Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-57080/USCOURTS-ca9-13-57080-0/pdf.json

Nature of Suit Code: 950
Nature of Suit: Constitutionality of State Statutes
Cause of Action: 

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANGELOTTI CHIROPRACTIC, INC.;

MOONEY & SHAMSBOD

CHIROPRACTIC, INC.; CHRISTINAARANA & ASSOCIATES, INC.; JOYCE

ALTMAN INTERPRETERS, INC.;

SCANDOC IMAGING, INC.; BUENA

VISTA MEDICAL SERVICES, INC.;

DAVID H PAYNE M.D., INC.,

Plaintiffs-Appellants,

v.

CHRISTINE BAKER, in her official

capacity as Director of the California

Department of Industrial Relations;

RONNIE CAPLANE, in her official

capacity as Chair of the Workers’

Compensation Appeals Board;

DESTIE LEE OVERPECK, in her

official capacity as Acting

Administrative Director of the

California Division of Workers

Compensation,

Defendants-Appellees.

No. 13-56996

D.C. No.

8:13-cv-01139-

GW-JEM

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2 ANGELOTTI CHIROPRACTIC V. BAKER

ANGELOTTI CHIROPRACTIC, INC.;

MOONEY & SHAMSBOD

CHIROPRACTIC, INC.; JOYCE

ALTMAN INTERPRETERS, INC.;

SCANDOC IMAGING, INC.; BUENA

VISTA MEDICAL SERVICES, INC.;

DAVID H PAYNE M.D., INC.;

CHRISTINA-ARANA & ASSOCIATES,

INC.,

Plaintiffs-Appellees,

v.

CHRISTINE BAKER, in her official

capacity as Director of the California

Department of Industrial Relations;

RONNIE CAPLANE, in her official

capacity as Chair of the Workers’

Compensation Appeals Board;

DESTIE LEE OVERPECK, in her

official capacity as Acting

Administrative Director of the

California Division of Workers

Compensation,

Defendants-Appellants.

No. 13-57080

D.C. No.

8:13-cv-01139-

GW-JEM

OPINION

Appeal from the United States District Court

for the Central District of California

George H. Wu, District Judge, Presiding

Argued and Submitted

November 18, 2014—Pasadena, California

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ANGELOTTI CHIROPRACTIC V. BAKER 3

Filed June 29, 2015

Before: Mary M. Schroeder and Jacqueline H. Nguyen,

Circuit Judges and Jack Zouhary,

*

 District Judge.

Opinion by Judge Nguyen

SUMMARY**

Civil Rights

The panel affirmed the district court’s dismissal of

plaintiffs’ claims under the Takings Clause and Due Process

Clause challenging California Senate Bill 863, vacated the

district court’s preliminary injunction and through pendent

appellate jurisdiction, reversed the district court’s denial of

defendants’ motion to dismiss plaintiffs’ Equal Protection

Clause claim.

In 2012, California enacted Senate Bill 863 to combat an

acute “lien crisis” in its workers’ compensation system. 

These liens are filed by medical providers and other vendors

to seek payment for services provided to an injured worker

with a pending claim. In an effort to clear an enormous and

rapidly growing backlog of these liens, SB 863 imposes a

$100 “activation fee” on entities like plaintiffs for each

* The Honorable Jack Zouhary, District Judge for the U.S. District Court

for the Northern District of Ohio, sitting by designation.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader. 

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4 ANGELOTTI CHIROPRACTIC V. BAKER

workers’ compensation lien filed prior to January 1, 2013. 

Plaintiffs sued, claiming that SB 863 violates the Takings

Clause, the Due Process Clause, and the Equal Protection

Clause of the United States Constitution.

The panel held that the district court properly dismissed

the Takings Clause claim because the economic impact of SB

863 and its interference with plaintiffs’ expectations was not

sufficiently severe to constitute a taking. The panel further

concluded that the lien activation fee did not burden any

substantive due process right to court access and also rejected

plaintiffs’ claim that the retroactive nature of the lien

activation fee violated the Due Process Clause. 

Vacating the district court’s preliminary injunction, the

panel held that the district court abused its discretion in

finding that a “serious question” existed as to the merits of

plaintiffs’ Equal Protection claim. Applying rational basis

review, the panel held that Labor Code § 4903.06(b), which

exempts certain entities other than plaintiffs from having to

pay the lien activation fee, was rationally related to the goal

of clearing the lien backlog. The panel also reversed the

district court’s denial of defendants’ motion to dismiss the

Equal Protection Clause claim because the panel’s ruling on

the preliminary injunction necessarily resolved the motion to

dismiss. 

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ANGELOTTI CHIROPRACTIC V. BAKER 5

COUNSEL

Donna M. Dean (argued), Deputy Attorney General, Joel A.

Davis, Supervising Deputy Attorney General, Kristin G.

Hogue, Senior Assistant Attorney General, Kathleen A.

Kenealy, Chief Assistant Attorney General, and Kamala D.

Harris, Attorney General of California, Los Angeles,

California, for Defendants-Appellants & Cross-Appellees.

Glenn E. Summers (argued), Sundeep K. Addy, and Daniel C.

Taylor, Bartlit Beck Herman Palenchar & Scott LLP, Denver,

Colorado; Paul Murphy and Mark Nagle, Murphy Rosen

LLP, Santa Monica, California, for Plaintiffs-Appellees &

Cross-Appellants.

Nicholas P. Roxborough and Anne S. Kelson, Roxborough,

Pomerance, Nye, & Adreani, LLP, Woodland Hills,

California, for Amicus Curiae California Societyof Industrial

Medicine and Surgery.

Michael A. Marks, Allweiss & McMurtry, Tarzana,

California, for Amicus Curiae California Workers’

Compensation Institute & American Insurance Association.

Ellen Sims Langille and Katherine F. Theofel, Finnegan,

Marks, Theofel & Desmond, San Francisco, California, for

Amicus Curiae California Chamber of Commerce.

Eric S. Boorstin (argued) and Jeremy B. Rosen, Horvitz &

Levy LLP, Encino, California, for Amicus Curiae State

Compensation Insurance Fund.

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6 ANGELOTTI CHIROPRACTIC V. BAKER

OPINION

NGUYEN, Circuit Judge:

In 2012, California enacted Senate Bill 863 (“SB 863”) to

combat an acute “lien crisis” in its workers’ compensation

system. These liens are filed by medical providers and other

vendors to seek payment for services provided to an injured

worker with a pending claim. In an effort to clear an

enormous and rapidly growing backlog of these liens, SB 863

imposes a $100 “activation fee” on entities like plaintiffs for

each workers’ compensation lien filed prior to January 1,

2013. Plaintiffs sued, claiming that SB 863 violates the

Takings Clause, the Due Process Clause, and the Equal

Protection Clause of the United States Constitution.

We affirm the district court’s dismissal of plaintiffs’

claims under the Takings Clause and Due Process Clause. As

to the Equal Protection claim, however, we vacate the

preliminary injunction and, through pendent appellate

jurisdiction, reverse the district court’s denial of the motion

to dismiss this claim.

BACKGROUND

A. Overview of the Workers’ Compensation System

Employers in California typically provide medical care

and other services to employees for work-related injuries. 

See generally Cal. Lab. Code §§ 3600, et seq. An employer

or its workers’ compensation insurer may choose to provide

medical care to workers through the employer’s Medical

Provider Network (“MPN”), 2 Witkin, Summ. Cal. Law,

Work. Comp. § 262 (10th ed. 2005), its Health Care

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ANGELOTTI CHIROPRACTIC V. BAKER 7

Organization (“HCO”), Cal. Lab. Code § 4600.3, or neither

of these. An MPN is a group of health care providers

selected by an employer or insurer to treat injured workers,

and an HCO is a managed care organization that contracts

with an employer to provide managed medical care.

In certain cases, an employer or its insurer might decline

to provide medical treatment to an injured employee on the

grounds that an injury is not work-related or the treatment is

not medically necessary. An injured worker may then seek

medical treatment on his or her own, and, if the injury is later

deemed work-related and the treatment medically necessary,

the employer is liable for the “reasonable expense” incurred

in providing treatment, which may include ancillary services

such as an interpreter to facilitate treatment. Cal. Lab. Code

§ 4600(a), (f); 2 Witkin, Summ. Cal. Law, Work. Comp.

§ 264; Guitron v. Santa Fe Extruders, 76 Cal. Comp. Cases

228, at *9 (WCAB 2011). An employer also may be liable

for “medical-legal expenses” necessary “for the purpose of

proving or disproving a contested claim” for workers’

compensation benefits, such as diagnostic tests, lab fees, and

medical opinions. Cal. Lab. Code § 4620(a).

A provider of services—whether for medical treatment,

ancillary services, or medical-legal services—may not seek

payment directly from the injured worker. Id. § 3751(b). Nor

may a provider seek payment through the filing of a civil

action against the employer or its insurer. Vacanti v. State

Comp. Ins. Fund, 24 Cal. 4th 800, 815 (2001) (“[C]laims

seeking compensation for services rendered to an employee

in connection with his or her workers’ compensation claim

fall under the exclusive jurisdiction of the [Workers’

Compensation Appeals Board].”). Instead, these providers

may seek compensation by filing a lien in the injured

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8 ANGELOTTI CHIROPRACTIC V. BAKER

employee’s workers’ compensation case. See generally

Rassp & Herlick, Cal. Workers’ Comp. Law ch. 17 (Lexis

2014). The filing of a lien entitles a provider to participate in

the workers’ compensation proceeding in order to protect its

interests. Id. § 17:111[5]. After the underlying workers’

compensation case is adjudicated, a “lien conference” is held

to discuss the liens that have not already been resolved

through settlement. Id. § 17:113. Any issues not resolved at

the lien conference will be set for a “lien trial.” Id.

Whether a provider of medical or ancillary services

obtains payment on its lien depends on the result reached in

the underlying case. These providers are entitled to payment

of their liens if the injured worker establishes that the injury

was work-related and that the medical treatment provided was

“reasonably required to cure or relieve the injured worker

from the effects of his or her injury.” Cal. Lab. Code § 4600;

see also id. § 4903.

Providers of medical-legal services must demonstrate that

the expense was “reasonably, actually, and necessarily

incurred,” Cal. Labor Code § 4621, “for the purpose of

proving or disproving a contested” workers’ compensation

claim, Rassp &Herlick § 17.70[1](c) (quotingCal. Lab. Code

§ 4620(a)). Medical-legal lien claimants may still obtain

payment even if the injured worker does not prevail in the

underlying workers’ compensation proceeding, provided that

the medical-legal expenses are “credible and valid.” Id.

B. The Lien Crisis and SB 863

The parties do not dispute that California’s workers’

compensation system is overwhelmed by liens, with a

substantial backlog that is growing rapidly. On September

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ANGELOTTI CHIROPRACTIC V. BAKER 9

18, 2012, California enacted SB 863, which aims to address

the “lien crisis,” described in a January 5, 2011 report

prepared by the California Commission on Health and Safety

and Workers’ Compensation (“Commission Report”). The

Commission Report noted that the workers’ compensation

courts lacked “the capacity to handle all the lien disputes”

that were filed. For example, the Los Angeles Office of the

Workers’ Compensation Appeals Board devotes 35 percent

of its time to lien-related matters, and even though it resolves

liens at the rate of approximately 2,000 per month as of

October 2010, the rate of filings is such that the backlog of

unresolved liens grows byapproximately 2,000 per month, on

top of the pre-existing backlog of 800,000. According to the

Commission Report, the backlog has two effects. First,

frivolous liens remain pending for years rather than being

denied outright, resulting in the employer paying to settle just

to close the case. Second, meritorious liens are delayed,

which means that employers can deny these claims with

impunity for years. One of the reforms recommended by the

Commission Report is the institution of a lien filing fee in

order to deter the filing of liens generally, and particularly to

deter the filing of frivolous liens.

SB 863 imposes a $150 filing fee for all liens filed on or

after January 1, 2013. Cal. Lab. Code § 4903.05(c)(1). 

Plaintiffs do not challenge the filing fee in this action. More

pertinently, SB 863 imposes a $100 “activation fee” for

pending liens filed prior to January 1, 2013, which must be

paid at the time that a declaration of readiness is filed for a

lien conference. Id. § 4903.06(a)(1), (2). Any lien for which

the activation fee is not paid by January 1, 2014, is

“dismissed by operation of law.” Id. § 4903.06(a)(5). The

purpose of these fees, according to a report of the State

Assembly’s Committee on Insurance, is to “provide a

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10 ANGELOTTI CHIROPRACTIC V. BAKER

disincentive to file frivolous liens.” The lien activation fee

provision exempts the following entities:

a health care service plan licensed pursuant to

Section 1349 of the Health and Safety Code,

a group disability insurer under a policy

issued in this state pursuant to the provisions

of Section 10270.5 of the Insurance Code, a

self-insured employee welfare benefit plan, as

defined in Section 10121 of the Insurance

Code, that is issued in this state, a TaftHartley health and welfare fund, or a publicly

funded program providingmedical benefits on

a nonindustrial basis.

Id. § 4903.06(b).

A lien claimant may recover reimbursement for the

activation fee by taking the following steps: first, 30 or more

days prior to filing a lien or a declaration of readiness for a

lien conference, the lien claimant must make a “written

demand for settlement of the lien claim for a clearly stated

sum;” second, the defendant (i.e., the entity owing on the

lien) must fail to accept the settlement within 20 days of

receipt of the settlement demand; and third, after submission

of the lien dispute to an arbitrator or the Workers’

Compensation Appeals Board, “a final award is made in favor

of the lien claimant of a specified sum that is equal to or

greater than the amount of the settlement demand.” Cal. Lab.

Code § 4903.07(a). This section does not preclude

reimbursement of the activation fee pursuant to “the express

terms of an agreed disposition of a lien dispute.” Id.

§ 4903.07(b).

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ANGELOTTI CHIROPRACTIC V. BAKER 11

C. The Present Action

Plaintiffs sued various state officials and agencies1

asserting claims for violations of the Takings Clause, the Due

Process Clause, and the Equal Protection Clause of the United

States Constitution.2 Plaintiffs filed a motion for a

preliminary injunction, and defendants moved to dismiss

plaintiffs’ complaint for failure to state a claim. After hearing

argument and issuing multiple written tentative rulings, the

district court dismissed plaintiffs’ Due Process and Takings

claims without leave to amend and entered final judgment as

to those claims pursuant to Federal Rule of Civil Procedure

54(b). The court denied defendants’ motion to dismiss the

Equal Protection claim. The court also issued a preliminary

injunction in plaintiffs’ favor as to the Equal Protection

claim, but not as to the other claims. Defendants appeal the

district court’s issuance of the preliminary injunction and its

denial of the motion to dismiss the Equal Protection claim. 

Plaintiffs cross-appeal as to the dismissal of their Takings and

Due Process claims.

1 The plaintiffs are Angelotti Chiropractic, Inc., Mooney & Shamsbod

Chiropractic, Inc., Christina-Arana & Associates, Inc., Joyce Altman

Interpreters, Inc., Scandoc Imaging, Inc., Buena Vista Medical Services,

Inc., and David H. Payne, M.D., Inc. Defendants are Christine Baker, in

her official capacity as the Director of the California Department of

Industrial Relations, Ronnie Caplane, in her official capacity as Chair of

the Workers’ Compensation Appeals Board, and Destie Lee Overpeck, in

her official capacity as Acting Administrative Director of the California

Division of Worker’ Compensation.

2 Plaintiffs also assert a stand-alone claim under 42 U.S.C. § 1983. In

the district court and on appeal, the parties do not address this claim. We

follow their lead.

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12 ANGELOTTI CHIROPRACTIC V. BAKER

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to 28 U.S.C.

§ 1331. We have jurisdiction over the district court’s order

dismissing the Takings and Due Process claims pursuant to

28 U.S.C. §§ 1291, as a result of the district court’s

certification pursuant to Federal Rule of Civil Procedure

54(b). See, e.g., Ariz. State Carpenters Pension Trust Fund

v. Miller, 938 F.2d 1038, 1039–40 (9th Cir. 1991). We have

jurisdiction over the district court’s preliminary injunction

order pursuant to 28 U.S.C. § 1292(a)(1), and we have

pendent appellate jurisdiction over the district court’s denial

of defendants’ motion to dismiss the Equal Protection claim. 

See Arc of Cal. v. Douglas, 757 F.3d 975, 993 (9th Cir. 2014).

We review de novo the district court’s dismissal of the

Takings and Due Process claims and accept factual

allegations in the complaint as true. Flores v. Cnty. of L.A.,

758 F.3d 1154, 1156 n.2, 1158 (9th Cir. 2014). We review the

district court’s decision to grant a preliminary injunction for

abuse of discretion. See Pimentel v. Dreyfus, 670 F.3d 1096,

1105 (9th Cir. 2012). In conducting that review, we consider

whether plaintiffs are “likely to succeed on the merits, . . .

likely to suffer irreparable harm in the absence of preliminary

relief,” whether “the balance of equities tips in [their favor],”

and whether “an injunction is in the public interest. Alliance

for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir.

2011) (quoting Winter v. Natural Res. Def. Council, 555 U.S.

7, 20 (2008)). “Serious questions going to the merits and

hardship balance that tips sharply towards [plaintiffs] can

[also] support issuance of a[] [preliminary] injunction,” so

long as there is a likelihood of irreparable injury and the

injunction is in the public interest.” Id. at 1132 (internal

quotation marks omitted).

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ANGELOTTI CHIROPRACTIC V. BAKER 13

DISCUSSION

Plaintiffs challenge the district court’s dismissal of their

Takings and Due Process claims. On cross-appeal,

defendants challenge the district court’s issuance of the

preliminary injunction on the Equal Protection claim. 

Defendants also argue that the court erred in denying their

motion to dismiss the Equal Protection claim. We address

each claim in turn.

A. Takings

Plaintiffs contend that the lien activation fee violates the

Takings Clause of the Fifth Amendment, which prohibits the

taking of private property “for public use, without just

compensation.” U.S. Const. amend. V. The Takings Clause

protects property interests created by independent sources

such as state law, but does not itself create property interests. 

Bowers v. Whitman, 671 F.3d 905, 912–14 (9th Cir. 2012). 

The property interest must be “vested.” In other words, “if

the property interest is ‘contingent and uncertain’ or the

receipt of the interest is ‘speculative’ or ‘discretionary,’ then

the government’s modification or removal of the interest will

not constitute a . . . taking.” Id. (citing Engquist v. Or. Dep’t

of Agric., 478 F.3d 985, 1002–04 (9th Cir. 2007)).

Here, the workers’ compensation liens are not property

interests protected by the Takings Clause. First, the right to

workers’ compensation benefits is “wholly statutory,” and

such rights are not vested until they are “reduced to final

judgment.” Graczyk v. Workers’ Comp. Appeals Bd.,

184 Cal. App. 3d 997, 1006 (1986). In Graczyk, plaintiff

Ricky Graczyk, a varsity football player at California State

University, Fullerton (“CSUF”), sustained a series of head,

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14 ANGELOTTI CHIROPRACTIC V. BAKER

neck, and spine injuries in 1977 and 1978. Id. at 1000. 

Graczyk sought workers’ compensation benefits from CSUF

on the grounds that his status as a student athlete qualified

him as an employee of CSUF within the definition of the

California Labor Code. Id. A workers’ compensation judge

agreed, and found Graczyk eligible for workers’

compensation benefits. Id. at 1001. While the judge

acknowledged that, in 1981, the Legislature expressly

excluded student athletes from the definition of “employee,”

the judge nevertheless found that the new definition could not

be applied retroactively to “deprive [Graczyk] of his vested

right to employee status under the law existing at the time of

his injury.” Id.

The Workers’ Compensation Appeals Board reversed,

and the Court of Appeal affirmed. Id. at 1001–09. The court

reasoned that Graczyk’s “inchoate right to benefits under the

workers’ compensation law is wholly statutory and had not

been reduced to final judgment before the [1981 amendment]. 

Hence, [Graczyk] did not have a vested right . . . .” Id. at

1006. The court explained that, “[w]here a right of action

does not exist at common law, but depends solely on statute,

the repeal of the statute destroys the inchoate right unless it

has been reduced to final judgment.” Id. at 1006–07; see also

Beverly Hilton Hotel v. Workers’ Comp. Appeals Bd.,

176 Cal. App. 4th 1597, 1605 (2009) (citing Graczyk for the

proposition that “[w]orkers’ compensation awards may

become null by subsequent legislation enacted prior to a final

judgment”); S. Coast Regional Comm’n v. Gordon, 84 Cal.

App. 3d 612, 619 (1978) (noting that “a statutory remedy

does not vest until final judgment since it has been held in a

long line of cases that the repeal of a statute creating a

penalty, running to either an individual or the state, at any

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ANGELOTTI CHIROPRACTIC V. BAKER 15

time before final judgment, extinguishes the right to recover

the penalty” (internal quotation marks omitted)).

Since an injured workers’ right to benefits does not vest

until final judgment, the same is true for the liens at issue

here, which are derivative of the underlying workers’

compensation claim. See Perrillo v. Picco & Presley,

157 Cal. App. 4th 914, 929 (2007) (noting that a lien

claimant’s rights to medical-legal costs are “derivative” of the

injured worker’s rights). Medical and ancillary lienholders

have the right to recover on the lien only upon a

determination that the expense was “reasonably required to

cure or relieve the injured worker from the effects of his or

her injury.” Cal. Lab. Code § 4600. Similarly, medical-legal

lien claimants must also demonstrate that an expense is

“incurred . . . for the purpose of proving or disproving a

contested” workers’ compensation claim, even if the injured

worker does not prevail in the underlying claim. Rassp &

Herlick § 17.70[1](c) (quoting Cal. Lab. Code § 4620(a)). 

Thus, because the right to workers’ compensation benefits

does not vest until reduced to a final judgment, it would be

illogical to reach a different conclusion as to the liens.

Plaintiffs’ reliance on In re Aircrash in Bali, Indonesia on

April 22, 1974, 684 F.2d 1301, 1312 (9th Cir. 1982), is

unpersuasive. There, the claim for compensation at issue was

a jury verdict for damages, id. at 1304, and even though it

was not reduced to a final judgment because it was still

pending on appeal, id., a jury award is substantially more

final than a pending workers’ compensation lien, which is

derivative of rights yet to be adjudicated at all. Plaintiffs also

cite several Supreme Court cases that have identified liens as

property protected by the Takings Clause. These cases do not

help plaintiffs because they address liens secured by a

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16 ANGELOTTI CHIROPRACTIC V. BAKER

specific piece of property. See Louisville Joint Stock Land

Bank v. Radford, 295 U.S. 555, 573–75 (1935) (mortgage lien

secured by 170 acre farm); Armstrong v. United States,

364 U.S. 40, 41 (1960) (lien secured by boat hulls); United

States v. Sec. Indus. Bank, 459 U.S. 70, 71–72 (1982) (lien

secured by interest in household furnishings). Here, by

contrast, the liens are unsecured, and act as a placeholder for

the possibility of a future recovery in a lien trial following the

adjudication of the underlying workers’ compensation claim.

Finally, plaintiffs argue that the lien activation fee

constitutes a taking of the services that they have already

provided to injured workers because the fee requires them to

pay large sums of money ($100, many times over) to save

their liens from dismissal. As the district court properly

found, the services were provided to the injured workers, not

the state, and were provided before the enactment of SB 863,

and thus could not have been “taken” by that legislation. 

While we agree that “an unreasonable amount of required

uncompensated service” might qualify as a taking, Family

Div. Trial Lawyers of Sup. Ct.-D.C., Inc. v. Moultrie,

725 F.2d 695, 705–06 (D.C. Cir. 1984), plaintiffs here were

never under any compulsion to provide services. Rather, they

rendered these services freely, with the expectation that they

might be compensated through the lien system. Provided that

the activation fee is paid, SB 863 does not affect plaintiffs’

ability to obtain payment on outstanding liens. Moreover, by

using the offer of settlement procedure set forth in Labor

Code § 4903.07(a), plaintiffs can preserve the possibility of

obtaining reimbursement of the fee. Under these

circumstances, we conclude that the district court properly

dismissed the Takings claim because the economic impact of

SB863 and its interference with plaintiffs’ expectations is not

sufficiently severe to constitute a taking. Cf. Managed

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ANGELOTTI CHIROPRACTIC V. BAKER 17

Pharmacy Care v. Sebelius, 716 F.3d 1235, 1252 (9th Cir.

2013) (holding that change in Medicaid reimbursement rates

did not give rise to a Takings claim because medical provider

participation in the program is voluntary).

B. Due Process

We next turn to plaintiffs’ claim that the lien activation

fee violates their due process rights. The Due Process Clause

of the Fourteenth Amendment provides that “[n]o State shall

. . . deprive any person of life, liberty, or property, without

due process of law.” U.S. Const. amend. XIV, § 1.

Plaintiffs argue that the lien activation fee provisions

burden their substantive due process right of access to the

courts, as set forth in Boddie v. Connecticut, 401 U.S. 371

(1971), and Payne v. Superior Court, 553 P.2d 565 (Cal.

1976). In Boddie, the Supreme Court struck down a filing fee

that prevented indigent litigants from obtaining a divorce. 

401 U.S. at 380–82. The Court reasoned that court

proceedings were “the sole means in Connecticut for

obtaining a divorce,” id. at 380, and noted the “basic

importance” of marriage in society, id. at 376. In Payne, the

California Supreme Court held that a prisoner had a due

process right to attend, or at least meaningfully participate in,

civil proceedings initiated against him despite his

incarceration. 553 P.2d at 570–73. Citing Boddie, the

California Court explained that “a defendant in a civil case

seeks not merely the benefit of a statutory expectancy, but the

protection of property he already owns or may own in the

future.” Payne, 553 P.2d at 571. Thus, the prisoner had been

“[f]ormally thrust into the judicial process,” and therefore had

“no alternative to the court system to protect his interests.” 

Id. at 572.

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18 ANGELOTTI CHIROPRACTIC V. BAKER

Here, by contrast, plaintiffs have not been “thrust” into

the judicial process. Cf. id. Nor is formal adjudication of the

lien the only way for plaintiffs to obtain payment, cf. Boddie,

401 U.S. at 380, since they are not barred from settling lien

disputes out of court. Moreover, this case does not present a

weighty societal concern on the level of the institution of

marriage. Cf. id. The lien activation fee here is more akin to

filing fees in conventional litigation scenarios, in which the

Supreme Court has rejected due process challenges. See

United States v. Kras, 409 U.S. 434, 443–46 (1973)

(upholding bankruptcy filing fee because bankruptcy did not

involve “fundamental interest” on the order of marriage, and

a debtor may resolve disputes with creditors through other

avenues besides the courts); Ortwein v. Schwab, 410 U.S.

656, 659 (1973) (upholding filing fee for action challenging

reduction in welfare payments because a pre–reduction

hearing was provided, and the interest in welfare is of “far

less constitutional significance than the interest of the Boddie

appellants”); see also Roller v. Gunn, 107 F.3d 227, 233 (4th

Cir. 1997) (explaining that filing fee for litigation by indigent

prisoner merely “places the . . . prisoner in a position similar

to that faced by those whose basic costs of living are not paid

by the state . . . [a prisoner] must weigh the importance of

redress before resorting to the legal system”). For these

reasons, we conclude that the lien activation fee does not

burden any substantive due process right to court access.

We also reject plaintiffs’ claim that the retroactive nature

of the lien activation fee violates the Due Process Clause. 

While courts will presume that statutes are intended to

operate prospectively, Landgraf v. USI Film Products,

511 U.S. 244, 265–73 (1994), and “stricter limits may apply

to [a legislature’s] authority when legislation operates in a

retroactive manner,” Eastern Enters. v. Apfel, 524 U.S. 498,

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524 (1998) (plurality opinion), a statute that the legislature

clearly intended to operate retroactively will be upheld if its

retroactivity is “justified by a rational legislative purpose.” 

United States v. Carlton, 512 U.S. 26, 31 (1994) (quoting

Pension Benefit Guaranty Corporation v. R.A. Gray & Co.,

467 U.S. 717, 729–30 (1984)).

Here, there is no dispute that the California Legislature

intended for the lien activation fee to operate retroactively. 

See Cal. Lab. Code § 4903.06(a) (requiring payment of

activation fee for “[a]ny lien filed . . . prior to January 1,

2013”). And, as discussed below in our analysis of the Equal

Protection claim, the lien activation fee provisions are

“justified by [the] rational legislative purpose” of clearing the

lien backlog. See Carlton, 512 U.S. at 31. We thus conclude

that the retroactivity of the lien activation fee does not violate

the Due Process Clause.

Plaintiffs’ reliance on Untermyer v. Anderson, 276 U.S.

440 (1928) and Nichols v. Coolidge, 274 U.S. 531 (1927), is

unpersuasive. In those cases, the Supreme Court invalidated

taxes that operated retroactively. The Court recently cited

those cases for the proposition that the retroactive application

of a “wholly new tax” may be constitutionally problematic. 

See Carlton, 512 U.S. at 34. However, the Court also

expressed skepticism as to the degree to which Nichols and

Untermyer still apply, since “those cases were decided during

an era characterized by exacting review of economic

legislation under an approach that has long since been

discarded.” Id. (internal quotation marks omitted). The

Court emphasized that the modern framework for evaluating

retroactive taxation “‘does not differ from the prohibition

against arbitrary and irrational legislation’ that applies

generally to enactments in the sphere of economic policy.” 

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Id. (quoting Pension Benefit Guaranty Corp., 467 U.S. at

733). Thus, even assuming, without deciding, that the lien

activation fee is analogous to a tax, its retroactive effect does

not violate due process because its retroactivity is justified by

a rational legislative purpose.

C. Equal Protection

Finally, we turn to defendants’ claim that the district court

abused its discretion in issuing a preliminary injunction on

the ground that the lien activation fee violates the Equal

Protection Clause, and that the court further erred in denying

their motion to dismiss this same claim.

1. Preliminary Injunction

The Equal Protection Clause of the Fourteenth

Amendment provides that “[n]o State shall . . . deny to any

person within its jurisdiction the equal protection of the

laws.” U.S. Const. amend. XIV, § 1.

Plaintiffs contend that Labor Code § 4903.06(b)’s

exemption of certain entities other than plaintiffs from having

to pay the lien activation fee violates the Equal Protection

Clause. Plaintiffs also argue that strict scrutiny applies in

evaluating the exemption because the activation fee trenches

on a fundamental right of access to the courts. As an initial

matter, we reject plaintiffs’ argument that strict scrutiny

applies because, as discussed above, the lien activation fee

does not implicate any fundamental right. Moreover, it is

well settled that equal protection challenges to economic

legislation such as SB 863 are evaluated under rational basis

review. See, e.g., FCC v. Beach Comm’cns, Inc., 508 U.S.

307, 313 (1993). We accordingly apply rational basis review

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ANGELOTTI CHIROPRACTIC V. BAKER 21

in considering whether Labor Code § 4903.06(b) violates the

Equal Protection Clause.

Under rational basis review, legislation that does not draw

a distinction along suspect lines such as race or gender passes

muster under the Equal Protection Clause as long as “there is

any reasonably conceivable state of facts that could provide

a rational basis for the classification.” FCC v. Beach

Comm’cns, Inc., 508 U.S. 307, 313 (1993). Thus, a

legislative classification must be upheld

so long as there is a plausible policy reason

for the classification, the legislative facts on

which the classification is apparently based

rationally may have been considered to be

true by the governmental decisionmaker, and

the relationship of the classification to its goal

is not so attenuated as to render the distinction

arbitrary or irrational.

Nordlinger v. Hahn, 505 U.S. 1, 11 (1992) (citations

omitted); see also Armour v. City of Indianapolis, 132 S. Ct.

2073, 2079–80 (2012).

Here, one “plausible policy” goal, see Nordlinger,

505 U.S. at 11, for the imposition of the lien activation fee is

to help clear the lien backlog by forcing lienholders to

consider whether a lien claim is sufficiently meritorious to

justify spending $100 to save it from dismissal. In turn, the

California Legislature’s decision to impose the activation fee

on entities like plaintiffs, while exempting other entities, is

rationally related to the goal of clearing the backlog because

the Legislature might have rationally concluded that the nonexempt entities are primarily responsible for the backlog. In

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this regard, the Commission Report states that ten of the

eleven top electronic lien filers are independent providers. 

Thus, the Legislature could have rationally found that

independent service providers bore primary responsibility for

the lien backlog, and therefore elected to focus on those

entities in imposing the activation fee.

The Legislature’s approach also is consistent with the

principle that “the legislature must be allowed leeway to

approach a perceived problem incrementally.” Beach

Commc’ns, 508 U.S. at 316; see also Silver v. Silver, 280 U.S.

117, 124 (1929) (stating that “[i]t is enough that the present

statute strikes at the evil where it is felt and reaches the class

of cases where it most frequently occurs.”). Targeting the

biggest contributors to the backlog—an approach that is both

incremental, see Beach Commc’ns, 508 U.S. at 316, and

focused on the group that “most frequently” files liens, see

Silver, 280 U.S. at 124,—is certainly rationally related to a

legitimate policy goal. Therefore, on this record, “the

relationship of the classification to [the Legislature’s] goal is

not so attenuated as to render the distinction arbitrary or

irrational.” Nordlinger, 505 U.S. at 11.

Moreover, on rational basis review, the burden is on

plaintiffs to negate “every conceivable basis” which might

have supported the distinction between exempt and nonexempt entities. See Armour, 132 S. Ct. at 2080–81. The

district court did not put plaintiffs to their burden of

demonstrating a “likelihood” or “serious question” that they

would be able to refute all rationales for this distinction and

its relationship to the goal of clearing the backlog. See

Winter v. Natural Resources Def. Council, 555 U.S. 7, 20

(2008); Alliance for the Wild Rockies v. Cottrell, 632 F.3d

1127, 1134–35 (9th Cir. 2011). Rather, the district court

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rejected defendants’ argument that the activation fee was

aimed at clearing the lien backlog, stating:

the backlog is the backlog, and if clearing it is

your purpose, then you attempt to clear it. It

makes little sense to clear only part of it. The

Court might also question the basis for the

legislature's belief in its apparent conclusion

that the exempted entities, in particular, are

not major contributors to the backlog (and

why other contributors who might also not be

major contributors are not also exempted from

the activation fee).

This reasoning runs contrary to Beach Communications and

Silver because it denies the Legislature the leeway to tackle

the lien backlog piecemeal, focusing first on a source of liens

that it could have rationally viewed as the biggest contributor

to the backlog. Also, the district court’s skepticism of the

notion that the exempted entities were not major contributors

of the backlog ran afoul of the principle that “a legislative

choice is not subject to courtroom fact-finding and may be

based on rational speculation unsupported by evidence or

empirical data.” See Beach Commc’ns, 508 U.S. at 315; see

also City of New Orleans v. Dukes, 427 U.S. 297, 303 (1976)

(per curiam) (stating that “rational [legislative] distinctions

may be made with substantially less than mathematical

exactitude”).3

3 Plaintiffs cite a portion of the oral argument transcript in the district

court in which plaintiffs’ counsel asserted, based on a public records

request, that Kaiser Foundation Hospitals and Anthem Blue Cross, both

exempt entities, rank at number six and number seven on a list of the

state’s largest lienholders. This assertion of counsel has no documentary

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Finally, we are not persuaded by plaintiffs’ reliance on

Lindsey v. Normet, 405 U.S. 56, 77–80 (1972). In Lindsey, an

Oregon statute required tenants wishing to appeal an order of

eviction to file “an undertaking with two sureties for the

payment of twice the rental value of the premises.” Id. at

75–76. This amount would be forfeited by the tenant if the

appeal was unsuccessful. Id. Oregon law imposed no such

double surety requirement on any other litigants in any other

civil proceedings. Id. The Supreme Court held that this

requirement, imposed only on defendants appealing from

eviction proceedings in which they did not prevail in the trial

court, was arbitrary and irrational because no other appellant

in Oregon was “subject to automatic assessment of unproved

damages,” the landlord was already protected by traditional

appeal bond requirements, and the double-bond requirement

did not operate to screen out frivolous appeals because it “not

only bars nonfrivolous appeals by those who are unable to

post the bond but also allows meritless appeals by others who

can afford the bond.” Id. at 78. The Court focused on the

fact that “the discrimination against the poor, who could pay

their rent pending an appeal but cannot post the double bond,

is particularly obvious,” and the traditional bond

requirements were sufficient to protect the landlord’s

interests. Id. at 77–79. Indeed, Lindsey relies on a line of

Supreme Court cases, including Griffin v. Illinois, 351 U.S.

12, 19 (1956) that looks with particular disfavor on laws that

erect barriers to an indigent litigant’s access to the appellate

process. See Lindsey, 405 U.S. at 77 (citing cases). By

contrast, this case does not present issues of indigency or

support in the record before us. And, even if it did, the fact that the

distinction drawn by the Legislature is imperfect because it exempts some

large lienholders will not render it invalid on rational basis review. See

Dukes, 427 U.S. at 303.

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discrimination against the poor, and thus Lindsey does not

guide our analysis.

In sum, we conclude that the district court abused its

discretion in finding that a “serious question” exists as to the

merits of plaintiffs’ Equal Protection claim. In the absence of

a “serious question” going to the merits of this claim, the

preliminary injunction must be vacated. See Alliance for the

Wild Rockies, 632 F.3d at 1134–35.

2. Motion to Dismiss

In addition to challenging the preliminary injunction,

defendants seek reversal of the district court’s denial of their

motion to dismiss plaintiffs’ Equal Protection claim because

it is “inextricably intertwined” with the resolution of the

court’s ruling on the preliminary injunction.

Denial of a motion under Federal Rule of Civil Procedure

12(b)(6) is “generally . . . not a reviewable final order.” 

Jensen v. City of Oxnard, 145 F.3d 1078, 1082 (9th Cir.

1998). While an appellate court reviewing an appealable

order may exercise pendent appellate jurisdiction over an

otherwise non-appealable order, the two orders must be

“inextricably intertwined.” Streit v. County of Los Angeles,

236 F.3d 552, 559 (9th Cir. 2001). In other words, the two

orders must “raise the same issues, use the same legal

reasoning, and reach the same conclusions.” Id. Two issues

(or orders) are not “inextricably intertwined” if they are

governed by different legal standards. Cunningham v. Gates,

229 F.3d 1271, 1285 (9th Cir. 2000).

“Although the standards for a motion for preliminary

injunctive relief and dismissal under Rule 12(b)(6) are not

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conterminous, they overlap where a court determines that the

plaintiff has no chance of success on the merits.” Arc of Cal.

v. Douglas, 757 F.3d 975, 993 (9th Cir. 2014) (exercising

pendent appellate jurisdiction over dismissal under Rule

12(b)(6) where the district court ordered dismissal “for the

selfsame reason” that it denied a preliminary injunction). 

This is so because a complaint cannot state a plausible claim

for relief if there is “no chance of success on the merits.” Id.

(quoting E. & J. Gallo Winery v. Andina Licores S.A.,

446 F.3d 984, 990 (9th Cir. 2006)). Here, our conclusion that

the exemption provision is rationally related to the purpose of

clearing the lien backlog amounts to a determination that

plaintiffs have no chance of success on the merits because,

regardless of what facts plaintiffs might prove during the

course of litigation, “a legislative choice is not subject to

courtroom fact-finding and may be based on rational

speculation unsupported by evidence or empirical data.” See

Beach Commc’ns, 508 U.S. at 315. Thus, the presence in the

Commission Report of evidence suggesting that non-exempt

entities are the biggest contributors to the backlog is

sufficient to eliminate any chance of plaintiffs succeeding on

the merits. Accordingly, we exercise pendent appellate

jurisdiction over the district court’s denial of the motion to

dismiss, and reverse.

CONCLUSION

The district court properly dismissed plaintiffs’ Takings

and Due Process claims. We likewise conclude dismissal

without leave to amend is proper because “it is clear, upon de

novo review, that the [claims] could not be saved by . . .

amendment.” Steckman v. Hart Brewing, Inc., 143 F.3d

1293, 1296 (9th Cir. 1998). However, because the district

court abused its discretion in concluding that “serious

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questions” exist as to the merits of plaintiffs’ Equal

Protection claim, we vacate the preliminary injunction. We

also reverse the district court’s denial of defendants’ motion

to dismiss the Equal Protection claim because our ruling on

the preliminary injunction necessarily resolves the motion to

dismiss.

AFFIRMED in part, VACATED in part, and

REVERSED in part.

Costs are awarded to defendants.

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