The Travelers Indemnity Co. v. New Orleans Louisiana Saints

• Court: Court of Appeals for the Ninth Circuit
• Decided: May 19, 2016
• Docket: 14-55838
• Status: Unpublished

Opinion

FILED NOT FOR PUBLICATION MAY 19 2016 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

THE TRAVELERS INDEMNITY No. 14-55838 COMPANY, a Connecticut corporation, D.C. No. 8:13-cv-01998-JLS-JPR Plaintiff - Appellant,

v. MEMORANDUM*

NEW ORLEANS LOUISIANA SAINTS, L.L.C., a Texas limited liability company,

Defendant - Appellee.

Appeal from the United States District Court for the Central District of California Josephine L. Staton, District Judge, Presiding

Argued and Submitted May 3, 2016 Pasadena, California

Before: FISHER, M. SMITH, and NGUYEN, Circuit Judges.

The Travelers Indemnity Company (Travelers) filed an action against the

New Orleans Louisiana Saints (Saints) for reimbursement, subrogation, and

indemnity related to a workers’ compensation claim that Travelers settled on

* This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3. behalf of an insured, the Kansas City Chiefs. In its complaint, Travelers alleged

that an injured football player, Jim Rourke, played for both the Saints and the

Chiefs during the last year of his exposure to a cumulative injury. Travelers prayed

for “that portion of the settlement . . . which represents the percentage of time that

Mr. Rourke was employed by the Saints during his last year of injurious exposure,”

damages under a subrogation theory, and equitable indemnity. The district court

dismissed the claims on the grounds that the California Workers’ Compensation

Appeals Board (WCAB) had exclusive jurisdiction over the dispute. It also

declined to hear Travelers’ declaratory judgment action and denied leave to amend.

We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.

1. California’s workers’ compensation statute confines recovery of benefits for

a cumulative injury to the employer that employed the employee during the last

year of the cumulative injury. See Cal. Lab. Code § 5500.5. If there is more than

one employer in that final year, the claimant “may elect to proceed against any one

or more of the employers.” Id. § 5500.5(c). Any employers held liable are jointly

and severally liable for the award, id., and “may institute proceedings before the

appeals board for the purpose of determining an apportionment of liability or right

of contribution.” Id. § 5500.5(e).

2 “In the event that none of the employers during the . . . periods of . . .

cumulative injury are insured for workers’ compensation coverage,” liability is

pushed back to the last employer who was insured during the period of cumulative

injury. Id. § 5500.5(a).

As a general matter, the WCAB has “exclusive authority to hear claims

‘[f]or the recovery of [workers’] compensation, or concerning any right or liability

arising out of or incidental thereto.” U.S. Fid. & Guar. Co. v. Lee Invs. LLC, 641

F.3d 1126, 1134 (9th Cir. 2011) (alterations in original) (quoting Cal. Lab. Code

§ 5300(a)). A limited exception exists where a plaintiff is pursuing a “claim for

damages against an uninsured employer” under the push-back scenario described

in the third paragraph of subsection 5500.5(a). Graphic Arts Mut. Ins. Co. v. Time

Travel Int’l, Inc., 23 Cal. Rptr. 3d 864, 870 (Cal. Ct. App. 2005).

Here, although Travelers characterizes its claim as one for “reimbursement

and subrogation” under subsection 5500.5(a) and alleges that the Saints were

unlawfully uninsured during the relevant time period, it cannot state a claim for

3 reimbursement and subrogation under that subsection.1 According to Travelers’

own pleading, the Chiefs employed Rourke during his last year of exposure to the

cumulative injury. Thus, even under Travelers’ version of the facts, it was not

liable “as a result of” the Saints’ alleged failure to secure workers’ compensation

insurance pursuant to the third paragraph of subsection 5500.5(a). Travelers may

well have claims for apportionment and contribution pursuant to subsections

5500.5(c) and (e), but exclusive jurisdiction lies with the WCAB, and the district

court properly dismissed the case. See U.S. Fid. & Guar. Co., 641 F.3d at 1133.

2. “[D]istrict courts’ decisions about the propriety of hearing declaratory

judgment actions . . . should be reviewed for abuse of discretion.” Wilton v. Seven

Falls Co., 515 U.S. 277, 289–90 (1995). “A district court should avoid needless

determination of state law issues; it should discourage litigants from filing

declaratory actions as a means of forum shopping; and it should avoid duplicative

litigation.” Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 803 (9th Cir.

2002).

1 We do not view In re George, 361 F.3d 1157 (9th Cir. 2004), and In re Lorber Industries of California, 564 F.3d 1098 (9th Cir. 2009), as controlling this issue. In those cases, liability had been pushed back to the state’s Uninsured Employers Fund due to the bankruptcy debtors’ undisputed failure to carry workers’ compensation insurance. The only question before the court was how to treat the reimbursement claim as a debt of the bankruptcy estate. They say nothing about the nature of Travelers’ claim.

4 Travelers sought a declaratory judgment that the Saints’ insurance policy did

not constitute workers’ compensation coverage. In a similar case filed in the state

system, however, a workers’ compensation judge made a ruling adverse to

Travelers, determining that the Saints’ policy was appropriate insurance. In this

context, the district court concluded that Travelers was forum shopping, as it

sought a declaratory judgment in an “attempt to have that interpretation enforced in

ongoing workers’ compensation proceedings” before the WCAB. That conclusion

was reasonable.

3. The district court did not abuse its discretion in denying leave to amend the

complaint. See Airs Aromatics, LLC v. Opinion Victoria’s Secret Stores Brand

Mgmt., Inc., 744 F.3d 595, 600 (9th Cir. 2014). “A district court may dismiss a

complaint without leave to amend if ‘amendment would be futile.’” Id. (quoting

Carrico v. City & County of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011)).

“A party cannot amend pleadings to ‘directly contradic[t] an earlier assertion made

in the same proceeding.’” Id. (alteration in original) (quoting Russell v. Rolfs, 893

F.2d 1033, 1037 (9th Cir. 1990)).

Given leave to amend, Travelers would be unable to allege a set of facts

showing it was liable “as a result of” the Saints’ alleged failure to carry lawful

insurance, or that it would otherwise be entitled to “reimbursement and

5 subrogation” from the Saints. Cal. Lab. Code § 5500.5(a). Even considering the

additional facts related to Rourke’s NFL career after 1986, Travelers does not

dispute that the Chiefs (and only the Chiefs) employed Rourke again in 1987, more

than a year after he played his final game for the Saints. Travelers also concedes

that the WCAB had jurisdiction over the Chiefs.

The judgment of the district court is AFFIRMED.

The Appellee’s Motion to Take Judicial Notice (Dkt. 18) is DENIED.