Branch v. Lilac Holdings, LLC

• Court: District Court, S.D. California
• Decided: April 21, 2022
• Docket: 3:21-cv-00605
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 KATHY BRANCH, Case No. 21-cv-00605-BAS-MDD

12 Plaintiff, ORDER: 13 v. (1) GRANTING PLAINTIFF’S 14 LILAC HOLDINGS, LLC, MOTION TO SET ASIDE AND 15 Defendant. REMAND (ECF No. 10);

16 (2) SETTING ASIDE JUDGMENT 17 (ECF No. 9); and 18 19 (3) REMANDING CASE TO SAN DIEGO SUPERIOR COURT 20

21 22 Before the Court is Plaintiff Kathy Branch’s motion (1) to set aside the judgment for 23 lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure (“Rule”) 24 60(b)(4), and (2) to remand the case to state court. (Mot., ECF No. 10.) Defendant Lilac 25 Holdings, LLC d/b/a Reo Vista Healthcare Center opposes. (Opp’n, ECF No. 11.) The 26 Court finds this motion suitable for determination on the papers submitted and without oral 27 argument. See Fed. R. Civ. P. 78(b); Civ. L.R. 7.1(d)(1). Having considered all arguments 1 (ECF No. 10), SETS ASIDE the prior judgment (ECF No. 9), and REMANDS the action 2 to San Diego Superior Court.1 3 I. BACKGROUND 4 Plaintiff Kathy Branch alleges that her mother, Sandra Hart, suffered severe neglect 5 while a resident at Defendant’s skilled nursing facility. (Compl. ¶¶ 1–3, 8, 10, Ex. 2 to 6 Notice of Removal, ECF No. 1.) In particular, Plaintiff alleges that “Defendant[] failed to 7 implement effective infection control policies throughout [its] facility which enabled Ms. 8 Hart to contract COVID-19” and “neglected Ms. Hart’s nutritional and liquid needs to the 9 point that her COVID-19 symptoms worsened and she developed hypernatremia.” (Id. ¶¶ 10 22–23.) Ms. Hart ultimately passed away in June of 2020. (Id ¶ 23.) 11 On December 3, 2020, Plaintiff filed this action in state court on behalf of her mother 12 and herself asserting state law claims for elder abuse, negligence, wrongful death, and 13 willful misconduct. (Id. ¶¶ 31–65.) Defendant removed the action to federal court on April 14 7, 2021 averring that federal jurisdiction was proper because: (1) the Public Readiness and 15 Emergency Preparedness (“PREP”) Act completely preempts Plaintiff’s claims; (2) 16 Plaintiff’s claims implicate embedded federal questions; and (3) Defendant qualifies as a 17 person “acting under” federal officers within the federal officer removal statute. (Notice 18 of Removal ¶¶ 8–93.) Plaintiff did not challenge the removal or move to remand the case 19 to state court for lack of subject matter jurisdiction. 20 Defendant moved to dismiss the case on April 14, 2021 and Plaintiff did not oppose. 21 (ECF No. 4.) The Court dismissed the case and entered final judgment on June 16, 2021. 22 (Dismissal Order, ECF No. 8 (“The Court therefore deems Plaintiff’s failure to oppose 23 Defendant’s motion as consent to granting it.”); see also J., ECF No. 9.) Plaintiff’s time to 24 appeal the judgment lapsed on July 16, 2021 yet she never appealed. See 28 U.S.C. § 25 2107(a). In sum, despite multiple opportunities to challenge subject matter jurisdiction— 26 27 1 Both parties ask the Court to take judicial notice of, inter alia, publications of the Department of 1 including by bringing a motion to remand, opposing Defendant’s motion to dismiss, or 2 appealing the judgment—Plaintiff failed to take any action. 3 Now, for the first time, Plaintiff raises this Court’s lack of federal subject matter 4 jurisdiction in her Motion to set aside the judgment and remand. (Mot.) This motion is 5 devoid of any explanation for her failure to participate in the litigation up until this point. 6 Defendant opposes Plaintiff’s motion, asserting the same three bases for subject matter 7 jurisdiction articulated in its Notice of Removal. (Compare Notice of Removal ¶¶ 8–93 8 with Opp’n 4–24.) Plaintiff did not reply. 9 II. LEGAL STANDARD 10 Rule 60(b)(4) expressly allows for final judgments to be declared void in some 11 circumstances, including situations in which the court lacked subject matter jurisdiction to 12 enter judgment in the first place. Hoffmann v. Pulido, 928 F.3d 1147, 1151 (9th Cir. 2019) 13 (citing See Yanow v. Weyerhaeuser S.S. Co., 274 F.2d 274, 278 n.7 (9th Cir. 1958)). But 14 the scope of what constitutes a void judgment is narrowly circumscribed, and judgments 15 are deemed void only where the assertion of jurisdiction is truly unsupported. Jones v. 16 Giles, 741 F.2d 245, 248 (9th Cir. 1984); see also United Student Aid Funds, Inc. v. 17 Espinosa, 559 U.S. 260, 271 (2010) (“[A] judgment is void because of a jurisdictional 18 defect [only in the] exceptional case in which the court that rendered judgment lacked even 19 an ‘arguable basis’ for jurisdiction.”). If any jurisdictional flaw could be the basis of a 20 voidness challenge, litigants would have unending opportunities to second-guess a court’s 21 legal determination as to its jurisdiction outside of the typical appellate review process, and 22 the court’s interest in finality would be undermined. Jones, 741 F.2d at 248. 23 III. ANALYSIS 24 A. Plaintiff’s Failure to Appeal 25 As a threshold issue, the Court first considers whether Plaintiff’s Rule 60(b)(4) 26 motion is proper despite her lack of participation in the proceedings prior to final judgment 27 and her subsequent failure to appeal. As discussed above, the Court initially dismissed the 1 did not appeal the Court’s judgment. Her failure to appeal is important because “motions 2 to vacate under Rule 60(b) are not a substitute for appeal.” Gould v. Mut. Life Ins. Co. of 3 New York, 790 F.2d 769, 771 (9th Cir. 1986); see also Plotkin v. Pac. Tel. & Tel. Co., 688 4 F.2d 1291, 1293 (9th Cir. 1982) (“Allowing motions to vacate pursuant to Rule 60(b) after 5 a deliberate choice has been made not to appeal, would allow litigants to circumvent the 6 appeals process and would undermine greatly the policies supporting finality of 7 judgments.”); Twentieth Century-Fox Film Corp. v. Dunnahoo, 637 F.2d 1338, 1341 (9th 8 Cir. 1981) (“Rule 60(b) cannot properly be invoked for the purpose of extending the time 9 for appeal which had already expired.”). 10 However, the Court recognizes there is tension between the notion that failure to 11 appeal a judgment precludes a later attempt to void the judgment, and the nondiscretionary 12 principle that district courts must set aside void judgments. See Watts v. Pinckney, 752 13 F.2d 406, 410 (9th Cir. 1985) (“A void judgment is a legal nullity and a court considering 14 a motion to vacate has no discretion in determining whether it should be set aside.”); Jones, 15 741 F.2d at 248. Additionally, the fact that there is no time limit to bring a Rule 60(b)(4) 16 motion suggests the importance of vacating void judgments. Million (Far E.) Ltd. v. 17 Lincoln Provisions Inc. USA, 581 F. App’x 679, 682 (9th Cir. 2014). 18 Because the “absence of subject matter jurisdiction may render a judgment void” 19 and “federal courts have authority to determine jurisdiction,” Jones, 741 F.2d at 248, this 20 Court will consider Plaintiff’s motion challenging its subject matter jurisdiction at the time 21 it entered judgment, despite her failure to appeal the judgment. See also In re Martinez, 22 721 F.2d 262, 264 (9th Cir. 1983) (finding that because federal courts are tribunals of 23 limited jurisdiction, they have both the inherent authority and the responsibility to consider 24 their own jurisdiction). This is especially true in light of the recent Ninth Circuit decision, 25 Saldana v. Glenhaven Healthcare LLC, 27 F.4th 679, 689 (9th Cir. 2022), which suggests 26 that this Court lacked subject matter jurisdiction when it entered final judgment, as 27 discussed in more detail below. 1 B. Arguable Basis for Subject Matter Jurisdiction in Federal Court 2 Where, as here, a Rule 60(b)(4) Motion challenges the Court’s subject matter 3 jurisdiction, the Court asks whether it lacked even an arguable basis for subject matter 4 jurisdiction at the time it entered final judgment. See Espinosa, 559 U.S. at 271. If the 5 Court answers the question affirmatively, the final judgment is void and therefore legally 6 ineffective. Id.; Watts, 752 F.2d at 410. 7 Defendant articulated three grounds for subject matter jurisdiction in its Notice of 8 Removal and again in its Opposition: (1) Plaintiff’s claims implicate embedded federal 9 questions; (2) the PREP Act completely preempts Plaintiff’s claims; and (3) Defendant 10 qualifies as a person “acting under” federal officers within the federal officer removal 11 statute. Despite the novelty and unsettled nature of these grounds at the time Defendant 12 made them, the law has since become definitive. In resolving a case with nearly identical 13 facts and asserted jurisdictional grounds, the Ninth Circuit concluded there was no basis 14 for federal jurisdiction. Saldana, 27 F.4th at 689. The Court addresses each of Defendant’s 15 arguments below, considering the Ninth Circuit’s reasoning in Saldana. 16 1. Federal Question Jurisdiction 17 The presence of federal question jurisdiction is generally governed by the “well- 18 pleaded complaint rule,” which provides that federal jurisdiction exists only when a federal 19 question is presented on the face of the plaintiff’s properly pleaded complaint. See 20 Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Federal subject matter jurisdiction 21 does not arise from “a federal defense, including the defense of preemption, even if the 22 defense is anticipated in the plaintiff’s complaint, and even if both parties admit that the 23 defense is the only question truly at issue in the case.” Franchise Tax Bd. of State of Cal. 24 v. Constr. Laborers Vacation Tr. for S. Cal, 463 U.S. 1, 13–14 (1983). 25 Under Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 26 545 U.S. 308 (2005), however, claims pled as state law claims can invoke federal question 27 jurisdiction if they “necessarily raise a stated federal issue, actually disputed and 1 substantial, which a federal forum may entertain without disturbing any congressionally 2 approved balance of federal and state judicial responsibilities.” Id. at 314. 3 Defendant contends that federal question jurisdiction exists under Grabel because 4 Plaintiff’s claims “implicate disputed and substantial federal issues under the PREP Act”— 5 specifically whether the PREP act confers immunity on Defendant.2 (Opp’n 18.) This 6 federal issue, however, relates to a defense rather than any allegation or claim on the face 7 of the Complaint. Saldana, 27 F.4th at 688 (“[Defendant] seeks to raise a federal defense 8 under the PREP Act, but a federal defense is not a sufficient basis to find embedded federal 9 question jurisdiction.”); Thomas v. Pomona Healthcare & Wellness Ctr., No. 2:22-CV- 10 00179-SVW-PLA, 2022 WL 845349, at *3 (C.D. Cal. Mar. 22, 2022); see also Padilla v. 11 Brookfield Healthcare Ctr., No. CV 21-2062-DMG (ASx), 2021 WL 1549689, at *6 (C.D. 12 Cal. Apr. 19, 2021) (“[I]mmunity under the PREP Act is a defense, not a necessary aspect 13 of Plaintiffs’ state law claims.”). Thus, because there is no embedded federal issue in the 14 Complaint, this Court lacks federal question jurisdiction under Grabel. See Thomas, 2022 15 WL 845349, at *3. 16 2. Complete Preemption Under the PREP Act 17 The United States Supreme Court has concluded that the preemptive force of some 18 federal statutes is so strong that they “completely pre-empt” an area of state law. See 19 Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987). The Ninth Circuit applies a two- 20 part test to determine whether a statue is a complete preemption statute: (1) did Congress 21 intend to displace a state-law cause of action and (2) did Congress provide a substitute 22 cause of action. Saldana, 27 F.4th at 687–88. When complete preemption applies, the 23 state-law nature of the plaintiff’s claim is “displace[d]” and the claim is considered “purely 24 a creature of federal law.” Franchise Tax Bd., 463 U.S. at 23–24. Complete preemption 25 is rare, see Hansen v. Grp. Health Coop., 902 F.3d 1051, 1057 (9th Cir. 2018), however, 26

27 2 Throughout its briefing Defendant relies on various HHS declarations and opinions. (See, e.g., Opp’n. 18.) This Court need not consider those materials. In Saldana the Ninth Circuit made clear that 1 when complete preemption is found it constitutes a narrow exception to the well-pleaded 2 complaint rule and provides a basis for federal subject matter jurisdiction, see Thomas, 3 2022 WL 845349, at *3. 4 Defendant argues that the PREP Act completely preempts Plaintiff’s state law claims 5 and therefore confers federal jurisdiction. (Opp’n 4–14.) However, in Saldana, the Ninth 6 Circuit explicitly held that “under this court’s two-part test, the PREP Act is not a complete 7 preemption statute.” Saldana, 27 F.4th at 688 (finding that nothing indicated Congress 8 intended the PREP Act to displace state law claims or intended to convert those claims into 9 federal ones, nor provide a substitute cause of action). And in fact, Saldana abrogated 10 much of the authority that Defendant relies on for the proposition that the PREP Act is a 11 complete preemption statute. See, e.g., Thomas, 2022 WL 845349, at *4 (“Garcia was 12 clearly abrogated on this issue by the Ninth Circuit in Saldana.”). Since the PREP Act is 13 not a complete preemption statute, it does not provide an exception to the well-pleaded 14 complaint rule, and does not therefore provide a basis for federal subject matter 15 jurisdiction. Saldana, 27 F.4th at 688; Thomas, 2022 WL 845349, at *3–4. 16 3. Federal Officer Removal Statute 17 Under 28 U.S.C. § 1442(a)(1), federal jurisdiction exists over state court actions 18 brought against “[t]he United States or any agency thereof or any officer (or any person 19 acting under that officer).” Private parties can exercise federal officer jurisdiction when 20 they can show that they were a “person acting under” a federal officer. See Durham v. 21 Lockheed Martin Corp., 445 F.3d 1247, 1251 (9th Cir. 2006). To do so, a party must 22 demonstrate that “(a) it is a person within the meaning of the statute; (b) there is a causal 23 nexus between its actions, taken pursuant to a federal officer’s directions, and plaintiff’s 24 claims; and (c) it can assert a ‘colorable federal defense.’” Stirling v. Minasion, 955 F.3d 25 795, 800 (9th Cir. 2020). 26 Defendant argues that Section 1442(a)(1) is applicable because “all actions [it took] 27 in preparation for and in response to the COVID-19 pandemic were taken ‘in an effort to 1 performed pursuant to the direct orders and comprehensive and detailed directives issued 2 by these agencies.” (Opp’n. 23.) Defendant also asserts that it was “acting at the direction 3 of the federal government to prevent, treat and contain COVID-19 at the facility and in its 4 care and treatment of Ms. Hart.” (Id.) However, “[a] private firm’s compliance (or 5 noncompliance) with federal laws, rules, and regulations does not by itself fall within the 6 scope of the statutory phrase ‘acting under’ a federal ‘official.’” Watson v. Philip Morris 7 Cos., Inc., 551 U.S. 142, 147, 153 (2007). “And that is so even if the regulation is highly 8 detailed and even if the private firm’s activities are highly supervised and monitored.” Id. 9 Defendant also argues that Section 1442(a)(1) applies since healthcare providers 10 were deemed “critical infrastructure” businesses in a memorandum from the Cybersecurity 11 and Infrastructure Security Agency (CISA), which obligated Defendant to aid the federal 12 government in preventing the spread of the virus. (Opp’n 21.) The Ninth Circuit rejected 13 the identical argument in Saldana however, noting that “the memorandum also states that 14 the national critical infrastructure list ‘does not impose any mandates on state or local 15 jurisdictions or private companies.’” 27 F.4th at 685. “It cannot be that the federal 16 government’s mere designation of an industry as important—or even critical—is sufficient 17 to federalize an entity’s operations and confer federal jurisdiction.” Id. (citing Buljic v. 18 Tyson Foods, Inc., 22 F.4th 730, 740 (8th Cir. 2021)). 19 Accordingly, as Saldana concluded, “[a]ll that [defendant] has demonstrated is that 20 it operated as a private entity subject to government regulations, and that during the 21 COVID-19 pandemic it received additional regulations and recommendations from federal 22 agencies. Thus, [defendant] was not ‘acting under’ a federal officer or agency as 23 contemplated by the federal officer removal statute.” 27 F.4th at 686. Thus, the mere fact 24 that Defendant followed government regulations—even if exactingly detailed—does not 25 provide a basis for jurisdiction here. See id. 26 The Ninth Circuit’s decision in Saldana makes clear that this Court does not have— 27 and never had—a legitimate basis to assert subject matter jurisdiction over Plaintiff’s case. 1 || Court, so there can be no arguable basis that this Court had jurisdiction at the time it entered 2 || final judgment. Saldana, 27 F.4th at 689. Because the Court lacked an arguable basis for 3 ||jurisdiction at the time it dismissed Plaintiff's case and entered judgment, it must declare 4 judgment void and set it aside. See Watts v. Pinckney, 752 F.2d 406, 410 (9th Cir. 5 1985). Accordingly, the Court GRANTS Plaintiff's Motion to Set Aside the Judgment 6 || pursuant to Rule 60(b)(4). (ECF No. 10.) 7 C. Remand 8 “If at any time before final judgment it appears that the district court lacks subject 9 matter jurisdiction, the case shall be remanded.” Saldana, 27 F.4th at 683 (quoting 28 10 ||U.S.C. § 1447(c)). Now that the Court has set aside the final judgment finding that it lacked 11 subject matter jurisdiction, it must remand the case. /d. The Court therefore GRANTS 12 || Plaintiff's Motion to Remand (ECF No. 10) and REMANDS the case back to San Diego 13 ||Superior Court. Cf /d. (affirming remand based on a finding that identical jurisdictional 14 bases do not confer subject matter jurisdiction on the district court); Thomas, 2022 WL 15 845349, at *5 (finding same). 16 CONCLUSION 17 For the foregoing reasons, Plaintiff's motion is GRANTED. Specifically, the Court 18 || VACATES its Dismissal Order (ECF No. 8), SETS ASIDE the Judgment (ECF No. 9), 19 |}and REMANDS the case back to the Superior Court of California, San Diego County. The 20 || Clerk of Court is directed to close the instant proceedings. 21 IT IS SO ORDERED. 22 / yy 23 || DATED: April 21, 2022 ( itl A (Hiphan 24 United States District Judge 25 26 27 28