Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_13-cv-02378/USCOURTS-caed-2_13-cv-02378-3/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

NUTRISHARE, INC., a California 

corporation,

Plaintiff,

v.

CONNECTICUT GENERAL LIFE INSURANCE 

COMPANY, a Connecticut 

Corporation, CIGNA HEALTH AND LIFE 

INSURANCE COMPANY, a Connecticut 

Corporation,

Defendants.

No. 2:13-cv-02378-JAM-AC

ORDER GRANTING COUNTERDEFENDANTS IN REPLY’S

MOTION TO STRIKE

CONNECTICUT GENERAL LIFE INSURANCE 

COMPANY and CIGNA HEALTH AND LIFE 

INSURANCE COMPANY, 

 Counter-Claimants,

 v.

NUTRISHARE, INC.,

 Counter-Defendant. 

NUTRISHARE, INC., PATIENT ONE, an 

individual, PATIENT TWO, an 

individual, PATIENT THREE, an 

individual, 

Counter-Claimants in 

Reply,

Case 2:13-cv-02378-JAM-AC Document 50 Filed 11/24/14 Page 1 of 8
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v.

CONNECTICUT GENERAL LIFE INSURANCE 

COMPANY and CIGNA HEALTH AND LIFE 

INSURANCE COMPANY, 

Counter-Defendants in 

Reply.

Defendants, Counter-Claimants and Counter-Defendants in 

Reply Connecticut General Life Insurance Company and CIGNA Health 

and Life Insurance Company (collectively “CIGNA”) move to strike 

(Doc. #46) the counter-claim in reply (“CCIR”) (Doc. #35). The 

CCIR was filed on behalf of Plaintiff, Counter-Defendant and 

Counter-Claimant in Reply Nutrishare, Inc. (“Nutrishare”) and 

Counter-Claimants in Reply Patients One, Two, and Three 

(collectively “Patients”).1 For the reasons discussed herein, 

CIGNA’s motion is GRANTED. 

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

The allegations and procedural history of this case have 

been well-documented. Therefore, the Court provides only a brief 

summary of the information relevant to resolving the motion 

currently before it. 

CIGNA brought a counterclaim (“CC”) stating four causes of 

action against Nutrishare: the first two are brought pursuant to 

§ 502(a)(3) of the Employment Retirement Income Security Act 

(“ERISA”), 29 U.S.C. § 1132 (“§1132”), in order to redress 

 

1 This motion was determined to be suitable for decision without 

oral argument. E.D. Cal. L.R. 230(g). The hearing was 

scheduled for November 5, 2014.

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alleged violations of ERISA plans; the third claim is for 

violations of California Business and Professions Code § 17200, 

et seq., California’s unfair competition law (“UCL”); and the 

fourth is for fraud. 

CIGNA serves as the claims administrator and/or the insurer 

of employee health benefit plans governed by ERISA that provide 

reimbursement for covered medical expenses incurred by individual 

plan participants and beneficiaries covered under the plans. CC 

¶ 2. CIGNA acts as a claims review fiduciary, either as the 

third party administrator of a self-funded, employer-sponsored 

group health plan, or as an insurer of such employer-sponsored 

ERISA plans. CC ¶ 16. Nutrishare is a medical provider 

specializing in “home infusion” and the provision of Total 

Parenteral Nutrition (“TPN”) to consumers. CC ¶ 17. Nutrishare 

is outside of CIGNA’s network of providers. Id. ¶ 3. 

The CC alleges that Nutrishare told some participants that 

they would not be billed at all for Nutrishare’s services. Id.

¶ 4. Nutrishare then billed CIGNA at exorbitant rates while 

misrepresenting the amounts it usually accepts for the services 

provided and what the “actual, total charges” for those services 

were. Id. ¶¶ 3, 6-7, 27-32, 39. CIGNA alleges Nutrishare failed

to inform CIGNA that it was not charging the required copayments, deductibles, or coinsurance. Id. The CC seeks to 

recover the amounts paid by CIGNA to Nutrishare as a result of 

the improper and fraudulent claims. CC ¶¶ 43-47, 50, 54, 61, 66. 

Nutrishare moved to dismiss (Doc. #13) and to strike (Doc. 

#12) portions of the CC. The Court denied the motions (Doc. #25) 

but certified (Doc. #41) the issue of federal preemption for 

Case 2:13-cv-02378-JAM-AC Document 50 Filed 11/24/14 Page 3 of 8
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interlocutory appeal. The Ninth Circuit denied Nutrishare’s 

petition for permission to appeal (Doc. #43). 

Nutrishare then brought the CCIR, joining Patients as fellow 

counter-claimants in reply. The CCIR brings eight causes of 

action against CIGNA: (1) failure to pay ERISA benefits pursuant 

to §1132; (2) breach of fiduciary duty pursuant to §1132;

(3) violation of the UCL; (4) breach of implied contract; 

(5) services rendered; (6) breach of covenant of good faith and 

fair dealing; (7) intentional interference with prospective 

economic advantage; and (8) negligent interference with 

prospective economic advantage.

II. OPINION

CIGNA bases its motion to strike on two grounds: (1) the 

eight new claims are not compulsory and thus are improperly 

brought in a counter-claim in reply; and (2) Patients were 

improperly joined under either Federal Rule of Civil Procedure 19 

or 20. 

A. Compulsory Counterclaims

1. Legal Standard

Although not explicitly authorized by the Federal Rules of 

Civil Procedure, a “counter-claim in reply” is permitted if the 

counterclaims alleged therein are compulsory. Mattel, Inc v. 

MGA Entm't, Inc., 705 F.3d 1108, 1110 (9th Cir. 2013)

(“Mattel”); Electroglas, Inc. v. Dynatex Corp., 473 F. Supp. 

1167, 1171 (N.D. Cal. 1979); Warner v. Sims Metal Mgmt., C 13-

02190 WHA, 2013 WL 4777314, at *1 (N.D. Cal. 2013). A claim is 

compulsory when it “arises out of the transaction or occurrence 

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that is the subject matter of the opposing party’s claim.” Fed. 

R. Civ. Proc. 13(a)(1)(A) (“Rule 13”). 

The Ninth Circuit has laid out the proper assessment of 

counter-claims in reply:

We apply “the logical relationship test for compulsory 

counterclaims.” In re Pegasus Gold Corp., 394 F.3d 

1189, 1195–96 (9th Cir. 2005). “A logical relationship 

exists when the counterclaim arises from the same 

aggregate set of operative facts as the initial claim, 

in that the same operative facts serve as the basis of 

both claims or the aggregate core of facts upon which 

the claim rests activates additional legal rights 

otherwise dormant in the defendant.” Id. at 1196; see

also Moore v. N.Y. Cotton Exch., 270 U.S. 593, 610

(1926).

Mattel, 705 F.3d at 1110. 

2. CCIR Claims

CIGNA contends the eight new claims do not arise out of the 

same transactions that are the subject of the CC. MTS at p. 7; 

Reply (Doc. #48) at p. 4. CIGNA argues the claims in the CCIR 

relate to billings in which CIGNA declined payment whereas the 

claims in the CC are based on payments actually made to 

Nutrishare as a result of Nutrishare’s allegedly fraudulent and 

improper scheme. Id. The Court agrees.

The four causes of action in the CC are based on allegedly 

improper and fraudulent medical claims submitted by Nutrishare 

and paid out by CIGNA. Each of CIGNA’s counterclaims 

specifically requests restitution or reimbursement of the funds 

actually paid out to Nutrishare by CIGNA on these medical 

claims. CC ¶¶ 43-47, 50-51, 54, 61, 66. However, the eight 

causes of action in the CCIR are based on medical claims 

submitted by Nutrishare that CIGNA rejected and failed to pay. 

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CCIR ¶¶ 79-80, 84-89, 92, 95, 102, 108, 110-12, 122, 134. By 

the explicit allegations in each pleading, the transactions 

underlying the causes of action in the CCIR are not the same as 

those in the CC. 

In Mattel, the Ninth Circuit was faced with a counterclaim 

by Mattel alleging the theft of trade secrets by MGA and a 

counter-claim in reply from MGA that alleged theft of trade 

secrets by Mattel. Mattel, 705 F.3d at 1110. The court found 

that the fact both parties were alleging trade secret claims 

against each other was not enough to render the counter-claim in 

reply compulsory. Id. The court reasoned that “[w]hat matters 

is not the legal theory but the facts. ‘[E]ven the most liberal 

construction of [“transaction”] cannot operate to make a 

counterclaim that arises out of an entirely different or 

independent transaction or occurrence compulsory under Rule 

13(a).’” Id. (emphasis in original) (quoting 6 Charles A. 

Wright & Arthur R. Miller, Federal Practice & Procedure § 1410, 

at 52 (3d ed. 2010)).

Nutrishare contends that the counterclaims in the CCIR are 

compulsory “because they arise from the very same patient claims 

that are the subject of [the CC].” Opposition (Doc. #47) at p. 

4. However, the CC involves medical claims that were paid by 

CIGNA while the CCIR is based on claims that Nutrishare alleges 

were improperly denied and not paid out. Clearly, the CCIR is 

based on completely separate medical claims from those 

underlying CIGNA’s counterclaims. 

Nutrishare further contends the complaint, CC, and CCIR are 

all “based on whether Nutrishare has a duty to collect copayment 

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and coinsurance amounts, and therefore they all arise from the 

same ‘transaction or occurrence.’” Id. The legal issue of 

whether Nutrishare had a duty to collect these payments from its 

patients underlies each of the pleadings in this matter. 

However, as the Ninth Circuit has stated, in determining whether 

a counter-claim in reply is compulsory “what matters is not the 

legal theory but the facts.” Mattel, 705 F.3d at 1110. 

Nutrishare conflates the legal question that underlies the 

pleadings with the facts alleged in each. The Court cannot 

construe the term “transaction” so loosely as to find a counterclaim in reply “that arises out of an entirely different or 

independent transaction or occurrence compulsory under Rule 

13(a).” Id. As such, the CCIR challenged by this motion is not 

compulsory and thus not permitted. See Mattel, 705 F.3d at 

1110. CIGNA’s motion to strike the CCIR as an improper pleading

is granted.

The Court also concludes that any attempt by Nutrishare or 

Patients to amend the CCIR to cure the deficiencies herein 

discussed would fail as its causes of action simply do not arise

out of the same transaction or occurrence that is the subject 

matter of CIGNA’s counterclaims. As amendment would therefore 

be futile, the motion to strike is granted WITHOUT LEAVE TO 

AMEND. Cervantes v. Countrywide Home Loans, Inc., 656 F.3d 

1034, 1041 (9th Cir. 2011).

B. Joinder of Patients

CIGNA contends Patients were improperly joined in this 

action through the filing of the CCIR. Nutrishare and Patients 

contend Patients were properly joined pursuant to Federal Rule 

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of Civil Procedure 20(a). As the Court has granted CIGNA’s 

motion to strike the entire CCIR above, the arguments regarding 

the propriety of Patients’ joinder are rendered moot. 

III. ORDER

For the reasons set forth above, the Court GRANTS CIGNA’s 

motion to strike WITHOUT LEAVE TO AMEND.

IT IS SO ORDERED.

Dated: November 21, 2014

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