Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 1 of 33 Page ID #:446 1 2 3 4 5 6 SEYFARTH SHAW LLP Kevin J. Lesinski (SBN 110862) E-mail: klesinski@seyfarth.com 333 South Hope Street, Suite 3900 Los Angeles, CA 90071-1406 Phone: (213) 270-9600 Fax: (213) 270-9601 Attorneys for Defendant TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN 7 8 9 UNITED STATES DISTRICT COURT 10 CENTRAL DISTRICT OF CALIFORNIA 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 MICHAEL GROSSMAN, MICHAEL LUDIN, AND ALL SIMILARLY SITUATED MEMBERS AND COVERED BENEFICIARIES OF DEFENDANT’S HEALTH PLAN, ) ) ) ) ) ) Plaintiffs, ) ) v. ) ) DIRECTORS GUILD OF AMERICA, ) INC. AND TRUSTEES OF THE DGA ) PRODUCER HEALTH PLAN ) ) Defendants. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 5:16-CV-01840-GW-SP Honorable George H. Wu MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICAPRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER FED. R. CIV. P. 12(B)(6) AND MOTION TO STRIKE UNDER FED. R. CIV. P. 12(F) Notice of Motion and Declaration of Kevin J. Lesinski filed concurrently; [Proposed] Order lodged concurrently Date: February 13, 2017 Time: 8:30 a.m. Department: 10 Complaint filed: August 26, 2016 Amended Complaint filed: December 13, 2016 Discovery Cutoff: None set Pre-trial Conference: None set Trial Date: None set 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 2 of 33 Page ID #:447 1 TABLE OF CONTENTS 2 I. INTRODUCTION...........................................................................................1 3 II. FACTS ALLEGED IN THE AMENDED COMPLAINT .............................3 4 III. STANDARD OF REVIEW ............................................................................7 5 A. Federal Rule of Civil Procedure 12(b)(6) .............................................7 6 B. Federal Rule of Civil Procedure 12(f) ..................................................8 7 8 IV. ARGUMENT ..................................................................................................8 A. 9 10 11 12 13 Plaintiffs’ ACA Claims Fail As A Matter Of Law Because There Is No Private Right Of Action Under ACA Sections 2709 and 2719................................................................................................8 1. There Is No Private Right Of Action Under Section 2706 Of The ACA. ..............................................................................9 2. There Is No Private Right Of Action Under Section 2719(b) Of The ACA................................................................12 3. In Their Response Brief To The Trustees’ Motion To Dismiss Plaintiffs’ Complaint, Plaintiffs Conceded That Their ACA Claims Must Be Brought Under ERISA ...............13 4. There Is No Implicit Private Right Of Action Under ACA Sections 2706 and 2719 Because The Statute Is Unambiguous............................................................................14 14 15 16 17 B. 18 Plaintiffs’ Purported State Law Claims And Remedies Are Preempted By ERISA Section 514(a).................................................16 1. 19 20 ERISA Section 514(a) Preempts All Claims That Relate To An Employee Benefit Plan..................................................16 a. Seminal United States Supreme Court Authorities Support A Finding Of ERISA Section 514(a) Preemption Here.............................................................16 b. Controlling Ninth Circuit Authorities Support A Finding of ERISA Section 514(a) Preemption Here. ...............................................................................17 c. Plaintiffs’ State Law Claims Relate To An ERISA Plan. ................................................................................19 21 22 23 24 25 26 C. Mr. Grossman Lacks Standing To Be Named A Plaintiff In This Lawsuit................................................................................................20 27 28 i MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 3 of 33 Page ID #:448 1 1. Mr. Grossman Lacks Standing Under Article III Of The United States Constitution To Pursue A Claim For Benefits Or Any Other Claim...................................................20 2. Mr. Grossman Lacks Standing Under ERISA To Pursue A Claim For Benefits Or Any Other Claim. ............................21 2 3 4 D. Plaintiffs’ Request For Actual Or Economic Damages, Costs Of Inquiries And Fact-Gathering, And Benefit Of The Bargain Damages Should Be Stricken As Not Permitted Under ERISA.........22 E. Plaintiffs’ Ghost-Writer Counsel Should be Reprimanded. ...............23 5 6 7 V. CONCLUSION .............................................................................................24 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -iiMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 4 of 33 Page ID #:449 1 TABLE OF AUTHORITIES 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Page(s) Federal Cases Aetna Health Inc. v. Davila, 542 U.S. (2004) .................................................................................................. 11 Aetna Life Ins. Co. v. Bayona, 223 F.3d 1030 (9th Cir. 2000)............................................................................ 17 Alexander v. Sandoval, 532 U.S. 275 (2001) ............................................................................................. 9 Anderson v. Angelone, 86 F.3d 932 (9th Cir. 1996) .................................................................................. 7 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ............................................................................................. 7 Balistreri v. Pacifica Police Dep’t., 901 F.2d 696 (9th Cir. 1990)................................................................................ 8 Bast v. Prudential Ins. Co. of Am., 150 F.3d 1003 (9th Cir. 1998)............................................................................ 17 17 18 19 20 21 22 23 24 25 26 27 28 Batton v. United States, 2006 WL 566295 (W.D. La. 2006) .................................................................... 15 Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ......................................................................................... 7, 8 Branch v. Tunnell, 14 F.3d 449 (9th Cir. 1994) .................................................................................. 3 Bui v. Am. Tel. & Tel. Co. Inc., 310 F.3d 1143 (9th Cir. 2002)............................................................................ 17 Bureerong v. Uvawas, 922 F.Supp. 1450 (C.D. Cal. 1996)...................................................................... 8 California v. Sierra Club, 451 U.S. 287 (1981) ............................................................................................. 9 iii MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 5 of 33 Page ID #:450 1 2 3 4 5 Cannon v. Univ. of Chi., 441 U.S. 677 (1979) ............................................................................................. 9 Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992 (9th Cir. 2010)................................................................................ 8 DeLetelier v. Republic of Chile, 748 F.2d 790 (2d Cir. 1984) ............................................................................... 15 6 7 8 9 10 11 12 13 14 15 16 17 18 Dominion Pathology Labs., P.C. v. Anthem Health Plans of Va., Inc., 111 F. Supp. 3d 731 (E.D. Va. 2015)........................................................... 10, 14 Ellenburg v. Brockway, Inc., 763 F.2d 1091 (9th Cir. 1985)............................................................................ 18 Fantasy, Inc. v. Fogerty, 984 F.2d 1524 (9th Cir. 1993).............................................................................. 8 Freedom Watch, Inc. v. Obama, 807 F. Supp. 2d 28 (D.D.C. 2011) ....................................................................... 9 Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167 (2000) ........................................................................................... 20 Gerritsen v. Warner Bros. Entertainment, Inc., 2015 WL 4069617 (C.D. Cal. Jan. 30, 2015)....................................................... 8 Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016) ................................................................................... 16, 17 19 20 21 22 23 24 25 26 Greany v. Western Farm Bureau Life Ins. Co., 973 F.2d 812 (9th Cir. 1992).............................................................................. 18 Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204 (2002) ....................................................................................... 2, 10 Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982) ........................................................................................... 14 Johnson v. District 2 Marine Engineers Beneficial Ass'n-Associated Maritime Officers, Medical Plan, 857 F.2d 514 (9th Cir. 1988).............................................................................. 22 27 28 -ivMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 6 of 33 Page ID #:451 1 2 3 4 5 Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489 (9th Cir. 1988).................................................................. 18, 19, 20 Lea v. Republic Airlines, Inc., 903 F.2d 624 (9th Cir. 1990).............................................................................. 18 Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134 (1985) ........................................................................................... 22 6 7 8 9 10 11 12 13 14 15 16 17 18 Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) ................................................................................... 2, 10, 16 Moyle v. Liberty Mut. Ret. Ben. Plan, 823 F.3d 948 (9th Cir. 2016)................................................................................ 3 Olson v. General Dynamics Corp., 960 F.2d 1418 (9th Cir. 1991)............................................................................ 18 Papasan v. Allain, 478 U.S. 265 (1986) ............................................................................................. 7 Pilot Life Ins. Co. v. Dedeaux, 481 US 41 (1987) ................................................................................... 11, 16, 22 Reynolds Metals Co. v. Ellis, 202 F.3d 1246 (9th Cir. 2000)............................................................................ 21 Ricotta v. State of Cal., 4 F.Supp.2d 961 (S.D. Cal. 1998) ................................................................ 23, 24 19 20 21 22 23 24 25 26 27 28 Rohm & Hass Tex. v. Ortiz Bros. Insulation, 32 F.3d 205 (5th Cir. 1994) ................................................................................ 21 Schlesinger v. Reservists Comm., 418 U.S. 208 (1974) ........................................................................................... 20 Shalaby v. Jacobowitz, No. 03-0227, 2003 WL 1907664 (N.D. Cal. April 11, 2003)............................ 24 Shaw v. Delta Air Lines, 463 U.S. 85 (1983) ............................................................................................. 16 Sidney–Vinstein v. A.H. Robins Co., 697 F.2d 880 (9th Cir. 1983)................................................................................ 8 -vMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 7 of 33 Page ID #:452 1 2 3 4 5 6 7 8 9 10 11 12 13 Silvers v. Sony Pictures Entertainment, Inc., 402 F. 3d 881 (9th Cir. 2005)............................................................................. 14 Southeastern Pennsylvania Transp. Authority v. Gilead Sciences, Inc., 102 F.Supp.3d 688 (E.D. Pa. 2015)........................................................ 11, 12, 15 Spinedex Physical Therapy USA Inc. v. United Healthcare of Ariz., Inc., 770 F.3d 1282 (9th Cir. 2014)............................................................................ 22 Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016) ........................................................................................ 22 Summers v. Earth Island Institute, 555 U.S. 488 (2009) ........................................................................................... 21 Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308 (2007) ............................................................................................. 3 Tingey v. Pixley-Richards, 953 F.2d (9th Cir. 1992) ..................................................................................... 18 14 15 Touche Ross & Co. v. Redington, 442 U.S. 560 (1979) ............................................................................................. 9 16 17 18 19 20 21 22 23 24 25 26 Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11 (1979) ............................................................................................... 9 United States v. Ritchie, 342 F.3d 903 (9th Cir. 2003)................................................................................ 3 United States v. Robinson, 94 F.3d 1325 (9th Cir. 1996).............................................................................. 14 Warth v. Seldin, 422 U.S. 490 (1975) ........................................................................................... 21 Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180 (9th Cir. 2010)...................................................................... 17, 19 Wood & Selick v, Compagnie Generale Transatlantique, 43 F.2d 941 (2d Cir. 1930) ................................................................................. 15 27 28 -viMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 8 of 33 Page ID #:453 1 Federal Statutes 2 28 U.S.C. § 2201(a) ................................................................................................... 7 3 ERISA § 502, 29 U.S.C. § 502..............................1, 2, 3, 5, 6, 10, 11, 13, 14, 15, 22 4 5 29 U.S.C. § 1002(1)............................................................................................. 3, 20 6 29 U.S.C. §1132............................................................................................. 2, 10, 11 7 ERISA § 514, 29 U.S.C. § 1144........................................................2, 16, 17, 18, 24 8 29 U.S.C. § 1185d........................................................................................ 10, 13, 15 9 10 ACA § 2706, 42 U.S.C. § 300gg-5..................................................1, 2, 4, 10, 13, 14 ACA § 2719, 42 U.S.C. § 300gg-19............................................1, 2, 5, 9, 12, 13, 14 11 12 ACA § 1557, 42 U.S.C. § 300gg-22............................................................ 10, 11, 12 13 42 U.S.C. § 18116.............................................................................................. 11, 12 14 Rules 15 Federal Rule of Civil Procedure 12(b)(6).............................................................. 7, 8 16 Federal Rule of Civil Procedure 12(f) ....................................................................... 8 17 18 Other 19 FAQs About Affordable Care Act Implementation at 4 (May 26, 2015), https://www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/ACA-FAQs-Part-XXVII-MOOP-2706FINAL.pdf. ......................................................................................................... 10 20 21 22 23 24 25 26 27 28 -viiMEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 9 of 33 Page ID #:454 1 I. INTRODUCTION 2 Plaintiffs Michael Grossman and Michael Ludin (“Plaintiffs”) sue the 3 Directors Guild of America, Inc. (“DGA”) and Trustees of the Directors Guild of 4 America-Producer Health Plan (“Trustees”) (improperly named in the Complaint 5 as the Trustees of the DGA-Producer Health Plan) and bring 13 separate causes of 6 action against the DGA and Trustees. Plaintiffs claim the Trustees are liable under 7 the following theories: 8 • A direct cause of action under the Affordable Care Act (“ACA”) Section 2706, 42 U.S.C. § 300gg-5(b); • A claim for benefits under ERISA Section 502(a)(1)(B), 29 U.S.C. § 502(a)(1)(B); • A claim under ERISA for violations of ACA Section 2719, 42 U.S.C. § 300gg-19(b); • A claim for ERISA breach of fiduciary duty; • A claim for “breach of contract in violation of ERISA”; • A claim for fraud; • A claim for declaratory relief; and • A claim for injunctive relief under ERISA Section 502(a)(3), 29 U.S.C. § 1132(a)(3). • Plaintiffs also ask that the Court grant them actual or economic damages; costs of inquiries and fact-gathering; benefit of the bargain damages; a declaration that naturopathic claims are covered under the Plan; and attorneys' fees and costs. 9 10 11 12 13 14 15 16 17 18 19 20 21 The underlying allegations in support of Plaintiffs’ Amended Complaint all 22 stem exclusively from the Trustees’ decision to deny Plaintiff Ludin (“Mr. Ludin”) 23 certain medical coverage under the Directors Guild of America-Producer Health 24 Plan (the “Health Plan”), a multiemployer employee benefit plan that is governed 25 by the Employee Retirement Income Security Act of 1974, as amended 26 (“ERISA”). 27 Despite the extensive allegations and causes of actions contained in the 28 Amended Complaint, this dispute is really nothing more than a garden-variety -1MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 10 of 33 Page ID #:455 1 ERISA action following the denial of Mr. Ludin’s claim for health benefits. As 2 explained by the Supreme Court, ERISA is a “comprehensive and reticulated 3 statute,” Great-West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002) 4 (quoting Mertens v. Hewitt Assoc., 508 U.S. 248, 251 (1993)), and ERISA Section 5 502, 29 U.S.C. §1132, provides the “exclusive federal cause of action for 6 resolution of such [recovery of benefits] disputes,” Metropolitan Life Ins. Co. v. 7 Taylor, 481 U.S. 58, 63 (1987). The Court should therefore dismiss the majority of 8 the claims against the Trustees. 9 Specifically, other than Mr. Ludin’s claims under ERISA Section 10 502(a)(1)(B) and (a)(3), the remaining individual claims for relief fail as a matter 11 of law for a number of reasons. First, with respect to Plaintiffs’ specific claims for 12 purported violation the ACA Section 2706, Plaintiffs fail to state a plausible claim 13 for relief because the ACA does not provide a private right of action for them to 14 sue the Trustees or anyone else. Second, with respect to Plaintiffs’ claim under 15 ERISA generally for violation of ACA Section 2719, Plaintiffs fail to state a 16 plausible claim for relief because the ACA does not provide a private right of 17 action from them to sue the Trustees or anyone else, even if they state they are 18 bringing the claim “under ERISA”. Third, with respect to Plaintiffs’ claims for 19 breach of contract and fraud, Plaintiffs fail to state a plausible claim for relief 20 because those claims are preempted by ERISA Section 514(a), 29 U.S.C. § 21 1144(a). 22 In addition to dismissing the above claims, the court should also dismiss 23 Michael Grossman (“Mr. Grossman”) from this action for lack of Article III and 24 ERISA statutory standing and should strike Plaintiffs’ request for actual or 25 economic damages, costs of inquiries and fact-gathering, and benefit of the bargain 26 damages because those damages are not allowed under ERISA. All that should 27 28 -2MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 11 of 33 Page ID #:456 1 remain is Mr. Ludin’s ERISA claims under Sections 502(a)(1)(B) and (a)(3), 2 which limit recovery to benefits and equitable relief.1 3 Finally, the Trustees assert that the Court should reprimand Plaintiffs’ ghost- 4 writing counsel who has failed to make an appearance in this action despite his 5 apparent intention to serve as Mr. Ludin’s “behind-the-scenes” counsel. 6 II. FACTS ALLEGED IN THE AMENDED COMPLAINT2 7 Mr. Grossman is a director in the motion picture industry and a long-time 8 member of the DGA. Amend. Compl. ¶ 22. As a working member of the DGA, 9 Mr. Grossman participates in the Health Plan. Id. Mr. Ludin is Mr. Grossman’s 10 husband and, as a member of Mr. Grossman’s immediate family, Mr. Ludin also 11 participates as a beneficiary in the Health Plan. Id. ¶ 23. The Health Plan is a 12 multiemployer health plan governed by ERISA and is an “employee welfare 13 benefit plan” within the meaning of ERISA Section 3(1), 29 U.S.C. § 1002(1). Id. 14 at ¶ 78; see also Ex. A, Health Plan, at 98-99 (providing information for the Health 15 Plan as required under ERISA); Ex. B, Trust Agreement, at 9-14 (explaining 16 Trustees’ authority to be consistent with ERISA); see also Ex. A at vi (stating that 17 the Health Plan, together with the Trust Agreement, is the Plan Document).3 18 1 19 20 21 22 23 24 25 26 27 28 The Trustees dispute the underlying merits of these claims and express doubt as to whether Plaintiffs’ claim under ERISA Section 502(a)(3) can survive because it is duplicative of their Section 502(a)(1)(B) claim. However, the Trustees acknowledge that it is improper to move to dismiss their claim under Section 502(a)(3) under Ninth Circuit precedent. See Moyle v. Liberty Mut. Ret. Ben. Plan, 823 F.3d 948, 962 (9th Cir. 2016). 2 For the purposes of this motion only, the Trustees assume, as they must, the facts (but not the conclusions and arguments) alleged in Plaintiffs’ Amended Complaint are true. The Trustees note, however, that the facts alleged are both inaccurate and incomplete, but these defects are not pertinent to this particular motion. 3 While the Court is generally limited in its review on a motion to dismiss to the facts alleged in the complaint, it may consider “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 322 (2007); see also United States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003) (“A court may, however, consider certain materials—documents attached to the complaint, documents incorporated by reference in the complaint, or matters of judicial notice—without converting the motion to dismiss into a motion for summary judgment.”); Branch v. Tunnell, 14 F.3d 449, 454 (9th Cir. 1994) (overruled on other grounds) (document is not “outside” complaint where its authenticity is not -3MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 12 of 33 Page ID #:457 1 Beginning in 2014, Mr. Ludin began receiving medical care through 2 licensed naturopathic doctors. Amend. Compl. ¶ 29. He initially received treatment 3 from a licensed naturopathic doctor in Carlsbad, California and then, beginning in 4 July 2014, began treatment with licensed naturopathic doctor in Portland, Oregon. 5 Id. ¶ 33. He has not been to the naturopathic doctor in Portland since 2015. Id. ¶ 6 37. 7 The Health Plan paid for the medical care costs from the Portland facility 8 from approximately July through October 2014. Id. ¶ 39. In October 2014, the 9 Health Plan stopped paying for naturopathic care and denied Mr. Ludin’s 10 continued claims for benefits because it concluded that naturopathic care was not 11 provided for under the Health Plan (and, in fact, the Health Plan expressly excludes 12 the coverage of naturopathic services). Id. ¶ 40; see also Ex. A at 59. The Health 13 Plan also collected overpayments from the previously granted claims by offsetting 14 those amounts against incoming claims. Id. ¶ 45. 15 Mr. Ludin submitted a written request for an internal appeal, arguing that the 16 Health Plan was violating Section 2706 of the ACA, 42 U.S.C. § 300gg-5(a), 17 which provides certain non-discrimination obligations with respect to coverage 18 against any health care provider who is acting within the scope of that provider’s 19 license. Id. ¶ 41. The Trustees partially reversed their decision to deny benefits and 20 (1) approved coverage only for Mr. Ludin’s Portland office visits, but (2) denied 21 coverage for procedures and treatments performed by the naturopathic doctor. Id. ¶ 22 43. The Trustees have consistently denied Mr. Ludin’s claims for naturopathic 23 treatments and procedures going forward. Id. ¶ 44. Mr. Ludin submitted written 24 requests for internal appeals for these denials. Id. ¶ 46. 25 26 27 28 questioned and complaint references it). Throughout the Complaint, Plaintiffs make repeated references to the Health Plan. Compl. ¶¶ 12-16, 27-33, 40-41, 44, 48-49, 54-56, 70, 74-76, 84, 94, 106. Plaintiffs also bring two separate breach of contract causes of action, which are based on allegations that the Trustees breached the “contract,” which in this case is the Plan Document. -4MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 13 of 33 Page ID #:458 1 Mr. Ludin also pursued an external review process provided for under the 2 Health Plan. Id. ¶¶ 52-53. As part of the external review process, Mr. Ludin 3 allegedly received incomplete documents in response to a request to receive copies 4 of documents relevant to his claim. Amend. Compl. ¶ 53. 5 There are no factual allegations whatsoever that Mr. Grossman (as opposed 6 to Mr. Ludin) was denied any benefits for naturopathic services. See Amend. 7 Compl. generally. 8 9 Based on the above factual allegations, Plaintiffs bring the following causes of action against the Trustees: 10 (1) Violation of ACA Section 2706. By denying Mr. Ludin’s claim for 11 benefits, specifically for treatment and procedures performed by Mr. Ludin’s 12 naturopathic doctors, Plaintiffs allege that Defendant Trustees discriminated 13 against Mr. Ludin “with respect to participation under the plan or coverage against 14 any health care provider who is acting within the scope of that provider’s license or 15 certification under applicable State Law.” Id. ¶ 58 (quoting Section 2706 of the 16 ACA, 42 U.S.C. § 300gg-5(a)). 17 (2) A claim for benefits under ERISA Section 502(a)(1)(B). Because 18 Plaintiffs made a proper claim for benefits under the Health Plan and exhausted 19 their administrative remedies, they are entitled to have their naturopathic health 20 care services paid for by the Health Plan. Id. ¶¶ 78-81. 21 (3) Violation of ACA Section 2719. As part of the external review process 22 provided under the Health Plan, Mr. Ludin alleges that he received documents that 23 were allegedly “materially incomplete” and therefore he claims he could not 24 “meaningfully serve his role in pursuing the external review.” See id. ¶¶ 85, 86, 89. 25 In addition, Plaintiffs allege somewhat cryptically that “[b]y secretively changing 26 the ‘question presented’ to the truism: was this consistent with the Plan’s language 27 28 -5MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 14 of 33 Page ID #:459 1 . . . , the Plan pre-determined the outcome of the external reviewer, and made the 2 external review process pointless and meaningless.” Id. ¶ 90. 3 (4) Breach of Fiduciary Duty under ERISA. The DGA and Trustees 4 allegedly violated their ERISA fiduciary duties of loyalty and care by “failing to 5 exercise [their] authority, control, or responsibility under the policies and 6 applicable law, namely, to provide coverage for naturopathic care and to avoid 7 discrimination against a patient’s choice of licensed health care provider” and 8 “acting in a matter that they knew, or should have known, benefited their financial 9 interests, to the direct detriment of Plaintiffs and the Class.” Id. ¶¶ 114, 125, 127. 10 (5) Breach of Contract. The DGA and Trustees allegedly breached their 11 contract with Plaintiffs by refusing to cover, and pay for, treatment and procedures 12 performed by naturopathic doctors. Id. ¶ 136. 13 (6) Fraud. The Plan stated that Mr. Ludin was “‘entitled to receive, upon 14 request, and free of charge . . . copies of all documents and other information’ 15 relevant to his claim,” and “it [allegedly] did not do so.” Id. ¶ 151. Plaintiffs allege 16 that the Trustees knew, at the time it made this statement, that the statement was 17 false, id. ¶ 153, and by relying on this fraudulent statement, Mr. Ludin allegedly 18 suffered and incurred damages, most especially not being able to “meaningfully 19 participate in the external review process, and making the process itself a waste of 20 time for him and the external reviewer.” Id. ¶ 158. 21 (6) Declaratory relief. Because there is allegedly “a real and immediate 22 dispute between the parties regarding the proper interpretation of their contract,” 23 Plaintiffs ask the Court to declare certain parts of the contract and practices of the 24 Health Plan are in violation of the ACA. Id. ¶¶ 160, 161. 25 26 (7) Injunctive relief. Plaintiffs seek under ERISA Section 502(a)(3) a “permanent injunction, enjoining both Defendants from denying coverage and 27 28 -6MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 15 of 33 Page ID #:460 1 payment for medical procedures performed by licensed naturopathic doctors.” Id. 2 ¶¶ 174-176. 3 (8) Damages. Plaintiffs generally seek actual or economic damages; costs of 4 inquiries and fact-gathering. Id. ¶¶ 171. Plaintiffs also seek attorneys’ fees and 5 expenses. 6 (9) Relief under the Declaratory Judgment Act. Plaintiffs request a 7 declaratory judgment be entered under 28 U.S.C. § 2201(a) for, among other 8 things, a declaration stating that procedures and treatment by naturopathic doctors 9 are covered under the Health Plan. Id. ¶ 172. 10 III. STANDARD OF REVIEW 11 A. 12 A motion under Rule 12(b)(6) tests the legal sufficiency of the claims stated Federal Rule of Civil Procedure 12(b)(6) 13 in a complaint. Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a 14 complaint must contain sufficient factual matter, accepted as true, to ‘state a claim 15 to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) 16 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)) (emphasis added). 17 “Determining whether a complaint states a plausible claim for relief will … be a 18 context-specific task that requires the reviewing court to draw on its judicial 19 experience and common sense.” Iqbal, 556 U.S. at 679. 20 “[A] complaint attacked by a Rule 12(b)(6) motion to dismiss “requires 21 more than labels and conclusions, and a formulaic recitation of the elements of a 22 cause of action will not do.” Twombly, 550 U.S. at 555. In evaluating the motion, 23 the Court accepts as true the facts alleged in the complaint, Anderson v. Angelone, 24 86 F.3d 932, 934 (9th Cir. 1996), but is “not bound to accept as true a legal 25 conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 26 (1986). 27 28 -7MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 16 of 33 Page ID #:461 1 “In deciding a motion to dismiss [under Rule 12(b)(6)], the court can 2 consider only the pleadings and documents that are incorporated by reference 3 therein or are properly the subject of judicial notice.” Gerritsen v. Warner Bros. 4 Entertainment, Inc., 2015 WL 4069617, at *4 (C.D. Cal. Jan. 30, 2015) (citing U.S. 5 v. Ritchie, 342 F.3d 903, 907-08 (9th Cir. 2003)); see also Daniels-Hall v. Nat'l 6 Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). 7 Dismissal is appropriate if there is a “lack of a cognizable legal theory or the 8 absence of sufficient facts alleged under a cognizable legal theory.” Balistreri v. 9 Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990); Twombly, 550 U.S. at 10 555. 11 B. 12 Fed. R. Civ. P. 12(f) empowers a court to strike from a pleading “any Federal Rule of Civil Procedure 12(f) 13 redundant, immaterial, impertinent, or scandalous matter.” “[T]he function of a 14 [F.R.Civ.P.] 12(f) motion to strike is to avoid the expenditure of time and money 15 that must arise from litigating spurious issues by dispensing with those issues prior 16 to trial.” Sidney–Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir. 1983); 17 Fantasy, Inc. v. Fogerty, 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on other 18 grounds, Fogerty v. Fantasy, Inc., 510 U.S. 517 (1994). “[A] motion to strike 19 maybe used to strike any part of the prayer for relief when the damages sought are 20 not recoverable as a matter of law.” Bureerong v. Uvawas, 922 F.Supp. 1450, 21 1479, n.34 (C.D. Cal. 1996). 22 IV. 23 ARGUMENT A. 24 Plaintiffs’ ACA Claims Fail As A Matter Of Law Because There Is No Private Right Of Action Under ACA Sections 2709 and 2719. 25 Plaintiffs assert two distinct causes of action under two different provisions 26 of the ACA: (1) by denying Mr. Ludin’s claim for benefits, specifically for 27 treatment and procedures performed by Mr. Ludin’s naturopathic doctors, 28 -8MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 17 of 33 Page ID #:462 1 Defendants allegedly discriminated against him “with respect to participation 2 under the plan or coverage against any health care provider who is acting within 3 the scope of that provider’s license or certification under applicable State Law,” id. 4 ¶ 58 (quoting Section 2706(a) of the ACA, 42 U.S.C. § 300gg-5(a)); and (2) as part 5 of the external review process provided under the Health Plan, Mr. Ludin received 6 documents that were allegedly “materially incomplete” and therefore he could not 7 “meaningfully serve his role in pursuing the external review,” which was in 8 violation of Section 2719(b) of the ACA, 42 U.S.C. § 300gg-19(b). Id. ¶¶ 86, 88, 9 89. 10 The mere “fact that a federal statute has been violated and some person 11 harmed does not automatically give rise to a private cause of action in favor of that 12 person.” Cannon v. Univ. of Chi., 441 U.S. 677, 688 (1979). “[P]rivate rights of 13 action to enforce federal law must be created by Congress.” Alexander v. Sandoval, 14 532 U.S. 275, 286 (2001); see also California v. Sierra Club, 451 U.S. 287, 293 15 (1981); Touche Ross & Co. v. Redington, 442 U.S. 560, 568 (1979); Transamerica 16 Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 15-16 (1979). As such, “a plaintiff 17 must demonstrate that the statute under which it is attempting to proceed reflects 18 Congressional intent to create a private remedy.” Freedom Watch, Inc. v. Obama, 19 807 F. Supp. 2d 28, 32 (D.D.C. 2011) (internal citation omitted). Where a plaintiff 20 cannot demonstrate a congressional intent to create a cause of action to enforce a 21 statutory right, Article III of the Constitution requires dismissal of the claim. Id. 22 23 24 25 26 27 28 1. There Is No Private Right Of Action Under Section 2706 Of The ACA. In 2010, Congress passed the ACA, which included the following provision effective January 1, 2014: A group health plan and a health insurance issuer offering group or individual health insurance coverage shall not discriminate with respect to participation under the plan or coverage against any health care provider who is acting within the scope of that provider's license -9MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 18 of 33 Page ID #:463 1 or certification under applicable State law. This section shall not require that a group health plan or health insurance issuer contract with any health care provider willing to abide by the terms and conditions for participation established by the plan or issuer. Nothing in this section shall be construed as preventing a group health plan, a health insurance issuer, or the Secretary from establishing varying reimbursement rates based on quality or performance measures. 2 3 4 5 Section 2706(a) of ACA, 42 U.S.C. § 300gg-5(a). Section 2706 was adopted 6 without meaningful discussion in the legislative history.4 Section 2706 does not provide for any independent private right of action to 7 8 enforce its provisions. See Dominion Pathology Labs., P.C. v. Anthem Health 9 Plans of Va., Inc., 111 F. Supp. 3d 731, 736 (E.D. Va. 2015) (stating that Section 10 2706 does not create a private right of action). Rather, with respect to commercial 11 health insurers, enforcement is limited to the states and the Secretary of Health and 12 Human Services. See 42 U.S.C. § 300gg-22. 13 Section 2706 is also one of the ACA provisions that is incorporated into 14 ERISA. See 29 U.S.C. § 1185d. Therefore, Section 2706 is enforceable only in 15 accordance with ERISA’s remedial scheme. Specifically, ERISA Section 502, 29 16 U.S.C. §1132, provides a civil enforcement mechanism described as the “exclusive 17 federal cause of action for resolution of such [recovery of benefits] disputes.” 18 Taylor, 481 U.S. at 63. ERISA Section 502, 29 U.S.C. §1132, provides several 19 bases for claims and type of relief, including claims to recover benefits or enforce 20 rights under an ERISA plan and relief for breach of a fiduciary duty or violations 21 of reporting requirements. These various bases are limited to narrow and specific 22 types of actions and remedies. See Knudson, 534 U.S. at 209 (noting the Court’s 23 reluctance “’to tamper with [the] enforcement scheme’ embodied in the statute by 24 4 25 26 27 28 Of importance, the departments charged with enforcing Section 2706 received over 1,500 comments when considering updated guidance on that provision, and they ultimately stated that no enforcement action will be taken against a group health plan under Section 2706 as long as the plan is “using a good faith, reasonable interpretation of the statutory provision.” FAQs About Affordable Care Act Implementation at 4 (May 26, 2015), https://www.cms.gov/CCIIO/Resources/Fact-Sheets-andFAQs/Downloads/ACA-FAQs-Part-XXVII-MOOP-2706-FINAL.pdf. -10MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 19 of 33 Page ID #:464 1 extending remedies not specifically authorized by its text” due to “strong evidence 2 that Congress did not intend to authorize other remedies that it simply forgot to 3 incorporate expressly”); Pilot Life Ins. Co. v. Dedeaux, 481 US 41, 54 (1987) 4 (“The deliberate care with which ERISA's civil enforcement remedies were drafted 5 and the balancing of policies embodied in its choice of remedies argue strongly for 6 the conclusion that ERISA's civil enforcement remedies were intended to be 7 exclusive”); Aetna Health Inc. v. Davila, 542 U.S. at 200, 215 (2004) (“The limited 8 remedies available under ERISA are an inherent part of the careful balancing 9 between ensuring fair and prompt enforcement of rights under a plan and the 10 encouragement of the creation of such plans.”). Accordingly, Plaintiffs are limited 11 to ERISA’s enforcement scheme under Section 502, 29 U.S.C. § 1132, and cannot 12 bring an independent cause of action under Section 2706 of the ACA. 13 Plaintiffs cite in their Amended Complaint Southeastern Pennsylvania 14 Transp. Authority v. Gilead Sciences, Inc., 102 F.Supp.3d 688, 698 (E.D. Pa. 15 2015), in support of an allegation that the ACA provides beneficiaries of medical 16 insurance with an implicit private right of action to enforce the Act’s non- 17 discrimination provisions. Amend. Compl. ¶ 59. There, the court discussed 18 whether an implicit private right of action existed under Section 1557 of the ACA, 19 which contains a separate and distinct anti-discrimination provision that “an 20 individual shall not, on [the basis of any protected ground], be excluded from 21 participation in, be denied the benefits of, or be subjected to discrimination under, 22 any health program or activity, any part of which is receiving Federal financial 23 assistance, including credits, subsidies, or contracts of insurance.” 42 U.S.C. § 24 18116. Protected grounds include race, color, national origin, sex, age, and 25 disability. Id. (citing to Title VI of the Civil Rights Act of 1964, Title IX of the 26 Education Amendments of 1972, the Age Discrimination Act of 1975, and Section 27 504 of the Rehabilitation Act of 1973). 28 -11MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 20 of 33 Page ID #:465 1 2 First, this matter does not involve any allegations under 42 U.S.C. § 18116 and therefore the court’s holding is irrelevant. 3 Second, the court’s underlying reasoning does not translate to Section 2706. 4 There, the court supported its conclusion that Section 1557 created a private right 5 of action because Section 1557: (1) expressly incorporates four federal civil rights 6 statutes and includes the kind of “rights-creating language” found in those statues; 7 (2) expressly cross-references those four federal civil rights statutes to provide the 8 classes of those protected by the statute’s non-discrimination provision; and (3) 9 expressly provides that the “enforcement mechanisms provided for and available 10 under such title VI, title IX, section 504, or such Age Discrimination Act shall 11 apply for purposes of violations of this subsection.” Gilead Sciences, 102 12 F.Supp.3d at 698. The court explained that the “cross-reference to these statutes 13 and the use of similar rights-creating terms manifest Congressional intent to create 14 a private right” and that the express incorporation of the enforcement mechanisms 15 from those statutes is probative of Congressional intent to provide both a private 16 right and a private remedy for violations of Section 1557. Id. Here, Section 2706(a) 17 does not reference or cross-reference any other federal statute or enforcement 18 mechanism. Not only is the holding inapplicable, but also the reasoning does not 19 apply. 20 21 2. There Is No Private Right Of Action Under Section 2719(b) Of The ACA 22 Section 2719(b), which provides for an external review process, states: 23 A group health plan and a health insurance issuer offering group or individual health insurance coverage-- (1) shall comply with the applicable State external review process for such plans and issuers that, at a minimum, includes the consumer protections set forth in the Uniform External Review Model Act promulgated by the National Association of Insurance Commissioners and is binding on such plans; or (2) shall implement an effective external review process that meets minimum standards established by the Secretary through guidance and that is similar to the process described under paragraph (1)-- (A) if the applicable State has not established an external review -12- 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 21 of 33 Page ID #:466 1 2 3 4 5 process that meets the requirements of paragraph (1); or (B) if the plan is a self-insured plan that is not subject to State insurance regulation (including a State law that establishes an external review process described in paragraph (1)). Section 2719(b) of ACA, 42 U.S.C. § 300gg-19(b). There are no cases that discuss whether there is a private right of action 6 under Section 2719 and therefore this is a matter of first impression for the Court. 7 Just like Section 2706, Section 2719 is also incorporated by reference into ERISA. 8 See 29 U.S.C. § 1185d. Therefore, the same logic applies, as discussed in 9 Argument Section IV(A)(i) above. Indeed, just as Section 2706 does not create a 10 private right of action, Section 2719 also does not create a private right of action 11 for the same reasons. 12 13 3. In Their Response Brief To The Trustees’ Motion To Dismiss Plaintiffs’ Complaint, Plaintiffs Conceded That Their ACA Claims Must Be Brought Under ERISA 14 In responding to the Trustees’ Motion to Dismiss Plaintiffs’ original 15 Complaint, Plaintiffs conceded that “[t]he ACA modifies and expands individual 16 rights under the Internal Revenue Code, under the Employee Retirement and 17 Income Security Act (“ERISA”), under the Fair Labor Standards Act, and under 18 the Public Health Service Act.” ECF No. 19 at 7. The Trustees agree. Because the 19 ACA provisions at issue in this case expand individual rights under ERISA, 20 Plaintiffs must follow the remedial structure of ERISA and bring a lawsuit under 21 ERISA Section 502(a). 22 Poignantly, Plaintiffs cited to N.H. Ekbloom, “Finding a Private Right of 23 Action in the Affordable Care Act,” LeClair Ryan, LLC, in support of their 24 alternate argument that there is a right to sue for violations of ACA mandates and 25 reforms. This well-reasoned article supports the Trustees’ position that there is no 26 private right of action and Plaintiffs must proceed through ERISA’s remedial 27 scheme. The article states: “The ACA does not create a private right of action for 28 -13MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 22 of 33 Page ID #:467 1 enforcement of private health insurance reforms, but instead amends and 2 incorporates by reference existing statutes.” Id. at 4. It then explains: 3 4 5 6 7 8 9 10 ERISA created a comprehensive law for the regulation of employee benefit plans. Sec. 502(a) of ERISA authorizes private plaintiffs, either participants or beneficiaries, to bring actions against a plan to either recover benefits or enforce or clarify the rights of the plaintiffs under the terms of the plan. Therefore, private individuals may sue companies under ERISA for failing to comply with ACA’s requirements. There are some caveats. The suit has to be brought in federal court because of preemption of state and common law remedies and the plaintiff’s recoverable damages are for the unpaid benefit and equitable relief. Id. at 5. Finally, it concludes “only Sec. 1558 of the ACA expressly creates a private right of action.” Id. at 20. 11 As scholars and the one court to address whether ACA Section 2706 creates 12 a private right of action have all found (and as Plaintiffs conceded in opposition to 13 the Trustees’ first Motion to Dismiss), there is simply no independent private right 14 of action under ACA Sections 2706 and 2719. See Dominion Pathology Labs., 15 P.C. v. Anthem Health Plans of Va., Inc., 111 F. Supp. 3d 731, 736 (E.D. Va. 16 2015) (stating that Section 2706 does not create a private right of action). Plaintiffs 17 must proceed through ERISA Section 502(a). 18 19 There Is No Implicit Private Right Of Action Under ACA Sections 2706 and 2719 Because The Statute Is Unambiguous 20 The argument that ACA Sections 2706 and 2719 create an implied private 21 right of action fails because there can be no implied private right of action when 22 the statutory language explicitly says otherwise. A statute should be interpreted 23 according to its plain terms. Silvers v. Sony Pictures Entertainment, Inc., 402 F. 3d 24 881, 896 (9th Cir. 2005); see also Griffin v. Oceanic Contractors, Inc., 458 U.S. 25 564, 570 (1982) (“Our task is to give effect to the will of Congress, and where its 26 will has been expressed in reasonably plain terms, ‘that language must ordinarily 27 be regarded as conclusive.’”) (citation omitted); United States v. Robinson, 94 F.3d 28 4. -14MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 23 of 33 Page ID #:468 1 1325, 1328 (9th Cir. 1996) (“If the language of a statute is unambiguous, the plain 2 meaning controls.”). 3 In this case, the statute expressly incorporates ACA Sections 2706 and 2719 4 into ERISA and thereby gives Plaintiffs the mechanism they are looking for the 5 bring suit. See 42 U.S.C. § 1185d. 6 As stated above, Southeastern Pennsylvania Transp. Authority, 102 7 F.Supp.3d at 698, found a private right of action under Section 1557. The Trustees 8 do not need to contest that decision for purposes of this motion. As discussed 9 above, Section 1557 is clearly distinguishable from ACA Sections 2706 and 2719 10 and the court’s rationale does not translate to these provisions. Moreover, ACA 11 Sections 2701 through 2728 are the specific sections of the ACA that are 12 incorporated into ERISA. See 42 U.S.C. § 1185d. In other words, sections 2706 13 and 2719 are expressly incorporated while Section 1557 is not. 14 In their response to the Trustees’ first motion to dismiss, Plaintiffs cited the 15 following cases in support of an argument that it would be “silly” not to provide a 16 private right of action under the ACA: DeLetelier v. Republic of Chile, 748 F.2d 17 790, 792 (2d Cir. 1984) (“a statute should not be interpreted to create a right 18 without a remedy”); see also Wood & Selick v, Compagnie Generale 19 Transatlantique, 43 F.2d 941, 943 (2d Cir. 1930) (“a right without any remedy is a 20 meaningless scholasticism”); Batton v. United States, 2006 WL 566295, at ¶3 21 (W.D. La. 2006) (“the Battons would have a right without a remedy-surely a result 22 that Congress could not have intended”). See ECF No. 19 at 16. As explained and 23 conceded by Plaintiffs, they indeed have a remedy -- it just isn’t through a direct 24 suit under the ACA. Rather, they have the opportunity to argue that ACA 25 provisions have been violated, but any lawsuit must be brought under ERISA 26 Section 502(a) because Congress explicitly incorporated these relevant provisions 27 into the ERISA statutory scheme. See 29 U.S.C. § 1185d. 28 -15MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 24 of 33 Page ID #:469 1 2 3 B. Plaintiffs’ Purported State Law Claims And Remedies Are Preempted By ERISA Section 514(a) Plaintiffs’ claims for “breach of contract under ERISA” and fraud should be 4 dismissed because these claims and remedies are preempted by ERISA Section 5 514(a), 29 U.S.C. § 1144(a). Plaintiffs’ state law claims rely entirely upon the 6 existence of the Health Plan, because each claim depends on Plaintiffs’ allegations 7 that Mr. Ludin was inappropriately denied benefits under the Health Plan. Amend. 8 Compl. ¶¶ 39-53. Under long-standing and settled precedent, these claims and 9 remedies are preempted by ERISA, and must be dismissed. 10 11 12 13 14 1. ERISA Section 514(a) Preempts All Claims That Relate To An Employee Benefit Plan. a. Seminal United States Supreme Court Authorities Support A Finding Of ERISA Section 514(a) Preemption Here. ERISA’s preemption clause, ERISA Section 514(a), 29 U.S.C. 1144(a), 15 expressly provides that ERISA “shall supersede any and all State laws insofar as 16 they may now or hereafter relate to any employee benefit plan” governed by 17 ERISA. 29 U.S.C. § 1144(a). In Pilot Life, the Supreme Court held that ERISA 18 Section 514(a) preempts all state contract and tort claims—including fraud in the 19 inducement—asserting improper processing of a claim for benefits under an 20 employee benefit plan. 481 U.S. at 54; see also Taylor, 481 U.S. 58 (1987). In so 21 holding, the Supreme Court characterized the scope of ERISA preemption as 22 “deliberately expansive.” Pilot Life, 481 U.S. at 46; Shaw v. Delta Air Lines, 463 23 U.S. 85, 97-99 (1983) (Congress used words “relate to” in broad sense). 24 Recently, in Gobeille v. Liberty Mut. Ins. Co., 136 S. Ct. 936 (2016), the 25 Supreme Court reaffirmed that ERISA Section 514(a) is the broadest preemption 26 clause ever enacted by Congress. There, the Supreme Court held that ERISA 27 preempted a Vermont state law that required certain entities to report payments 28 relating to health care claims and other information relating to health care services -16MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 25 of 33 Page ID #:470 1 to a state agency for compilation in a database. Id. at 940. The Supreme Court 2 concluded that Vermont’s law, which merely imposed a reporting requirement in 3 hopes of controlling health care outcomes and costs, had an impermissible 4 “connection with” ERISA, because, inter alia, it purported to “govern[] . . . a 5 central matter of plan administration”—that of recordkeeping. Id. at 943. Gobeille 6 emphasizes the view of ERISA Section 514(a) as perhaps the “most expansive 7 express pre-emption provision in any federal statute.” Id. at 947 (Thomas, J., 8 concurring); see also id. at 958 (Ginsburg, J., dissenting) (describing majority 9 opinion as “retrieval” of “super-preemption” doctrine from “discard bin”). Even 10 the dissent conceded that “ERISA’s domain is the design and administration of 11 employee benefit plans: notably, prescriptions on the vesting of benefits, claims 12 processing, and the designation of beneficiaries.” Id. at 953 (Ginsbug, J., 13 dissenting) (emphasis added). 14 15 16 b. Controlling Ninth Circuit Authorities Support A Finding of ERISA Section 514(a) Preemption Here. Numerous Ninth Circuit authorities support a finding here that ERISA 17 Section 514(a) preempts Plaintiffs’ state law claims for breach of contract, fraud, 18 declaratory relief, injunctive relief, damages, and attorneys’ fees, expenses and 19 costs. See, e.g., Wise v. Verizon Commc’ns, Inc., 600 F.3d 1180 (9th Cir. 2010) 20 (holding that where the existence of an ERISA plan “is a critical factor in 21 establishing liability under a state cause of action, the state law claim is 22 preempted” and dismissing plaintiff’s claims of fraud, negligence, and 23 misrepresentation); Bui v. Am. Tel. & Tel. Co. Inc., 310 F.3d 1143, 1152 (9th Cir. 24 2002) (holding ERISA preempted plaintiff's breach of contract claims “because the 25 contract allegedly breached is the ERISA plan itself”); Aetna Life Ins. Co. v. 26 Bayona, 223 F.3d 1030 (9th Cir. 2000) (holding that ERISA preempted 27 beneficiary’s claims for breach of contract, bad faith, and fraud); Bast v. Prudential 28 -17MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 26 of 33 Page ID #:471 1 Ins. Co. of Am., 150 F.3d 1003, 1008 (9th Cir. 1998) (holding that ERISA Section 2 514 barred all state claims); Greany v. Western Farm Bureau Life Ins. Co., 973 3 F.2d 812, 817 (9th Cir. 1992) (explaining that “ERISA contains one of the broadest 4 preemption clauses ever enacted by Congress” and holding all state law claims 5 preempted); Tingey v. Pixley-Richards, 953 F.2d at 1124 (9th Cir. 1992) (holding 6 plaintiffs’ causes of action for breach of contract, breach of the duty of good faith 7 and fair dealing, intentional infliction of emotional distress, and violations of the 8 Arizona Insurance Code were preempted by ERISA); Lea v. Republic Airlines, 9 Inc., 903 F.2d 624, 632 (9th Cir. 1990) (state claims for negligence, breach of 10 contract, fraud, and equitable estoppel relating to an ERISA plan were preempted); 11 Kanne v. Connecticut Gen. Life Ins. Co., 867 F.2d 489, 494 (9th Cir. 1988) 12 (holding that ERISA preempts all state law claims against a plan administrator); 13 Ellenburg v. Brockway, Inc., 763 F.2d 1091, 1095 (9th Cir. 1985) (stating that 14 under Ninth Circuit law, ERISA preempts all common law theories, including 15 breach of implied contract, promissory estoppel, estoppel by conduct, fraud, and 16 breach of contract). 17 For example, in Olson v. General Dynamics Corp., the Ninth Circuit 18 considered whether ERISA preempted a state law fraud claim that was based on a 19 representation regarding the level of benefits Olson would receive upon retirement. 20 960 F.2d 1418, 1419-20 (9th Cir. 1991). In holding that ERISA preempted Olson’s 21 fraud claim, the Ninth Circuit remarked that “it is difficult to see how Olson’s 22 fraud claim could be found not to ‘relate to’ an employee benefit plan.” Id. at 1421. 23 This holding—that ERISA preempted Olson’s fraud claim based on a 24 misrepresentation about the general level of retirement benefits—compels the 25 conclusion that ERISA likewise preempts Plaintiffs’ fraud claim alleging 26 misrepresentations about documents provided to Mr. Ludin and external reviewers 27 in connection with the administrative appeals process. Moreover, Plaintiffs actually 28 -18MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 27 of 33 Page ID #:472 1 cite to the Health Plan’s provisions on which they rely in support of their fraud 2 claim, Amend. Compl. ¶ 74, indicating that the claim is based on the terms of an 3 ERISA plan. 4 Additionally, as the Ninth Circuit explained in Wise, where “the existence of 5 [an ERISA] plan is a critical factor in establishing liability” under a state law 6 claim, the claim is preempted. 600 F.3d at 1190 (citing Ingersoll–Rand Co. v. 7 McClendon, 598 U.S. 133, 136, 139-40 (1990)). Wise alleged her employer 8 breached several state law duties in the course of its efforts to recruit her to return 9 to work, and that its conduct constituted fraud, misrepresentation, and negligence. 10 Id. at 1190. Wise sought damages to compensate her for the insurance benefits lost 11 on account of her employer’s conduct. Id. The Ninth Circuit held these state law 12 claims were preempted, because the complaint “necessarily referenced” an ERISA 13 plan. Id. The state law claims “all depended on the existence of an ERISA-covered 14 plan to demonstrate that Wise suffered damages: the loss of insurance benefits.” Id. 15 16 17 c. Plaintiffs’ State Law Claims Relate To An ERISA Plan. Here, Plaintiffs admit that the benefits sought were provided pursuant to a 18 multiemployer health plan provided as a benefit of Mr. Grossman’s employment. 19 Amend. Compl. ¶¶ 23, 56. Specifically, Mr. Grossman and his husband, Mr. 20 Ludin, were provided health care benefits under the Health Plan, which was 21 adopted by the Trustees pursuant to the Trust Agreement. See Ex. B, Trust 22 Agreement at 3 (“The term ‘Health Plan’ as used herein shall mean and include the 23 plan of health eligibilities and benefits adopted by the Plan Trustees pursuant to 24 this agreement.”). The Plan meets all the criteria for an ERISA plan, namely it is: 25 “(1) a plan, fund, or program (2) [that has been] established or maintained (3) . . . 26 by an employee organization, (4) for the purpose of providing ... benefits . . . (5) to 27 participants or their beneficiaries.” Kanne v. Conn. Gen. Life Ins. Co., 867 F.2d 28 -19MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 28 of 33 Page ID #:473 1 489, 491-92 (9th Cir. 1988), cert. denied, 492 U.S. 906 (1989); see also 29 U.S.C. 2 § 1002(1). The Ninth Circuit generally considers the employee organization’s 3 involvement in a group insurance plan sufficient enough to constitute an employee 4 benefit plan subject to ERISA. Kanne, 867 F.2d at 492 (excluding claims where all 5 requirements for a plan were met). See also Ex. A at 17, 88, 90, 95, 98, 99, 102, 6 103, and Ex. B at 3, 13, 14, 19, 22, 23, 27, 31, referencing ERISA throughout. 7 The remedies Plaintiffs seek hinge on the interpretation of this ERISA- 8 governed health plan, i.e., whether the Trustees properly interpreted the Health 9 Plan when denying coverage for Mr. Ludin’s naturopathic services. Under the 10 well-established the Ninth Circuit authorities cited above, each of Plaintiffs’ state 11 law claims are preempted by ERISA. 12 13 14 15 16 C. Mr. Grossman Lacks Standing To Be Named A Plaintiff In This Lawsuit. 1. Mr. Grossman Lacks Standing Under Article III Of The United States Constitution To Pursue A Claim For Benefits Or Any Other Claim. To have standing, a plaintiff must demonstrate, at the outset of litigation, 17 that: (1) he has “suffered an ‘injury in fact’ that is (a) concrete and particularized 18 and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly 19 traceable to the challenged action of the defendant; and (3) it is likely, as opposed 20 to merely speculative, that the injury will be redressed by a favorable decision.” 21 Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., 528 U.S. 167, 180-81 (2000) 22 (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). While these 23 three elements are “the irreducible constitutional minimum,” injury in fact, or a 24 concrete and particularized harm, is the “indispensable element of a dispute” that 25 “adds the essential dimension of specificity to the dispute by requiring that the 26 complaining party have suffered a particular injury caused by the action.” 27 Schlesinger v. Reservists Comm., 418 U.S. 208, 220-21 (1974). 28 -20MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 29 of 33 Page ID #:474 1 Critically, “injury in fact is a hard floor of Article III jurisdiction that cannot 2 be removed by statute.” Summers v. Earth Island Institute, 555 U.S. 488, 497 3 (2009). Even after Congress has authorized a suit, “Article III’s requirement 4 remains[, and] the plaintiff must allege a distinct and palpable injury to himself.” 5 Warth v. Seldin, 422 U.S. 490, 501 (1975) (emphasis added). To that end, the 6 “deprivation of a procedural right without some concrete interest that is affected by 7 the deprivation—a procedural right in vacuo—is insufficient to create Article III 8 standing.” Summers, 555 U.S. at 496 (Kennedy, J. concurring). 9 Here, there are no allegations that Mr. Grossman has any quantifiable 10 damage or loss as a result of the Trustees’ alleged misconduct. Indeed, there are no 11 factual allegations that the Trustees denied a claim of Mr. Grossman’s related to 12 naturopathic services. See Amend. Compl. generally. Therefore, Mr. Grossman has 13 no injury in fact with respect to any individual claim for benefits or other alleged 14 misconduct. In other words, he has not suffered any injury as a result of the 15 Trustees’ alleged misconduct because there are no allegations that he submitted a 16 claim for benefits for naturopathic services and was denied. See, e.g., Rohm & 17 Hass Tex. v. Ortiz Bros. Insulation, 32 F.3d 205, 208 (5th Cir. 1994) (internal 18 citation omitted) (“[A]n indirect financial stake in another party's claim is 19 insufficient to create standing [].”). 20 21 22 2. Mr. Grossman Lacks Standing Under ERISA To Pursue A Claim For Benefits Or Any Other Claim. “ERISA provides for a federal cause of action for civil claims aimed at 23 enforcing the provisions of an ERISA plan.” Reynolds Metals Co. v. Ellis, 202 24 F.3d 1246, 1247 (9th Cir. 2000) (citing 29 U.S.C. § 1132(e)(1)). In order to have 25 standing to bring such a claim, “a plaintiff must fall within one of ERISA's nine 26 specific civil enforcement provisions, each of which details who may bring suit 27 and what remedies are available.” Id. “ERISA's civil enforcement provision, 28 -21MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 30 of 33 Page ID #:475 1 ERISA Section 502(a), 29 U.S.C. § 1132(a) identifies only plan participants, 2 beneficiaries, fiduciaries, and the Secretary of Labor as persons empowered to 3 bring a civil action.” Spinedex Physical Therapy USA Inc. v. United Healthcare of 4 Ariz., Inc., 770 F.3d 1282, 1288-89 (9th Cir. 2014) (brackets and quotation marks 5 omitted). However, “a plaintiff [does not] automatically satisf[y] the injury in fact 6 requirement whenever a statute grants a person a statutory right and purports to 7 authorize that person to sue to vindicate that right.” Spokeo, Inc. v. Robins, 136 8 S.Ct. 1540, 1549 (2016). A plaintiff must still demonstrate that he meets the 9 standing requirements of Article III of the Constitution. See id. 10 Because Mr. Grossman has not suffered an injury in fact, for the reasons 11 discussed above, he also lacks statutory standing under ERISA and the court 12 should dismiss him as a plaintiff in this lawsuit. 13 14 15 D. Plaintiffs’ Request For Actual Or Economic Damages, Costs Of Inquiries And Fact-Gathering, And Benefit Of The Bargain Damages Should Be Stricken As Not Permitted Under ERISA. In addition to Plaintiffs seeking benefits and equitable relief pursuant to 16 ERISA, they also seek monetary damages in the form of “actual or economic 17 damages, costs of inquiries and fact-gathering, and benefit of the bargain 18 damages.” Amend. Compl. ¶ 171. The Supreme Court has held that compensatory 19 damages cannot be recovered under ERISA. Pilot Life Ins. Co., 481 U.S. 41; see 20 also Mass. Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 148 (1985) (holding that a 21 beneficiary could not recover extra-contractual damages, either compensatory or 22 punitive, against a fiduciary for improper processing of benefit claims); Johnson v. 23 District 2 Marine Engineers Beneficial Ass'n-Associated Maritime Officers, 24 Medical Plan, 857 F.2d 514, 518 (9th Cir. 1988) (holding extracontractual 25 damages are unavailable under ERISA § 502(a)). The Court should strike 26 Plaintiff’s prayer for actual or economic damages, costs of inquiries and fact- 27 28 -22MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 31 of 33 Page ID #:476 1 gathering, and benefit of the bargain damages based on the Amended Complaint’s 2 alleged facts. 3 E. 4 At this Court’s November 7, 2016 hearing on the DGA’s motion to dismiss, Plaintiffs’ Ghost-Writer Counsel Should be Reprimanded. 5 Mr. Ludin represented that he was receiving assistance from Robert Teir, a 6 member of the Texas and District of Columbia bar, and friend of Mr. Ludin. 7 Counsel for the Trustees received an email from Mr. Teir on October 10th asking 8 for Defendants’ assistance in either (1) moving his admission for pro hac vice into 9 the Court; or (2) forgo an opposition to an effort to be admitted to pro hac vice. 10 The Trustees responded that they would not oppose any request to be admitted pro 11 hac vice, but he did not move for admission. See Exhibit C attached hereto. Then, 12 on November 7, 2016, this Court stated that “Counsel for Plaintiff will file an 13 Application to Appear Pro Hac Vice forthwith.” ECF No. 21. Mr. Teir has failed to 14 do so. 15 The Trustees acknowledge that Mr. Teir’s conduct does not arise to a level 16 to warrant sanctions, but request that this Court reprimand Mr. Teir for his conduct 17 in substantively helping Mr. Ludin prepare Plaintiffs’ Amended Complaint without 18 an appearance in the matter and issue an order to show cause as to why he has not 19 moved for pro hac vice admission. 20 Federal Courts have consistently admonished licensed attorneys for ghost- 21 writing on behalf of pro se litigants. In Ricotta v. State of Cal., 4 F.Supp.2d 961, 22 987 (S.D. Cal. 1998), the court explained: 23 24 25 26 27 28 [A] licensed attorney does not violate procedural, substantive, and professional rules of a federal court by lending some assistance to friends, family members, and others with whom he or she may want to share specialized knowledge. Otherwise, virtually every attorney licensed to practice would be eligible for contempt proceedings. Attorneys cross the line, however, when they gather and anonymously present legal arguments, with the actual or constructive knowledge that the work will be presented in some similar form in a motion before the Court. With such participation the attorney guides the course of litigation while standing in the shadows of the Courthouse -23MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 32 of 33 Page ID #:477 1 4 door. This conclusion is further supported by the ABA Informal Opinion of 1978 that “extensive undisclosed participation by a lawyer ... that permits the litigant falsely to appear as being without substantial professional assistance is improper.” ABA Informal Opinion (1978) (quoted in Elizabeth, J. Cohen, Afraid of Ghosts: Lawyers May Face Real Trouble When they ‘Sort of’ Represent Someone, 80 ABA JOURNAL (Dec.1997)). 5 There, the lawyer was found to be involved in drafting seventy-five to one 2 3 6 hundred percent of Plaintiff's legal arguments in his oppositions to the defendants' 7 motions to dismiss. The Court found that “this assistance is more than informal 8 advice to a friend or family member and amounts to unprofessional conduct.” Id.; 9 see also Shalaby v. Jacobowitz, No. 03-0227, 2003 WL 1907664, at *5 (N.D. Cal. 10 April 11, 2003) (recognizing that ghost-writing is frowned upon). Here, based on the causes of actions brought and the extensive and complex 11 12 allegations (which include case citations and extensive statutory references), the 13 Trustees believe that Mr. Tier gave substantially more than just informal advice to 14 Mr. Ludin in what to state in the amended complaint. Accordingly, admonishment 15 in an opinion, in addition to an order to show cause as to why Mr. Teir has not 16 appeared, would be sufficient to remedy the situation. In Ricotta, the court stated: 17 “this Court believes that per the requirement of the Code of Judicial Ethics, this 18 Opinion is sufficient because it admonishes the attorney that her behavior is 19 questionable, despite the failure of the professional rules of conduct and local court 20 rules to provide clear guidelines on the subject.” Id. 21 V. CONCLUSION The Trustees of the Directors Guild of America-Producer Health Plan 22 23 respectfully request that the Court grants this Motion and order as follows: 24 • Plaintiffs’ claims under ACA Sections 2706 and 2719 fail as a matter of law because those sections do not provide a private right of action; • Plaintiffs’ claims for breach of contract and fraud fail as a matter of law because they are preempted by ERISA Section 514(a). • Plaintiff Michael Grossman lacks Article III and statutory standing under ERISA and therefore is dismissed as a plaintiff from this action; 25 26 27 28 -24MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) Case 5:16-cv-01840-GW-SP Document 25-1 Filed 12/27/16 Page 33 of 33 Page ID #:478 1 • Plaintiffs’ request for actual or economic damages, costs of inquiries and fact-gathering, benefit of the bargain damages are stricken because those types of damages are not permitted under ERISA; and • Plaintiffs’ counsel Robert Teir is reprimanded for failing to file an appearance despite his assistance in representing Mr. Ludin in this action. 2 3 4 5 6 Dated: December 27, 2016 Respectfully submitted, 7 8 9 SEYFARTH SHAW LLP By: /s/ Kevin J. Lesinski Kevin J. Lesinski 10 Attorneys for Defendant Trustees of the Directors Guild of America-Producer Health Plan 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -25MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF DEFENDANT TRUSTEES OF THE DIRECTORS GUILD OF AMERICA-PRODUCER HEALTH PLAN’S MOTION TO DISMISS AMENDED COMPLAINT IN PART UNDER Fed. R. Civ. P. 12(b)(6) 36287939v.3