Lucile Salter Packard Children's Hospital at Stanford v. Blue Cross Blue Shield Healthcare Plan of Georgia, Inc.

Opinion

LUCILE SALTER PACKARD Case No. 21-cv-09606-EMC CHILDREN’S HOSPITAL AT STANFORD, Plaintiff, ORDER GRANTING UNIVERSITY v. DISMISS BLUE CROSS BLUE SHIELD Docket No. 32 INC., et al., Defendants. Plaintiff Lucile Salter Packard Children’s Hospital at Stanford brings suit against Defendants Blue Cross Blue Shield Healthcare Plan of Georgia, Inc. (“Blue Cross GA”), the Board of Regents of the University System of Georgia, and the Georgia Institute of Technology (“University Defendants”). Plaintiff claims it is owed compensation from University Defendants for services provided to a non-party patient (“Patient D”)—an alleged enrollee of a health plan “sponsored, administered, and/or financed by” University Defendants. See Docket No. 27 (“FAC”). Plaintiff bases its claims on theories of quantum meruit and breach of an implied-in-fact contract. Id. Now pending is University Defendants’ 12(b)(6) motion to dismiss Plaintiff’s suit. Docket No. 32 (“MTD”). University Defendants present three arguments in support of dismissal: (1) Plaintiff’s claims are barred by the Eleventh Amendment; (2) the Court lacks diversity jurisdiction over Defendants because they are not citizens for diversity purposes; and (3), Plaintiff has not For the following reasons, the Court GRANTS University Defendants’ motion to dismiss based on the Eleventh Amendment. The order does not address the validity of the underlying contract claim. A. Rule 12(b)(6) Federal Rule of Civil Procedure 8(a)(2) requires a “pleading that states a claim for relief” to include “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). A pleading that fails to meet this standard may be dismissed pursuant to Rule 12(b)(6). See Fed. R. Civ. P. 12(b)(6). To overcome a Rule 12(b)(6) motion to dismiss after the Supreme Court’s decisions in Ashcroft v. Iqbal, 556 U.S. 662 (2009) and Bell Atlantic Corporation v. Twombly, 550 U.S. 544 (2007), a plaintiff’s “factual allegations [in the pleading] ‘must . . . suggest that the claim has at least a plausible chance of success.’” Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014). The court “accept[s] factual allegations in the [pleading] as true and construe[s] the pleadings in the light most favorable to the nonmoving party.” Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008). “A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the Defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (quoting Twombly, 550 U.S. at 556). The Ninth Circuit treats Eleventh Amendment immunity as a quasi-jurisdictional affirmative defense that will be waived if not asserted. See Tritchler v. Cnty. of Lake, 358 F.3d 1150 (9th Cir. 2004) (citing ITSI TV Prods., Inc. v. Agric. Ass’ns, 3 F.3d 1289, 1291 (9th Cir.1993)). Thus, dismissal under 12(b)(6) is appropriate where a defendant validly raises the Eleventh Amendment.1 See Wagnon v. Rocklin Unified Sch. Dist., No. 217CV01666TLNKJN, 2021 WL 1214571 (E.D. Cal.

1 Considering the quasi-jurisdictional nature of the Eleventh Amendment, see Tritchler, 358 F.3d 1150, the Court also notes that a 12(b)(2) motion to dismiss may have been an appropriate mechanism to move for dismissal. See Loucks v. Kaiser Found. Hosps., No. 20-CV-01216-EMC, Mar. 31, 2021). B. Eleventh Amendment The Eleventh Amendment of the United States Constitution provides: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. The Supreme Court has construed the text of the Amendment broadly, such that “an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of another state.” Pennhurst State Sch. & Hosp. v. Halderman, 465 U.S. 89, 100 (1984); Beentjes v. Placer Cty. Air Pollution Control Dist., 397 F.3d 775, 777 (9th Cir. 2005) (“The ultimate guarantee of the Eleventh Amendment is that nonconsenting States may not be sued by private individuals in federal court.”) (internal citation omitted). This rule “extends to suits by citizens against their own state and certain actions against state agencies and state instrumentalities.” Holz v. Nenana City Pub. Sch. Dist., 347 F.3d 1176, 1180 (9th Cir. 2003) (internal citations and quotation marks omitted). University Defendants seek dismissal for failure to state a claim upon which relief can be granted, contending they are immune from suit in federal court under the Eleventh Amendment. See MTD. Eleventh Amendment immunity applies if University Defendants are properly characterized as arms of the state of Georgia. See Holz, 347 F.3d at 1180. Numerous cases have concluded that University Defendants are properly characterized as such. See, e.g., Nicholl v. Bd. of Regents of Univ. Sys. of Ga., 706 F. App’x 493, 495 (11th Cir. 2017) (“The Board is considered a state entity that is an arm of the state of Georgia for purposes of the Eleventh Amendment.”) (citing Lapides v. Bd. of Regents of Univ. Sys. of Ga., 535 U.S. 613, 616–17 (2002)); Duva v. Bd. of Regents of the Univ. Sys. of Georgia, 654 F. App’x 451, 453 (11th Cir. 2016) (“[T]he Board is an agency of the State of Georgia.”); Baggett v. Georgia Inst. of Tech., No. 1:07-CV-1399-WSD- AJB, 2009 WL 10665814, at *n.4 (N.D. Ga. Jan. 8, 2009) (“It is undisputed that under Georgia law, the Board of Regents and the universities it operates, including Georgia Tech, are arms of the State of Georgia.”); Peacock v. Riggsbee, 309 F. Supp. 542, 543 (N.D. Ga. 1970) (Eleventh Therefore, University Defendants constitute arms of the state of Georgia and are entitled to Eleventh Amendment immunity. The Court finds that Plaintiff’s suit against University Defendants is barred by the Eleventh Amendment of the United States Constitution, and GRANTS University Defendants’ motion to dismiss. The Clerk is instructed to enter Judgment in favor of University Defendants. This order disposes of Docket No. 32. Dated: October 4, 2022 ______________________________________ EDWARD M. CHEN United States District Judge