Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-01160/USCOURTS-cand-3_15-cv-01160-9/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

FCE BENEFITS ADMINISTRATORS, 

INC.,

Plaintiff,

v.

TRAINING, REHABILITATION & 

DEVELOPMENT INSTITUTE, INC.,

Defendant.

Case No. 15-cv-01160-JST 

ORDER GRANTING MOTION TO 

REALIGN

Re: ECF No. 51

Before the Court is Defendant Training, Rehabilitation & Development Institute, Inc.’s 

(“TRDI”) Motion to Realign, in which TRDI requests that it be realigned as plaintiff and that 

current Plaintiff, FCE Benefits Administrators, Inc. (“FCE”) be realigned as defendant. The Court 

will grant the motion.

I. BACKGROUND

FCE is a third party administrator that provides services including hour tracking, fringe 

compliance, consolidated premium billing, and web enrollment and cloud solutions for fringe 

benefit health plans. Declaration of Gary Beckman (“Beckman Decl.”), ECF No. 18 ¶ 2. TRDI is 

a former FCE client. Id. ¶ 3. In September 2008, the parties entered into an Adoption Agreement 

for TRDI’s Health and Welfare Plan and a Third Party Administrator Agreement (“TPA 

Agreement”). Id. On June 10, 2014, TRDI notified FCE that it was terminating the TPA 

Agreement. Id. ¶ 7. FCE alleges, however, that it continued to provide services through midOctober of 2014, with TRDI’s approval, and that it was not compensated for those services. Id.; 

see also Compl., ECF No. 2.

On January 30, 2015, FCE filed a complaint against TRDI in San Mateo County Superior 

Court for (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) 

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unjust enrichment; and (4) quantum meruit. Compl. at 1. On March 11, 2015, TRDI filed a crosscomplaint in San Mateo County Superior Court, stating claims for (1) breach of fiduciary duty 

under the Employee Retirement Income Security Act (“ERISA”); (2) prohibited transactions under 

ERISA; (3) equitable relief pursuant to ERISA; (4) breach of contract; (5) breach of the implied 

covenant of good faith and fair dealing; (6) unjust enrichment; and (7) accounting. Cross-compl., 

ECF No. 1-2 at 3. On the same day, TRDI removed the action to this Court based on diversity of 

citizenship, pursuant to 28 U.S.C. sections 1332 and 1441(a) and (b). ECF No. 1. FCE does not 

dispute that the case meets the requirements for diversity jurisdiction. ECF No. 22 at 2.

FCE filed its motion to remand on April 1, 2015. ECF No. 16. On May 7, 2015, the Court 

granted the motion in part. ECF No. 24. It retained jurisdiction over TRDI’s ERISA 

counterclaims, but concluded that both FCE’s and TRDI’s state law claims should be remanded to 

the state court, as they were sufficiently distinct from the federal claims under ERISA that parallel 

litigation would not be duplicative or waste judicial resources. ECF No. 24 at 8.

The parties have participated in mediation and settlement talks. See, e.g., ECF No. 42. On 

June 15, 2016, TRDI filed this Motion to Realign. ECF No. 51. The motion is opposed by FCE. 

ECF No. 55.

II. LEGAL STANDARD

A complaint's alignment of the parties “is not binding on the courts.” Scotts Co. LLC v. 

Seeds, Inc., 688 F.3d 1154, 1157 (9th Cir. 2012) (quoting Dolch v. United Cal. Bank, 702 F.2d 

178, 181 (9th Cir. 1983)). “Instead, ‘[w]e must align for jurisdictional purposes those parties 

whose interests coincide respecting the ‘primary matter in dispute.’” Id. (quoting Prudential Real 

Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000)).

There is some variation in the legal analysis that courts generally conduct in regards to 

motions to realign. In Scotts Co., the Ninth Circuit applied the “primary matter in dispute” test to 

determine proper alignment of the parties, id., and at least one case cited extensively by the 

parties, Plumtree Software, Inc. v. Datamize, LLC, No. C 02-5693 VRW, 2003 WL 25841157, at 

*1 (N.D. Cal. Oct. 6, 2003), follows the same test. As FCE notes, however, the Ninth Circuit has 

generally applied that test in cases where realignment could potentially destroy diversity 

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jurisdiction. See Scotts Co., 688 F.3d at 1157; Prudential, 204 F.3d at 87. At least one district 

court has declined to use that test when, as in this case, federal jurisdiction is not at issue. Kerr 

Corp. v. N. Am. Dental Wholesalers, Inc., No. SACV 11-0313 DOC CWX, 2011 WL 4965111, at 

*3 (C.D. Cal. Oct. 18, 2011) (“[T]he ‘primary purpose’ test that Kerr urges is traditionally applied 

in a different context, namely to determine whether a party is improperly designated as a 

defendant or plaintiff as part of an effort to establish sham diversity jurisdiction.”).

FCE contends that the legal standards from cases such as Scotts Co. and Prudential should 

be disregarded based on this distinction. ECF No. 55 at 6. At the same time, however, FCE also 

relies heavily on Plumtree Software, in which the district court used the “primary purpose” test 

despite not being confronted with diversity jurisdiction issues, and indeed, explicitly rejected the 

suggestion that the “primary purpose” test should be limited to cases involving diversity 

jurisdiction concerns. 2003 WL 25841157 at *2-3.

Plumtree Software considered several factors to determine the “primary purpose” of the 

litigation. These factors included (1) “the first party to sue on the issue”; (2) the “natural plaintiff” 

in the case, as defined by who raises “the affirmative claim” and who bears “the burden of proof”; 

(3) whether realignment “may aid in the logical presentation of the evidence at trial”; and (4) 

whether realignment “mitigates the effects of . . . evident forum-shopping.”1 Id. at *2-5. Other 

district courts have considered some of these same factors. See Allegro Ventures, Inc. v. 

Almquist, No. 11-CV-2009-L WVG, 2013 WL 3864329, at *1 (S.D. Cal. July 24, 2013) (“The 

burdens of proof also support realignment.”); Fresenius Med. Care Holdings, Inc. v. Baxter Int'l, 

Inc., No. C 03-01431 SBA(EDL), 2006 WL 1646110, at *2 (N.D. Cal. June 12, 2006) 

(considering both burdens of proof and “efficiency factors and clear presentation of the 

evidence”).

Using this case law as guidance, the Court turns to the merits of the motion.

III. DISCUSSION

 

1

Plumtree Software, which involved a claim for declaratory judgment of patent noninfringement 

and a cross-claim of infringement, also considered two factors that are less relevant here: the 

“rationale for bringing a declaratory judgment action” and consistency with “the Patent Local 

Rules and the parties’ joint case management statement.” 2003 WL 25841157 at *4-5.

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TRDI argues that because its ERISA claim is the only one remaining before this Court, it is

the natural plaintiff in the case. ECF No. 51 at 4. It contends that “TRDI’s ERISA claims form 

the primary matter in dispute,” and that “FCE retains no affirmative claims and, as a result, retains 

no burden to prove any claims.” Id.

TRDI’s position is persuasive. Indeed, it is difficult to see how FCE could remain the 

plaintiff in this case when it is presenting no affirmative claims to the Court. By contrast, all of 

the cases cited by Defendant involve at least a dispute regarding which parties’ claims should be 

considered the primary matter in the litigation. See Plumtree Software, 2003 WL 25841157, at *1 

(comparing claim for declaratory judgment of non-infringment with counterclaim of 

infringement); Allegro Ventures, 2013 WL 3864329, at *2 (comparing claim for declaratory relief 

that a party is not liable for maintenance and cure with counterclaims that the party is liable); 

Fresenius Med. Care, 2006 WL 1646110, at *2 (comparing claim for declaratory judgment of noninfringement with counterclaim of infringement); Kerr Corp., WL 4965111, at *2 (comparing 

commercial defamation and similar claims with trademark infringement and similar claims); 

Animal Care Sys., Inc. v. Hydropac/Lab Products, Inc., No. 13-CV-00143-MSK-BNB, 2014 WL 

103812, at *2 (D. Colo. Jan. 10, 2014) (comparing claims of infringement with claims of 

invalidity). Here, it is quite obvious that TRDI bears the burden of proof and that its claims are 

the primary matter in dispute, because its claims are the only ones before the Court. Because of 

this, TRDI further argues that realignment will “aid in the logical presentation of the evidence at 

trial.” ECF No. 51 at 4.

FCE offers a number of responses to TRDI’s contentions, none of which are persuasive. 

First, it argues that because the parties are sharing discovery between both the federal ERISA 

action and the parallel state action, granting the request will result in discovery documents with 

different parties identified as plaintiff and defendant, which “is virtually guaranteed to confuse the 

jury.” ECF No. 55 at 2. However, FCE identifies no law suggesting that the Court should base its 

alignment of the parties in this case based on the status of a different case; indeed, TRDI points to 

Ninth Circuit law indicating that this would be improper. See ECF No. 51 at 6 (citing Scotts Co., 

688 F.3d at 1156 (“[W]hen a federal court evaluates realigning the parties in a case, it may not 

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consider claims made in a different case.”)). In any event, even if realignment could potentially 

result in some confusion, it would be easy to avoid or remedy this confusion in the state court 

action through the myriad of procedural options available to both the court and the parties.

Second, FCE argues that some of the considerations used in the Plumtree Software

decision, including which party first brought suit and the danger of juror confusion, support 

denying TRDI’s motion. ECF No. 55 at 6. This may be true, but those considerations are 

outweighed by other factors also discussed in the Plumtree Software case, such as that TRDI is the 

only party bringing affirmative claims and with a burden of proof. Moreover, as TRDI points out, 

Plumtree Software offered these various factors as support for why it concluded that one party’s 

claims were the primary purpose of the litigation. See Plumtree Software, 2003 WL 25841157, at 

*6. Here, there is no dispute that TRDI’s ERISA claims, as the only federal claims left, are the 

primary purpose of this case.

Third, FCE contends that the motion is untimely. It states that “[w]hile, theoretically, a 

motion for realignment can be submitted at any time, FCE submits such motions are generally 

submitted early in the litigation.” ECF No. 55 at 7. Missing from this point, however, is any 

identified case law suggesting that the timing of the motion is relevant. FCE adds that had it 

known of TRDI’s intent to seek realignment, it would have raised its concerns when stipulating to 

the parties’ global discovery plan, and repeatedly asserts that it “has received no explanation” 

when asking TRDI for its rationale in requesting realignment. ECF No. 55 at 7. This Court has 

already addressed FCE’s argument about potential jury confusion, and concluded it is not 

dispositive. As for TRDI’s explanation, it has already been stated quite clearly: TRDI is the only 

party bringing claims before this Court and bearing a burden of proof, and therefore is the natural 

plaintiff.

Finally, FCE asserts that realignment is unnecessary, because the Court still retains “its 

inherent authority to direct the order of evidence in the Federal Action or tak[e] any other similar 

steps it may deem appropriate to facilitate an orderly trial.” ECF No. 55 at 3. It is true that 

“district courts have inherent power to control their dockets,” and that “all federal courts are 

vested with inherent powers enabling them to manage their cases and courtrooms effectively and 

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to ensure obedience to their orders.” Allegro Ventures, 2013 WL 3864329, at *1 (quotation marks 

and citations omitted). One of the tools within the Court’s inherent power is to realign the parties 

when it properly reflects the dispute before it. Here, TRDI is the natural plaintiff in the case. 

Accordingly, realignment is appropriate.

CONCLUSION

For the reasons stated above, TRDI’s Motion for Realignment is granted. From this point 

onward, TRDI shall be designated as Plaintiff, and FCE shall be designated as Defendant.

IT IS SO ORDERED.

Dated: August 22, 2016

______________________________________

JON S. TIGAR

United States District Judge

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