Bandy v. Alliance for Shared Health Inc et al
Filing
33
ORDER DENYING IN PART AND GRANTING IN PART 15 & 18 DEFENDANTS' MOTION TODISMISS. Plaintiff's claim for deceptive business practices in violation of the Washington Consumer Protection Act, ECF No. 1 at 2526, is DISMISSED WITHOUT PREJUDICE. Plaintiff's claims for illegal contract and unfair business practices in violation of the Washington Consumer Protection Act remain. Signed by Judge Salvador Mendoza, Jr. (TR, Case Administrator)
Case 2:22-cv-00025-SMJ
ECF No. 33
1
Sep 16, 2022
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
3
MARTIN BANDY,
5
8
9
SEAN F. MCAVOY, CLERK
No. 2:22-cv-00025-SMJ
Plaintiff,
6
7
PageID.296 Page 1 of 17
FILED IN THE
U.S. DISTRICT COURT
EASTERN DISTRICT OF WASHINGTON
2
4
filed 09/16/22
v.
ALLIANCE FOR SHARED HEALTH,
INC., and CHRISTIAN DISCOUNT
ALLIANCE, LLC d/b/a SHARED
HEALTH ALLIANCE,
ORDER DENYING IN PART AND
GRANTING IN PART
DEFENDANTS’ MOTION TO
DISMISS
Defendants.
10
11
Before the Court are Defendant Alliance for Shared Health Inc.’s Motion to
12
Dismiss, ECF No. 15, and Defendant Christian Discount Alliance’s Motion to
13
Dismiss, ECF No. 18. On August 23, 2022, the Court heard argument from the
14
parties on the motions and reserved judgment. After reviewing the motions and the
15
file, the Court is fully informed and grants in part and denies in part each of the
16
motions. The Court declines to dismiss Plaintiff’s claims in full but agrees that
17
Plaintiff’s deceptive practices claim sounds in fraud but fails to meet Federal Rule
18
of Civil Procedure 9(b) heightened pleading standard. As such, that claim is
19
dismissed with leave to replead.
20
//
ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 1
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BACKGROUND
2
Plaintiff Martin Bandy brings this class action under the Washington
3
Consumer Protection Act (CPA), WASH. REV. CODE §19.86, and contract law,
4
against Defendants Alliance for Shared Health, Inc. (ASH), and Christian Discount
5
Alliance, LLC d/b/a Shared Health Alliance (SHA), on behalf of himself and other
6
Washington consumers who were allegedly marketed and sold unauthorized health
7
insurance plans that were deceptively marketed as being offered by a Health Care
8
Sharing Ministry in Washington by Defendants. ECF No. 1 at 1–2.
9
Plaintiff enrolled in an ASH healthcare plan on April 24, 2020, paying a $125
10
one-time enrollment fee and a monthly premium of approximately $355.50. Id. at
11
14. Once enrolled, Plaintiff received what he believed was an insurance card from
12
ASH. Id. The insurance card purportedly certified Plaintiff’s membership in a
13
“Health Care Sharing” community. Id. In June 2021, after experiencing symptoms
14
of a stroke, Plaintiff received care at the emergency room and was admitted to the
15
hospital, where he continued to receive extensive care. Id. at 15. When Plaintiff
16
tried to have these costs covered by what he believed was his insurance, Defendants
17
denied Plaintiff’s claims for coverage of services in the emergency room and during
18
his overnight stay at the hospital. Id.. The complaint alleges Plaintiff was forced to
19
pay out-of-pocket for services he believed would be covered by ASH, and now has
20
more than $40,000 in medical debt, which he continues to pay. Id.
ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 2
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Plaintiff alleges Defendants entered into illegal contracts and engaged in
2
unfair and deceptive business practices by illegally acting as insurers and selling
3
sham plans to more than 3,000 Washingtonians in violation of contract law and the
4
Washington CPA. Id. at 1, 15. Defendants both now move to dismiss this action.
5
See generally ECF Nos. 15, 18. Defendant ASH argues Plaintiff’s three claims
6
should be dismissed as (1) the illegal contract claim fails because Plaintiff has not—
7
and cannot—establish the plan as an insurance contract, (2) Plaintiff cannot state a
8
claim for unfair business practices, as ASH’s disclosures bar this claim, and (3) the
9
deceptive business practices claim is deficient because it does not comply with Rule
10
9(b). ECF No. 15 at 6. Defendant SHA argues Plaintiff’s claims should be dismissed
11
because (1) Plaintiff did not have a contract with SHA, and (2) Plaintiff cannot sue
12
under the CPA because he never interacted with or had a relationship with SHA.
13
ECF No. 18 at 1–2.
14
LEGAL STANDARD
15
A complaint must contain “a short and plain statement of the claim showing
16
that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Under Federal Rule of
17
Civil Procedure 12(b)(6), the Court must dismiss the complaint if it “fail[s] to state
18
a claim upon which relief can be granted.”
19
In deciding a Rule 12(b)(6) motion, the court construes the complaint in the
20
light most favorable to the plaintiff and draws all reasonable inferences in the
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plaintiff’s favor. Ass’n for L.A. Deputy Sheriffs v. County of Los Angeles, 648 F.3d
2
986, 991 (9th Cir. 2011). Thus, the Court must accept all factual allegations
3
contained in the complaint as true. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
4
However, the Court may disregard legal conclusions couched as factual allegations.
5
See id.
6
To survive a Rule 12(b)(6) motion, the complaint must contain “some viable
7
legal theory” and provide “fair notice of what the claim is and the grounds upon
8
which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 562 (2007) (internal
9
quotation marks and ellipsis omitted). While the complaint need not contain
10
detailed factual allegations, threadbare recitals of a cause of action’s elements,
11
supported only by conclusory statements, do not suffice. Iqbal, 556 U.S. at 663.
12
Thus, the complaint must contain “sufficient factual matter, accepted as true, to
13
‘state a claim to relief that is plausible on its face.’” Id. at 678 (quoting Twombly,
14
550 U.S. at 570). Facial plausibility exists where the complaint pleads facts
15
permitting a reasonable inference that the defendant is liable to the plaintiff for the
16
misconduct alleged. Id. Plausibility does not require probability but demands more
17
than a mere possibility of liability. Id. Whether the complaint states a facially
18
plausible claim for relief is a context-specific inquiry requiring the Court to draw
19
from its judicial experience and common sense. Id. at 679.
20
//
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1
While a court generally does not consider any material beyond the pleadings
2
in ruling on a Rule 12(b)(6) motion to dismiss, there are certain exceptions.
3
Relevant here, the Court may consider documents incorporated by reference in the
4
complaint. United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003). A document
5
“may be incorporated by reference into a complaint if the plaintiff refers extensively
6
to the document or the document forms the basis for the plaintiff’s claim.” Id. “In
7
other words, a court ‘may consider a document the authentic of which is not
8
contested, and upon which the plaintiff’s complaint necessarily relies.’” Lopez v.
9
Stages of Beauty, LLC, 307 F. Supp. 3d 1058, 1064 (S.D. Cal. 2018) (quoting
10
Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir. 1998), superseded by statue on
11
other grounds in Abrego v. Dow Chem. Co., 443 F.3d 676, 681–82 (9th Cir. 2006)).
12
In this case, the Court relies on ASH’s Membership Guidelines, ECF No. 15-2, as
13
they are repeatedly cited and quoted in the Complaint and form the basis of
14
Plaintiff’s claims.
DISCUSSION
15
16
A.
The Illegal Contract Claim
17
Plaintiff alleges that the insurance plans he and other Washingtonians entered
18
with Defendants are illegal contracts because Defendants were not authorized to
19
issue health insurance in Washington. ECF No. 24. Any entity that sells insurance
20
as defined by Washington law must obtain a certification of authorization from the
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State, or else the issued insurance is illegal. WASH. REV. CODE §48.05.030 (2022).
2
As defined, insurance is “a contract whereby one undertakes to indemnify another
3
or pay a specified amount upon determinable contingencies.” WASH. REV. CODE
4
§48.01.040 (2022).
5
Defendants have provided two general arguments against Plaintiff’s common
6
law claim for illegal contract. First, that ASH is a Health Care Sharing Ministry
7
(HCSM) and is therefore exempt form more onerous state and federal insurance
8
laws, and second, that even if ASH is not an HCSM, Plaintiff’s allegations do not
9
support a claim that the plans at issue are insurance. Neither of these arguments
10
prove persuasive; the Court addresses each in turn.
11
1.
Health Care Sharing Ministry
12
The Court must first determine whether ASH is a valid HCSM. If an
13
organization qualifies as a Health Care Sharing Ministry (HCSM), it can sell health
14
plans in Washington that provide fewer benefits than Washington law or the ACA
15
require. See WASH. REV. CODE §48.43.009 (2022). “If an entity meets the federal
16
requirements of an HCSM, it then qualifies as an HCSM under Washington law,
17
and is exempt from obtaining a certificate of authority from the Washington
18
Insurance Commissioner.” Jackson v. Aliera Co., 462 F. Supp. 3d 1129,1132 (W.D.
19
Wash. 2020). To qualify as an HCSM, an organization must meet the five
20
ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 6
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requirements set forth in 26 U.S.C. § 5000A(d)(2)(B)(ii). An HCSM must be an
2
entity:
3
4
5
6
7
8
9
10
(I) which is described in section 501(c)(3) and is exempt from taxation
under section 501(a),
(II) [whose] members of which share a common set of ethical or
religious beliefs and share medical expenses among members in
accordance with those beliefs and without regard to the State in which
a member resides or is employed,
(III) [whose] members of which retain membership even after they
develop a medical condition,
(IV) which (or a predecessor of which) has been in existence at all
times since December 31, 1999, and medical expenses of its members
have been shared continuously and without interruption since at least
December 31, 1999, and
(V) which conducts an annual audit which is performed by an
independent certified public accounting firm in accordance with
generally accepted accounting principles and which is made available
to the public upon request.
11
12
26 U.S.C. § 5000A(d)(2)(B) 4. But an entity that fails to qualify as an HCSM and
13
operates without a certificate of authority is an unauthorized insurer and any plans
14
an unauthorized insurer markets or sells are illegal plans. WASH. REV. CODE §§
15
48.01.04, 48.01.050, 48.05.030 (2022).
16
Taking the plausible allegations as true, Plaintiff has sufficiently alleged that
17
ASH is not a valid HCSM. Plaintiff alleges that ASH did not form until 2017 and
18
did not attain 501(c)(3) status until 2019. ECF No. 1 at 4, 12. Given this, Plaintiff
19
has plausibly alleged that ASH does not meet the fourth requirement for HCSM
20
status that the HCSM be in continuous existence since 1999 and have shared
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1
medical expenses “continuously and without interrupts” since that time. 26 U.S.C.
2
§ 5000A(d)(2)(B)(ii)(IV).
3
Although ASH argues that it is a continuation of the entity known as the Bible
4
Army International Church (BAIC) which has been operating since or before 1999,
5
Plaintiff provides plausible reason to doubt this claim. See ECF No. 1 at 11–12.
6
Plaintiff alleges the Washington Office of the Insurance Commissioner (OIC)
7
launched a formal investigation into ASH in May 2019, shortly after the IRS
8
afforded it 501(c)(3) status. Id. at 4, 10. The OIC’s investigation ultimately
9
determined (1) that ASH did not qualify as an HCSM under state or federal law, (2)
10
that ASH operated as an unauthorized health insurer, and (3) that SHA acted as an
11
insurance producer without a license. Id. at 12–13. Accordingly, the OIC issued
12
ASH and SHA cease and desist orders and eventually issued consent orders against
13
ASH and SHA. Id. at 13–14. In one order, ASH was ordered to cease and desist
14
from further insurance transactions in Washington and to terminate all existing ASH
15
plans by the end of 2021. Id. at 14. Two days later, Plaintiff enrolled in an ASH
16
healthcare plan.
17
Plaintiff also notes that the Predecessor Agreement between ASH and BAIC
18
did not establish ASH as a successor of BAIC, noting that in ASH’s 2018
19
application for nonprofit status to the Internal Revenue Service (IRS), “ASH
20
represented it was not a successor to another organization. ASH did not acquire
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BAIC, and the entities did not merge. They remain distinct entities.” Id. at 12. As
2
such, disposition on this contested issue is inappropriate at the motion-to-dismiss
3
stage.
4
2.
Health Plans as Insurance Contracts
5
Defendants next argue that dismissal is appropriate because ASH’s plan, as
6
alleged, does not qualify as insurance under Washington law. As mentioned above,
7
“[i]nsurance is a contract whereby one undertakes to indemnify another or pay a
8
specified amount upon determinable contingencies.” WASH. REV. CODE §48.01.040
9
(2022). The essential elements of an insurance contract include: (1) an insurer; (2)
10
an insured or beneficiary; (3) a premium payment and (4) a loss or injury to be
11
protected against. State ex rel. Fishback v. Globe Casket & Undertaking Co., 82
12
Wn. 124, 128 (1914).
13
Looking to the provided Member Guidelines and taking Plaintiff’s plausible
14
allegations as true, the Court finds that ASH’s health plans meet these elements.
15
ASH shares 100 percent of bills for any medical incident exceeding the Member
16
Responsibility Amount or “MRA” up to the annual sharing maximum, as long as
17
all other Guidelines are met. ECF No. 15-2 at 9. The MRA is a deductible which
18
must be paid to obtain benefits. ECF No. 1 at 7. After the MRA is satisfied, medical
19
bills are paid in accordance with schedules set forth in the plan’s Guidelines. Id. at
20
23. The plans require “members” to pay a “monthly contribution.” Id. Failure to pay
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this monthly fee gives ASH the right to “automatically cancel the membership.” Id.
2
at 7. In return for this monthly fee, ASH, as stated above, allegedly shares 100
3
percent of bills. ECF No. 15-2 at 9. And, finally, the plans are accompanied by the
4
indicia of insurance: members are issued ID cards that Defendants urge members
5
to give providers “if they ask for proof of insurance.” ECF No. 1 at 24. Because
6
ASH provides a plan that shares 100 percent of bills to members, the Court finds
7
Plaintiff has sufficiently pled ASH is an insurer; the “members” are the insured or
8
beneficiaries; the “MRA” is a premium payment, and the plan provides a way to
9
pay for loss or injuries, as set out in the schedules.
10
Although the Member Guidelines state that the health plans are not a form of
11
“insurance,” “[n]o one can change the nature of insurance business by declaring in
12
the contract that it is not insurance.” McCarty v. King Cty. Med. Serv. Corp., 26
13
Wn.2d 660, 678 (1946). Here, given the language of the plans and the issued ID
14
cards that are to be shown to providers upon request for insurance, the Complaint
15
plausibly alleges that Defendants issued insurance. Regardless of how many
16
disclaimers and attestations Defendants put forth, the content of the plans, as
17
alleged, are virtually indistinguishable from those of a health insurance plan. As
18
such, Plaintiff has met his burden at this stage, and the Court denies the motion to
19
dismiss this claim.
20
//
ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 10
Case 2:22-cv-00025-SMJ
1
B.
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Unfair Business Practices
2
To establish a claim under the Consumer Protection Act (CPA), a plaintiff
3
must prove five elements: (1) an unfair or deceptive act or practice that (2) affects
4
trade or commerce and (3) impacts the public interest, and (4) the plaintiff sustained
5
damage to business or property that was (5) caused by the unfair or deceptive act or
6
practice. Keodalah v. Allstate Ins. Co., 194 Wn.2d 339, 349 (2019). All five
7
elements must be established, and certain elements can be satisfied per se based on
8
the violation of another statute. Id. at 350. For instance, the first two elements are
9
established where a statute declares that a violation is a per se unfair trade practice,
10
and the third element—that the violation impacts the public interest— also may be
11
established per se based on a showing that a statue has been violated that contains
12
a specific legislative declaration of public interest impact. Id. “By broadly
13
prohibiting ‘unfair or deceptive acts or practices in the conduct of any trade or
14
commerce,’ the legislature intended to provide sufficient flexibility to reach unfair
15
or deceptive conduct that inventively evades regulation.” Panag v. Farmers Ins. Co.
16
of Wash., 166 Wn.2d 27, 49 (2009).
17
Plaintiff alleges that because ASH’s health plans are not licensed with the
18
State of Washington and do not comply with the ACA or Washington law,
19
Defendant engaged in unfair business practices under the CPA. ECF No. 1 at 27.
20
The Complaint also alleges that Defendants’ plans failed to provide coverage for
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1
treatments and conditions that are mandated “essential” benefits under the ACA and
2
Washington law. Id. at 8, 27. Specifically, ASH’s plans excluded coverage for pre‐
3
existing conditions, imposed waiting periods, annual and lifetime caps, and limits
4
on coverage, all of which are prohibited by the ACA and Washington law. Id.
5
Plaintiff
6
“common course of unfair conduct caused substantial injury to consumers,” and
7
“[t]housands of Washingtonians have been affected by Defendants’ unfair
8
practices” and that this conduct caused injury. Id. at 28.
alleges
that
Defendants’
9
Defendants argue that Plaintiff’s CPA claim based on unfair business
10
practices is barred because the Guidelines disclosed the alleged statutory violations
11
that Plaintiff alleges are unfair. ECF No. 15 at 17. Defendants argue every alleged
12
statutory violation is plainly disclosed to prospective members in the Guidelines,
13
including limitations on sharing for pre-existing conditions, waiting periods, annual
14
and lifetime caps on sharing, and ASH’s lack of an insurance license. Id. at 14.
15
Defendant argues that because the alleged violations are disclosed, there cannot be
16
a claim for unfair business practices. Id. However, there is no support for this
17
assertion. The only case Defendants point to involving the CPA is Lowden v. T‐
18
Mobile USA, Inc., No. C05‐1482 MJP, 2009 WL 537787 (W.D. Wash. Feb. 18,
19
2009), aff’d, 378 F. App’x 693 (9th Cir. 2010). Lowden is distinguishable. There,
20
the plaintiff alleged that T–Mobile violated the CPA by assessing additional charges
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1
without disclosing them, but the court found that T-Mobile’s contract adequately
2
informed customers that they may be charged for regulatory costs imposed on T–
3
Mobile. Id. at *2. Those disclosures, in contrast to those at issue here, were not
4
alleged to be contrary to Washington law. See id. Instead, the Ninth Circuit
5
addressed a valid, legal contract that included terms and disclosures that are
6
permissible under Washington law.
7
Here, Plaintiff has sufficiently alleged that ASH’s health plans were in
8
violation of the ACA and Washington law, as ASH was plausibly not a valid HCSM
9
and therefore was not exempt from obtaining a certificate of authority from the
10
Washington Insurance Commission. Absent a certificate of authority, the health
11
plans were illegal, WASH. REV. CODE §48.05.030 (2022) (“All entities that sell
12
products in Washington meeting the definition of insurance must obtain a certificate
13
of authorization.”), and allegations of illegality satisfy the CPA’s unfair practice
14
element. See, e.g., Bess v. Ocwen Loan Servicing, LLC, 727 F. App’x 918, 921 (9th
15
Cir. 2018) (“By alleging Ocwen entered Bess’s property pursuant to the unlawful
16
entry provisions in the parties’ deed of trust, Bess has plausibly alleged an unfair or
17
deceptive practice”); Wilson v. PTT, LLC, 351 F. Supp. 3d 1325, 1339 (W.D. Wash.
18
2018) (denying motion to dismiss CPA claim based on allegation that defendant
19
violated statutory prohibition on gambling). As such, the Court denies the motion
20
to dismiss the unfair business practice theory of Plaintiff’s CPA claim.
ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 13
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C.
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Deceptive Business Practices
2
Next, Defendants argue that Plaintiff’s CPA deceptive practices claim must
3
be subjected to Rule 9(b)’s heightened pleading standard and, evaluating the claim
4
under that standard, the claim must be dismissed. The Court agrees.
5
Under Rule 9(b), a party “alleging fraud or mistake . . . must state with
6
particularity the circumstances constituting fraud or mistake.” Fed. R. Civ. P. 9(b).
7
This heightened standard applies so long as the claim is “grounded in fraud” or
8
“sounded in fraud,” even if fraud is not an essential element of claim alleged. Vess
9
v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1103 (“[I]n cases in which fraud is not
10
an essential element of the claim, Rule 9(b) applies, but only to particular averments
11
of fraud.”).
12
Plaintiff argues his claim is based on deceptive conduct but is neither
13
“grounded in fraud” nor does it “sound in fraud” because Plaintiff does not allege
14
that Defendants intentionally engaged in a “unified course of fraudulent conduct.”
15
Vess v. Ciba‐Geigy Corp. USA, 317 F.3d 1097, 1103–04 (9th Cir. 2003). But a
16
“unified course of fraudulent conduct” is virtually indistinguishable from
17
Defendants’ alleged “common course of deceptive conduct.” See ECF No. 1 at 25.
18
Plaintiff, in several places, alleges that he or members of the prospective class were
19
misled by material misrepresentations about what were (insurance companies) and
20
what they could offer (insurance), allegations that seemingly sound in fraud. ECF
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1
No. 1 at 25–26. As such, his allegations, as opposed to what he is required to prove
2
in support of his claim, sound in fraud and the Court must subject the allegations to
3
Rule 9(b)’s heightened pleading standard.
4
Even so, Plaintiff argues, regardless of whether Rule 9(b) is applicable, the
5
Complaint would satisfy the rule because “it identifies the circumstances
6
constituting fraud so that the defendant can prepare an adequate answer from the
7
allegations.” Stellar J. Corp. v. Argonauts Ins. Co., No. 3:12–cv–05982 RBL, 2014
8
WL 3673301, at *2 (W.D. Wash. Jul. 23, 2014) (quoting Neubronner v. Milken, 6
9
F.3d 666, 671‐672 (9th Cir. 1993)). For example, Plaintiff identified the
10
communications that had the capacity to deceive and what they said (that ASH is
11
an HCSM and that the plans were insurance); where the communications were
12
promulgated (on SHA’s website, through brokers, in ASH’s Guidelines, and on
13
membership cards); who saw or heard them (Plaintiff, consumers who complained
14
to OIC, and OIC); how the communications were false, unfair, and deceptive (ASH
15
does not meet the requirements of an HCSM and the health plans are not ACA‐
16
compliant); and the time period during which the alleged practice occurred (from
17
2019 to 2021). ECF No. 1 at 2, 5, 10–11, 13–14, 17–20, 25.
18
But Rule 9(b) requires greater specificity in pleading allegations that sound
19
in fraud. Rule 9(b) requires a plaintiff to “identify the ‘who, what, when, where, and
20
how of the misconduct charged,’ as well as ‘what is false or misleading about [the
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conduct] and why it is false.” Cafasso, ex rel. U.S. v. Gen. Dynamica C4 Sys., Inc.,
2
637 F.3d 1047, 1055 (9th Cir. 2011) (quoting Ebeid ex rel. U.S. v. Lungwitz, 616
3
F.3d 993, 998 (9th Cir. 2010). Plaintiff’s complaint lumped both Defendants, which
4
is not “specific enough to give defendants notice of the particular misconduct… so
5
that they can defend against the change and not just deny that they have done
6
anything wrong.” Neubronner v. Miken, 6 F.3d 666, 672 (9th Cir. 1993).
7
Despite this deficiency, the Court finds good cause to grant Plaintiff leave to
8
amend his complaint. Under Federal Rule of Civil Procedure 15(a)(2), “[t]he
9
[C]ourt should freely give leave when justice so requires.” “In general, a court
10
should liberally allow a party to amend its pleading.” Sonoma Cty. Ass'n of Retired
11
Employees v. Sonoma Cty., 708 F.3d 1109, 1117 (9th Cir. 2013) (citing Fed. R. Civ.
12
P. 15(a)). Still, the Court “may exercise its discretion to deny leave to amend due
13
to ‘undue delay, bad faith or dilatory motive on part of [Plaintiff], repeated failure
14
to cure deficiencies by amendments previously allowed undue prejudice to the
15
opposing party, ... [and] futility of amendment.’” Carvalho v. Equifax Info. Servs.,
16
LLC, 629 F.3d 876, 892–93 (9th Cir. 2010) (quoting Foman v. Davis, 371 U.S. 178,
17
182 (1962)). Here, there is no evidence of undue delay, bad faith, dilatory motive,
18
failure to cure deficiencies, or futility of amendment, and when given the
19
opportunity to address prejudice, ASH’s counsel offered only that having a pending
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case against ASH that alleges deceptive practices is harmful to the organization.
ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 16
Case 2:22-cv-00025-SMJ
ECF No. 33
filed 09/16/22
PageID.312 Page 17 of 17
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The mere fact that a company’s reputation may be harmed by a deceptive practices
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claim filed against it is not enough for the Court to deny Plaintiff leave to amend
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his deceptive-practices claim.
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Accordingly, IT IS HEREBY ORDERED:
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1.
Defendants’ motions to dismiss, ECF Nos. 15, 18, are GRANTED IN
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PART and DENIED IN PART. Plaintiff’s claim for deceptive
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business practices in violation of the Washington Consumer Protection
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Act, ECF No. 1 at 25–26, is DISMISSED WITHOUT PREJUDICE.
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Plaintiff’s claims for illegal contract and unfair business practices in
violation of the Washington Consumer Protection Act remain.
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2.
The Court GRANTS Plaintiff leave to file a first amended complaint
by no later than October 13, 2022.
IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and
provide copies to all counsel.
DATED this 16th day of September 2022.
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SALVADOR MENDOZA, JR.
United States District Judge
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ORDER RULING ON DEFENDANTS’ MOTIONS TO DISMISS – 17
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