complaint concerns the

14 obligation of Defendants to protect confidential and sensitive personal information
15 when such information is provided to Defendants upon enrolling in a plan. This is an
16 independent legal duty that would exist with or without the ERISA plan. See Marin
17 Gen. Hosp., 581 F.3d at 950. Accordingly, the Court concludes that since the second
18 prong has not been met, there is no complete preemption by ERISA. Therefore,
19 Defendants’ argument on complete preemption fails.
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Amendment to the Complaint

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Second, Defendants argue that the Court’s prior ruling allowing Plaintiff to

22 amend the complaint based on Weight v. Active Network, Inc., 29 F. Supp. 3d 1289,
23 1293 (S.D. Cal. 2014)4 , is not consistent with subsequent Ninth Circuit authority. They
24 argue that federal jurisdiction is only determined at the time of removal and nothing
25 filed afterwards affects jurisdiction. They also argue that Weight was based on the
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In Weight, District Judge Janis L. Sammartino concluded that the Plaintiff’s
revision from “residents of California” to “citizens of California” in an amended
28 complaint was a clarification rather than an amendment. Weight v. Active Network,
Inc., 29 F. Supp. 3d 1289, 1293 (S.D. Cal. June 26, 2014).
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1 Ninth Circuit’s former rule that there is a strict presumption against removal. Plaintiff
2 opposes.
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Defendants cite to Doyle v. OneWestBank, FSB, 764 F.3d 1097, 1098 (9th Cir.

4 2014), a case decided after Weight, in support but that case only addresses a general
5 proposition and does not address any of the issues in this case. In Doyle, after all
6 parties agreed to sever one plaintiff’s claim and transfer them to another court, the
7 remaining plaintiff was directed by the court to file a second amended complaint to
8 reflect the severance. Id. Then, the remaining plaintiff moved to remand the case to
9 state court under one of the exceptions to CAFA. Id. The district court granted the
10 motion to remand based on the allegations of citizenship alleged in the second amended
11 complaint. Id. The Ninth Circuit held that the district court’s determination of citizen
12 based on the second amended complaint, filed after the action had been removed, was
13 error. Id. The Ninth Circuit vacated and remanded the district court’s order remanding
14 the case to state court to allow the court to determine whether, considering the plaintiff
15 class as pleaded at the time of removal, any of the exceptions to CAFA applies. Id.
16 Doyle did not address any amendment or clarification by Plaintiff to support federal
17 jurisdiction or an exception to the rule that jurisdiction is determined at the time of
18 removal.
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Contrary to Defendants’ assertion that there is an absolute ban on looking at

20 post-removal filings or events to determine jurisdiction, the Ninth Circuit held recently
21 that a party is allowed to amend the complaint in order to clarify certain jurisdictional
22 facts related to the “local controversy” exception to CAFA. See Benko v. Quality Loan
23 Serv. Corp., –F.3d –, 2015 WL 3772885 (9th Cir. 2015) (“Where a defendant removes
24 a case to federal court under CAFA, and the plaintiffs amend the complaint to explain
25 the nature of the action for purposes of our jurisdictional analysis [local controversy
26 exception], we may consider the amended complaint to determine whether remand to
27 the state court is appropriate.”). While the Ninth Circuit has not specifically addressed
28 clarification or amendment to facts supporting minimal diversity post-removal, it has
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1 allowed post-removal amendments to clarify jurisdictional issues.
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In addition, Defendants argue that Weight is not consistent with Dart Cherokee

3 Operation Co. LLC v. Owens, 135 S. Ct. 547, 554 (2014) where the Supreme Court
4 held that there is no longer a strong presumption against removal jurisdiction in CAFA
5 cases. Defendants argue that since Weight stated the pre-Dart Cherokee rule on
6 presumption, then necessarily the court’s ultimate conclusion fails. The Court
7 disagrees. Despite the change in presumption under Dart Cherokee for CAFA cases,
8 the presumption does not appear to have been a key factor in the ruling in Weight.
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The Court reiterates its conclusion that the change from “residents” to “citizens”

10 of California in the class description is a clarification of the Court’s jurisdiction and
11 can be the basis to amend the complaint especially in this case where the Complaint
12 alleges claims against California based Defendants, alleges only California law causes
13 of action, and the class was intended to be limited to individuals who entered into
14 contracts with California corporations for future services in California. This is even
15 acknowledged by Defendants in the Notice of Removal. (Dkt. No. 1, Notice of
16 Removal ¶ 17 (“Apparently seeking to avoid this Court’s jurisdiction, the Complaint
17 does not name Anthem as a defendant.”) Accordingly, Defendants’ argument does not
18 compel the Court to alter its prior ruling.
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Conclusion
Based on the above, the Court REMANDS the case to state court for lack of

21 subject matter jurisdiction. The hearing date set for July 17, 2015 shall be vacated.
22 The Clerk of Court shall close the case.
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IT IS SO ORDERED.

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25 DATED: July 14, 2015
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HON. GONZALO P. CURIEL
United States District Judge

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