Soba Living LLC v. California Physicians Service
2:20-cv-11325
C.D. Cal.Mar 2, 2021Background
- Soba Living LLC operates addiction treatment centers and treated patients insured under plans administered by defendants.
- Before treatment, Soba obtained benefit verifications and authorizations from defendants, who represented patients had coverage and that defendants would reimburse providers.
- Soba alleges defendants knowingly underpaid or refused reimbursement despite those representations, and Soba treated patients in reliance on the assurances.
- Plaintiffs sued in California state court asserting only state-law claims: breach of oral and implied contract, promissory estoppel, open book account, negligent and intentional misrepresentation, and UCL violations.
- Defendants removed to federal court asserting ERISA complete preemption; Plaintiffs moved to remand. The district court granted remand and denied Plaintiffs’ request for fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of removal under 28 U.S.C. §1446(b) | Removal untimely because defendants waited until Dec 2020; 30-day clock began when complaint filed in Oct 2019 | 30-day clock began when defendants received correspondence/meet-and-confer on Dec 9, 2020 that made removability clear | Removal was timely under §1446(b)(3); correspondence triggered the 30-day window and defendants removed within 30 days |
| ERISA complete preemption and federal-question jurisdiction | Claims are state-law contract and tort claims arising from independent obligations between Soba and defendants, not from ERISA plans, so not preempted | Claims are effectively suits to recover benefits under ERISA plans and are completely preempted by ERISA §502(a) | Claims are not completely preempted; both Davila prongs fail because Soba could not have brought these claims under §502(a)(1)(B) and the duties alleged are independent of ERISA plans; remand required |
| Award of attorneys’ fees under 28 U.S.C. §1447(c) | Seek fees and costs because removal lacked an objectively reasonable basis | Removal was objectively reasonable given apparent ERISA issues | Fees denied; removal was not objectively unreasonable even though remand granted |
Key Cases Cited
- Aetna Health Inc. v. Davila, 542 U.S. 200 (2004) (establishes ERISA §502(a) complete-preemption framework)
- Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941 (9th Cir. 2009) (provider claims based on independent provider-administrator obligations are not necessarily preempted)
- Blue Cross of Cal. v. Anesthesia Care Assocs. Med. Grp., Inc., 187 F.3d 1045 (9th Cir. 1999) (provider-assignee may sue under ERISA §502(a)(1)(B) but does not foreclose separate contract claims)
- Fossen v. Blue Cross & Blue Shield of Montana, Inc., 660 F.3d 1102 (9th Cir. 2011) (describes Ninth Circuit two-part test for ERISA complete preemption)
- Harris v. Bankers Life and Cas. Co., 425 F.3d 689 (9th Cir. 2005) (removability under §1446(b) is determined from the four corners of pleadings and other paper)
- Ethridge v. Harbor House Rest., 861 F.2d 1389 (9th Cir. 1988) (removal statutes strictly construed and burden on removing party)
- Mattel, Inc. v. Bryant, 441 F. Supp. 2d 1081 (C.D. Cal. 2005) (removal time is triggered when information supporting removal is unequivocally clear)
- Jordan v. Nationstar Mortg. LLC, 781 F.3d 1178 (9th Cir. 2015) (fees under §1447(c) normally require lack of objectively reasonable basis for removal)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (2005) (standards for awarding fees under §1447(c))
- Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062 (9th Cir. 2008) (removal not objectively unreasonable merely because arguments lack merit; clearly foreclosed law may support fee awards)