941 F. Supp. 2d 1191
N.D. Cal.2013Background
- Rader filed breach of contract and bad faith claims against Sun Life and sought mandamus against the California Insurance Commissioner in San Francisco Superior Court.
- Sun Life removed the case to federal court invoking diversity, arguing the Commissioner is a sham defendant.
- Rader moved to remand arguing the court lacks subject matter jurisdiction and that removal was improper.
- The court analyzes fraudulent joinder, writ relief under Cal. Code Civ. Proc. §1085, and Insurance Code implications.
- The court holds that Sun Life’s removal lacks merit, the mandamus claim is viable, and the action is remanded to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the Commissioner a sham defendant to defeat diversity? | Rader argues joinder is not fraudulent; intent is irrelevant. | Sun Life asserts Commissioner is sham to defeat diversity. | Not fraudulent; remand proper on jurisdiction grounds. |
| Is mandamus under Cal. Code Civ. Proc. §1085 cognizable to address alleged policy-law violations? | Rader seeks writ to ensure Commissioner enforces Insurance Code compliance. | Writ relief not appropriate if discretion is involved and remedy exists otherwise. | Writ relief is cognizable to address alleged abuse of discretion. |
| Would mandamus relief affect Rader’s existing policy or is it prospective only? | Withdrawal of approval could affect future or ongoing benefits. | Relief would be prospective and not affect current policy. | Writ could effectively remedy beyond mere prospective effects. |
| Does Rader have an adequate remedy at law against the Commissioner? | Remedy against Sun Life does not substitute for Commissioner’s action. | Adequate remedy exists via alternative avenues. | No plain, speedy, adequate remedy against the Commissioner; writ available. |
| Do Insurance Code provisions apply to group disability policies for removal purposes? | Code sections apply to group disability policies; removal within period is viable. | Code sections may not apply to group disability policies; new argument improper for removal. | Code sections apply; new removal grounds not persuasive. |
Key Cases Cited
- Van Ness v. Blue Cross of California, 87 Cal.App.4th 364 (Cal. Ct. App. 2001) (recognizes writ relief to review insurer approvals)
- Peterson v. American Life & Health Ins. Co., 48 F.3d 404 (9th Cir.1995) (insured may seek writ relief for abuse of discretion)
- Palma v. Prudential Insurance Company, 791 F.Supp.2d 790 (N.D. Cal. 2011) (writ relief to compel proper use of discretionary review)
- Hansen v. Ohio Nat. Life Assur., 2011 WL 3294289 (N.D. Cal. 2011) (writ relief against policy language in violation of Insurance Code)
- Blake v. UnumProvident Corp., 2007 WL 4168235 (N.D. Cal. 2007) (writ relief feasible to address abusive approvals)
- McCabe v. General Foods Corp., 811 F.2d 1336 (9th Cir. 1987) (fraudulent joinder standard for removing non-diverse parties)
- Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir. 1998) (jurisdictional questions resolved in favor of remand when uncertain)
- Good v. Prudential Ins. Co. of America, 5 F.Supp.2d 804 (N.D. Cal. 1998) (removal jurisdiction doubts favor remand)
- Brazina v. Paul Revere Life Ins. Co., 271 F.Supp.2d 1163 (N.D. Cal. 2003) (adequacy of remedy at law against Commissioner debated)
- ARCO Environmental Remediation, L.L.C. v. Dept. of Health & Env. Quality, 213 F.3d 1108 (9th Cir. 2000) (removal timing and grounds in context of administrative actions)