Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_10-cv-03020/USCOURTS-caed-2_10-cv-03020-1/pdf.json

Parties Involved:
Employers Insurance Company of Nevada
Defendant
Lincoln National Life Insurance
Defendant
Teresa Shappell
Plaintiff
Sun Life Assurance Company
Defendant

Document Text:

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

TERESA SHAPPELL, No. 2:10-cv-03020-MCE-EFB

Plaintiff,

v. ORDER

SUN LIFE ASSURANCE COMPANY

and LINCOLN NATIONAL LIFE

INSURANCE, EMPLOYERS INSURANCE

COMPANY OF NEVADA and DOES 1

to 100,

Defendants.

----oo0oo----

Through the present action, Plaintiff Teresa Shappell

(“Plaintiff”) seeks damages for the denial of total disability

benefits she claims entitlement to under disability insurance

plans issued by Defendants Sun Life Assurance Company (“Sun

Life”) and Lincoln National Life Insurance (“Lincoln”). Those

disability plans were obtained by Plaintiff’s former employer,

Employers Insurance Company of Nevada (“Employers”). 

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Although the gravamen of Plaintiff’s lawsuit is for breach of

contract against both Sun Life and Lincoln for failing to honor

Plaintiff’s claims, she also sues Employers in the instant matter

for wrongfully interfering with her efforts to collect disability

benefits. Her Third Cause of Action is directed to Employers and

alleges interference with protected rights due to Employers’

alleged failure to disclose pertinent information. As a Fifth

Cause of Action, Plaintiff also appears to sue Employers for

breach of the duty of good faith and fair dealing, although the

substance of that claim appears to relate to the insurers’

alleged breaches as opposed to any wrongful conduct on the part

of Employers.1

Employers now requests that the Court dismiss the claims

being asserted against Employers in the present case on grounds

that because said claims are already encompassed within another

action filed against Employers on Plaintiff’s behalf, the present

lawsuit represents an impermissible attempt at “claim splitting”

by asserting the same claims against Employers in two different

forums. Employers alternatively requests dismissal on grounds

that this Court lacks jurisdiction because of an arbitration

provision, contained in Plaintiff’s Employment Agreement, that

requires any claim or controversy arising out of the Agreement to

be settled through arbitration.

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 Plaintiff also pleads an ostensible claim against 1

Employers for attorney’s fees and costs, but as its moniker

suggests that Third Cause of Action seeks additional remedies

rather than asserting any new or different substantive claim.

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Plaintiff’s dispute with Employers stems from Plaintiff’s

termination on or about January 25, 2008 and the events leading

up to that termination. On April 13, 2008, Plaintiff filed a

lawsuit in Nevada state court against Employers for gender

discrimination, retaliation, and breach of contract. Employers

proceeded to remove that case to the District of Nevada on May 5,

2009, and one week later, on May 12, 2009, Employers filed a

Motion to Compel Arbitration and Motion to Dismiss. After a

February 12, 2010 hearing on that Motion, the Nevada District

Court found that the arbitration provision contained within

Plaintiff’s Employment Agreement was valid and enforceable,

therefore requiring Plaintiff to arbitrate her claims against

Employers. The Court accordingly granted the Motion to Compel

Arbitration and dismissed Plaintiff’s Complaint, with prejudice. 

The arbitration proceedings themselves remain pending.

Significantly, on March 2, 2011, Plaintiff filed a Motion to

Amend the arbitration proceedings against Employers to include,

inter alia, a claim against Employers for interference with her

long-term disability benefits. Employers did not oppose

Plaintiff’s request to add that interference claim. In the

meantime, however, on November 5, 2010, utilizing different

counsel than those retained to prosecute the Nevada proceedings,

Plaintiff filed the instant lawsuit in this District against both

Sun Life, Lincoln and Employers. According to Employers, the

present action seeks damages for the same interference with longterm disability benefits that Plaintiff has sought to add to the

earlier-filed Nevada arbitration proceeding.

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The prohibition against claim splitting bars subsequent

litigation involving the same subject matter (Single Chip Systems

Corp. v. Intermec IP Corp., 495 F. Supp. 2d 1052, 1058 (S.D. Cal.

2007)), and is designed “to protect the defendant from being

harassed by repetitive actions based on the same claim.” 

Clements v. Airport Auth. of Washoe County, 69 F.3d 321, 328 (9th

Cir. 1995).

In assessing whether a suit is duplicative, Ninth Circuit

case law looks to the causes of action asserted, the relief

sought, and the parties to the action. See Adams v. Cal. Dep’t

of Health Servs., 487 F.3d 684, 689 (9th Cir. 2007) (overruled on

other grounds by Taylor v. Sturgell, 553 U.S. 880 (2008)). A

suit is deemed duplicative if the claims, parties and available

relief do not vary significantly between the two actions. Id. 

The singularity of successive causes of action is determined

by reference to the so-called “transaction test”. Id. That test

entails consideration of four criteria; namely, 1) whether the

rights or interests established in the initial action would be

impaired by prosecution of a second suit; 2) whether

substantially the same evidence would be presented in both

actions; 3) whether both suits involve infringement of the same

right; and 4) whether both suits arise out of the same

transactional nucleus of facts. Costantini v. Trans World

Airlines, 681 F.2d 1199, 1201-02 (9th Cir. 1982). The last

factor has been deemed the most important. Id. at 1202.

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Both actions at issue here stem from Employer’s alleged

interference with Plaintiff’s procurement of long-term disability

benefits. The substantive interference claims appear identical

and arise from the same alleged misconduct and essentially the

same factual allegations, to wit, that Employers failed to

provide accurate information to its long-term disability carriers

and that as a result, Plaintiff suffered damages through the

denial of her claims. See Employers’ Mot., 6:28-7:5. 

Consequently, it appears clear that the same evidence is

applicable to both actions. Moreover, to the extent this second

action against Employers is permitted, any decision reached by

the arbitrator in the Nevada action would be subject to

circumvention.

After weighing these pertinent factors, the Court concludes

that the two actions, insofar as they pertain to Employers, are

indeed duplicative. The inherent power to manage the Court’s own

docket permits it to order dismissal of duplicative claims in

order to foster judicial economy and the “comprehensive disposal

of litigation”. See, e.g., Alltrade, Inc. v. Uniweld Products,

Inc., 946 F.2d 622, 627-28 (9th Cir. 1991).

Dismissal is also warranted here for yet another reason. As

already mentioned, Plaintiff’s Employment Agreement contains an

arbitration provision mandating that “[a]ny controversy arising

out of this Agreement....shall be settled by arbitration

according to the rules of the American Arbitration Association

applicable to disputes arising in Nevada and under Nevada law.” 

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See Employers’ Mot., Ex. 2. There can be no doubt here that 2

Employers’ alleged conduct in failing to disclose information

pertaining to a perquisite of Plaintiff’s employment (i.e., the

long-term disability benefits provided by Employers to its

employees) “arose” from Plaintiff’s employment so as to come

within the scope of the arbitration provision. Even Plaintiff

does not argue otherwise. Her Complaint acknowledges that “[a]s

a benefit of her employment with Employers, Plaintiff Teresa

Shappell received coverage for short and long term disability

under both the Lincoln Plan and the Sun Life Plan.” Pl.’s

Compl., ¶ 7.

Plaintiff instead claims that because disability plan

benefits fall within the purview of ERISA, federal jurisdiction

over ERISA matters permits the Court to entertain this lawsuit. 

That contention misses the mark, however, because arbitration

provisions like those applicable here may properly extend to

federal, as well as state claims. See EEOC v. Luce, Forward, 3

Hamilton & Scripps, 345 F.3d 742, 750 (9th Cir. 2003) (employer

may require employees to arbitrate federal statutory claims).

 While Plaintiff objects to materials beyond the four 2

corners of her Complaint being considered in conjunction with the

present Motion to Dismiss, because a valid arbitration agreement

bears on the Court’s jurisdiction to entertain this lawsuit, as

discussed in more detail below, matters extrinsic to the

complaint can be utilized in deciding whether the matter is

subject to dismissal under Federal Rule of Civil Procedure

12(b)(1). See Augustine v. United States, 704 F.2d 1074, 1077

(9th Cir. 1983).

 The Court rejects Plaintiffs’ argument that the 3

arbitration provision only extends to issues under Nevada law. 

The language of the provision, as recited above, makes Nevada law

applicable to the conduct of the arbitration itself, not to the

substantive matters subject to determination by the arbitrator. 

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In Comer v. Micor, Inc., 436 F.3d 1098, 1100-01 (9th Cir. 2006),

the Ninth Circuit went so far as to note that any skepticism

about the arbitrability of ERISA claims has been put to rest by

the Supreme Court’s decisions in Shearson/American Express Inc.

v. MacMahon, 482 U.S. 220, 226 (1987) and Rodriguez de Quijas v.

Shearson/American Express, Inc., 490 U.S. 477, 481 (1989).

It must also be noted that “any doubts concerning the scope

of arbitration issues should be resolved in favor of

arbitration.” Simula Inc. v. Autoliv, Inc., 175 F.3d 716, 719

(9th Cir. 1999), citing Moses H. Cone Mem’l Hosp. v. Mercury

Constr. Corp., 460 U.S. 1, 24-25 (1983). Arbitration should not

be rejected “unless it may be said with positive assurance that

the arbitration clause is not susceptible to an interpretation

that covers the asserted dispute.” United Steelworkers of

America v. Warrior & Golf Navigation Co., 363 U.S. 574, 582-83

(1960). “In the absence of any express provision excluding a

particular grievance from arbitration...only the most forceful

evidence of a purpose to exclude the claim from arbitration can

prevail, particularly where...the arbitration clause [is] quite

broad.” Id. at 584-85. Here, the broad language of the

arbitration provision extends to “any claim or controversy”

arising out of Plaintiff’s employment, therefore, subjecting all

claims she asserts against Employers to arbitration. ERISA

claims are not excluded.

Consequently this matter is properly subject to the alreadycommenced arbitration proceedings–-proceedings in which Plaintiff

has already sought leave to present the interference claims also

being pursued here.

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Because Plaintiff’s claims against Employers are subject to

arbitration, this lawsuit is properly subject to dismissal. See

Sparling v. Hoffman Constr. Co., Inc., 864 F.2d 635, 638 (9th

Cir. 1988). That arbitration requirement amounts to a

jurisdictional bar against the present case from proceeding in

this Court. Defendant Employer’s Motion to Dismiss is

accordingly GRANTED. Since the deficiencies of Plaintiff’s 4

claims against Employers in this case cannot be remedied through

amendment, no leave to amend will be afforded with respect to

those claims. See DeSoto v. Yellow Freight Sys., Inc., 957 F.2d

655, 658 (9th Cir. 1992). This litigation is consequently

terminated against Employers, although Plaintiff’s remaining

claims against Sun Life and Lincoln remain pending and viable.

IT IS SO ORDERED.

Dated: May 20, 2011

_____________________________

MORRISON C. ENGLAND, JR.

UNITED STATES DISTRICT JUDGE

 Because oral argument was not of material assistance, the 4

Court ordered this matter submitted on the briefs. E.D. Cal.

Local Rule 230(g). 

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