Tennessee Tractor, LLC on behalf of itself and the Tennessee Tractor, LLC Health and Welfare Benefit Plan et al v. WH Adminstrators, Inc.
Filing
84
ORDER DENYING DEFENDANT'S 60 MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT FOR FAILURE TO JOIN A NECESSARY AND INDISPENSABLE PARTY. Signed by Chief Judge S. Thomas Anderson on 8/22/18. (mbm)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
EASTERN DIVISION
______________________________________________________________________________
KERRY YOUNG, on behalf of
himself and all similarly situated
persons,
)
)
)
)
Plaintiff,
)
)
vs.
)
No. 1:17-cv-02829-STA-egb
)
WH ADMINISTRATORS, INC.,
)
)
Defendant.
)
______________________________________________________________________________
ORDER DENYING DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S FIRST
AMENDED COMPLAINT FOR FAILURE TO JOIN A NECESSARY AND
INDISPENSABLE PARTY
______________________________________________________________________________
Before the Court is Defendant WH Administrators, Inc.’s Motion to Dismiss for Failure
to Join a Necessary and Indispensable Party (ECF No. 60). Defendant seeks the dismissal of this
class action under Federal Rule of Civil Procedure 12(b)(7) because Plaintiff Kerry Young failed
to join his co-plaintiff and employer Tennessee Tractor, LLC, (“Tennessee Tractor”) and
insurance broker Jas. D. Collier & Co. (“Collier”). Plaintiff filed a Response in Opposition (ECF
No. 65) to Defendant’s Motion, asserting that neither Tennessee Tractor nor Collier is necessary
and indispensable to this case. For reasons set forth below, the Court agrees with Plaintiff.
Defendant’s Motion to Dismiss is therefore DENIED.
BACKGROUND
I.
Allegations of the Complaint
The following facts are alleged by Plaintiff in the Frist Amended Complaint
(“Complaint”). The Court repeats its recitation of those allegations from the Court’s Order
Granting in Part and Denying in Part Defendant’s Third Motion to Compel Arbitration (ECF No.
44) below.
Tennessee Tractor is a west Tennessee-based John Deere dealer engaged
in the sale and service of John Deere tractors, mowers, and their respective parts.
Tennessee Tractor also established the Tennessee Tractor LLC Health and
Welfare Benefit Plan (the “Plan”) for the benefit of its employees and their
eligible dependents. Young is and, at all times relevant to this lawsuit, was a fulltime employee of Tennessee Tractor. Defendant is and, at all times relevant to
this lawsuit, was a third-party provider of ERISA plan administration and claims
services. In February 2016, Defendant, through its own actions in Tennessee and
those of its agent and broker, marketed a self-funded group health plan in
Tennessee to Tennessee Tractor for the benefit of its employees. This health plan
would be and indeed was an employee welfare benefit plan as defined under
ERISA. On or about April 18, 2016, Tennessee Tractor entered into a Patient
Protection and Affordable Care Act Compliance Service Agreement (the
“Agreement”) with Defendant WH Administrators, Inc., to administer the Plan.
Under the Agreement, Defendant was to, among other things, ensure Tennessee
Tractor's compliance with the Patient Protection and Affordable Care Act and
administer the Plan. The Plan was to commence on June 1, 2016. Tennessee
Tractor was named as Plan Sponsor. Defendant was the duly appointed Plan
Administrator and named fiduciary. Tennessee Tractor's employees, including
Young, were participants in the Plan and therefore eligible to receive benefits
under it. Over the course of the parties’ contractual relationship, Tennessee
Tractor performed all of its duties and obligations under the Agreement. But in
December 2016, Defendant abruptly and without explanation ceased processing
or paying the claims of Tennessee Tractor's employees, including those of Young.
Tenn. Tractor, LLC v. WH Adm’rs, Inc., 2018 U.S. Dist. LEXIS 39617, at *4–5 (W.D. Tenn.
Mar. 12, 2018).
II.
Procedural Posture
The Court next repeats its description of the procedural posture of this case from its
Order Denying Defendant’s Motion for Stay Without Prejudice (ECF No. 68) below.
On November 10, 2017, Plaintiffs Tennessee Tractor, LLC, and Kerry
Young, on behalf of himself and all similarly situated persons, filed a class-action
Complaint (ECF No. 1) under [ERISA] against Defendant WH Administrators,
Inc. On November 27, 2017, Plaintiffs filed a still-pending Motion for
Preliminary Injunction (ECF No. 10). On December 4, 2017, Defendant filed a
Motion to Compel Arbitration (ECF No. 14). Then on December 11, 2017,
Plaintiffs filed an Amended Complaint (ECF No. 22), resulting in Defendants’ re2
filed Motion to Compel Arbitration (ECF No. 24). After the parties filed a
Response (ECF No. 25), a Reply (ECF No. 30), and a Sur-Reply (ECF No. 34),
the Court granted Defendant’s Motion to Compel Arbitration in Part (ECF No.
44) and compelled Tennessee Tractor to take its claims against Defendant to
arbitration. Defendant sought reconsideration of its Motion as to Kerry Young
and the other class Plaintiffs (ECF No. 46), which the Court denied in its April 13,
2018 Order (ECF No. 49).
Young v. WH Adm’rs, Inc., 2018 U.S. Dist. LEXIS 87762, at *1–2 (W.D. Tenn. May 25, 2018).
Since that time, the Court has rejected Defendant’s efforts to quash various subpoenas
because Defendant lacked standing to move the Court to do so (ECF No. 76), and the parties
agreed to a Consent Order that resolved the Motion for Preliminary Injunction (ECF Nos. 82 &
83).
LEGAL STANDARD
The Court must determine the indispensability of absent parties before ruling on the
merits of a case. See Keweenaw Bay Indian Cmty. v. Michigan, 11 F.3d 1341, 1348 (6th Cir.
1993) (citing Tankersley v. Albright, 514 F.2d 956, 966 (7th Cir. 1975)). Pursuant to Federal
Rule of Civil Procedure 12(b)(7), a defendant may move to dismiss a complaint for failure to
join a party under Federal Rule of Civil Procedure 19. Fed. R. Civ. P. 12(b)(7); 5C Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure § 1359 (3d ed. 2004) (“. . . Rule
12(b)(7) permits a motion to dismiss when there is an absent person without whom complete
relief cannot be granted . . . .”). In a motion to dismiss under Rule 12(b)(7), just as is the case
under Rule 12(b)(6), the Court accepts Plaintiff’s allegations as true and draws all reasonable
inferences in his favor. Nanko Shipping, USA v. Alcoa, Inc., 850 F.3d 461, 465 (D.C. Cir. 2017)
(citing Paiute-Shoshone Indians of the Bishop Cmty. v. City of Los Angeles, 637 F.3d 993, 996
n.1 (9th Cir. 2011)).
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The Court’s analysis under Rule 19 involves two steps: (1) the Court must determine
whether the absent parties are required parties; and if so, (2) the Court must determine whether,
in their absence, equity and good conscience require the case to be dismissed. Sch. Dist. v. Sec’y
of U.S. Dept. of Educ., 584 F.3d 253, 264–65 (6th Cir. 2009); see also Keweenaw Bay Indian
Cmty., 11 F.3d at 1345 (citing Local 670 v. Int’l Union, United Rubber, Cork, Linoleum and
Plastic Workers of Am., 822 F.2d 613, 618 (6th Cir. 1987)) (applying pre-2007 version of Rule
19). “If the answer to either question is no, then Rule 19 does not” require dismissal. Sch. Dist.,
584 F.3d at 265.
The first step of this inquiry is set out in Rule 19(a), which provides that an absent party
is required for joinder if
(A) in that person’s absence, the court cannot accord complete relief among
existing parties; or
(B) that person claims an interest relating to the subject of the action and is so
situated that disposing of the action in the person’s absence may:
(i) as a practical matter impair or impede the person’s ability to protect the
interest; or
(ii) leave an existing party subject to a substantial risk of incurring double,
multiple, or otherwise inconsistent obligations because of the interest.
Fed. R. Civ. P. 19(a). If the Court finds that an absent party is required but that joinder is not
feasible, then the Court must proceed to the second step, which is governed by Rule 19(b). Sch.
Dist., 584 F.3d at 264. Under that paragraph, the Court “must determine whether, in equity and
good conscience, the action should proceed among the existing parties or should be dismissed.”
Fed. R. Civ. P. 19(b). In doing so, the Court should consider the following factors:
(1) the extent to which a judgment rendered in the person’s absence might
prejudice that person or the existing parties;
(2) the extent to which any prejudice could be lessened or avoided by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
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(3) whether a judgment rendered in the person’s absence would be adequate; and
(4) whether the plaintiff would have an adequate remedy if the action were
dismissed for nonjoinder.
Fed. R. Civ. P. 19(b). Ultimately, however, “the burden is on the moving party ‘to show the
nature of the unprotected interests of the absent individuals [or organizations] and the possibility
of injury to them or that the parties before the court will be disadvantaged by their absence.’”
United States v. Sweeny, 418 F. Supp. 2d 492, 499 (S.D.N.Y. 2006) (quoting Wright & Miller,
supra, at § 1359).
The Supreme Court has opined that “the issue of joinder [under Rule 19] can be complex,
and determinations are case specific.” Republic of Phil. v. Pimentel, 553 U.S. 851, 863 (2008)
(citing Provident Tradesmens Bank & Trust Co. v. Patterson, 390 U.S. 102, 118–19 (1968)).
Thus, Rule 19 “is not to be applied in a rigid manner but should instead be governed by the
practicalities of the individual case.” Smith v. United Brotherhood of Carpenters & Joiners, 685
F.2d 164, 166 (6th Cir. 1982) (citing Patterson, 390 U.S. at 116 n.12). “Rule 19 calls for a
pragmatic approach; simply because some forms of relief might not be available due to the
absence of certain parties, the entire suit should not be dismissed if meaningful relief can still be
accorded.” Keweenaw Bay Indian Cmty., 11 F.3d at 1346 (quoting Local 670, 822 F.2d at 618).
ANALYSIS
Defendant argues that dismissal is warranted under Rule 12(b)(7) because, under Rule 19,
Tennessee Tractor and Collier are necessary and indispensable parties to this action. Plaintiff
responds that Defendant has failed to demonstrate, and indeed cannot demonstrate, that either
Tennessee Tractor or Collier are necessary to this action under Rule 19. The Court finds that
Defendant has failed to meet its burden of showing that an absent party is necessary and
indispensable to this litigation. Accordingly, dismissal is not warranted under Rule 12(b)(7).
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The issue before the Court is whether it can “accord complete relief among existing
parties.” Fed. R. Civ. P. 19(a)(1)(A). “Completeness is determined on the basis of those persons
who are already parties, and not as between a party and the absent person whose joinder is
sought.” Sch. Dist., 584 F. 3d at 265. Defendant argues that without the presence of Tennessee
Tractor, Collier, or both entities in this action, the Court cannot give complete relief. Defendant
first notes that “[w]here a claim is predicated on the failure of the plan to pay benefits under
ERISA, it is generally settled that the plan []or plan administrator [is] a necessary party.” WH
Admin., Inc.’s Mot. to Dismiss Pls.’ First Am. Compl. for Failure to Join a Necessary and
Indispensable Party, at 4, May 4, 2018, ECF No. 60 (citing Jass v. Prudential Health Care Plan,
88 F.3d 1482, 1490 (7th Cir. 1996); Daniel v. Eaton Corp., 839 F.2d 263, 266 (6th Cir. 1988)).
The Sixth Circuit noted in Daniel, however, that “[u]nless an employer is shown to control
administration of a plan, it is not a proper party defendant in an action concerning benefits.” 839
F.2d at 266 (citing Foulke v. Bethlehem 1980 Salaried Pension Plan, 565 F. Supp. 882 (E.D. Pa.
1983); Boyer v. J.A. Majors Co. Employees’ Profit Sharing Plan, 481 F. Supp. 454, 457–58
(N.D. Ga. 1979)). As such, Defendant asserts that Tennessee Tractor is the Plan Administrator
and, therefore, Tennessee Tractor’s presence is required because it is the entity in control of the
funds and in the best position to provide Plaintiff with relief. But, as Plaintiff noted in his
Response and as the Court noted in its Order on the Motion to Compel, there are, at the very
least, reasons to doubt Defendant’s assertion here. Ultimately, however, the Court need only,
and indeed must, accept Plaintiff’s allegations as true for the purposes of this Motion. And
Plaintiff alleges that Defendant is the Plan Administrator. Therefore, the Court lacks a basis to
conclude that Tennessee Tractor is a necessary party. Defendant’s additional argument that
Collier is a necessary party because Plaintiff relies on representations made by Collier in setting
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forth his claims must also fail. The Amended Complaint only mentions Collier to the effect that
Collier assisted Defendant in marketing its health plans in Tennessee to Tennessee Tractor. But
Plaintiff’s claims against Defendant involve Defendant’s statutory duties under ERISA and are
not based in Collier’s representations. Thus, complete relief can be sought from Defendant as
Plan Administrator. Once again, the Court lacks a basis to conclude that Collier is a necessary
party because the nature of Plaintiff’s allegations suggests that relief, if he is entitled to it, should
come completely from Defendant.
As Defendant does not assert that either Tennessee Tractor or Collier “claims an interest
relating to the subject of the action,” the Court further concludes that there is no basis to find that
either party is necessary under the second prong of Rule 19(a). Thus, there is no need to proceed
to Rule 19(b). The Court holds that Rule 12(b)(7) and Rule 19 do not require dismissal of the
Amended Complaint. The instant Motion is DENIED.
CONCLUSION
Because the Court finds that Defendant has not shown that an absent party is required in
the instant action, Defendant’s Rule 12(b)(7) Motion to Dismiss is DENIED.
IT IS SO ORDERED.
s/ S. Thomas Anderson
S. THOMAS ANDERSON
CHIEF UNITED STATES DISTRICT JUDGE
Date: August 22, 2018.
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