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Nutrishare, Inc. v. Connecticut General Life Insurance Co.

United States District Court, E.D. California

June 12, 2014

NUTRISHARE, INC., a California corporation, Plaintiff,
v.
CONNECTICUT GENERAL LIFE INSURANCE COMPANY, a Connecticut Corporation, CIGNA HEALTH AND LIFE INSURANCE COMPANY, a Connecticut Corporation, and DOES 1 THROUGH 10, inclusive, Defendants. CONNECTICUT GENERAL LIFE INSURANCE COMPANY and CIGNA HEALTH AND LIFE INSURANCE COMPANY, Counter-Claimants,
v.
NUTRISHARE, INC., Counter-Defendant.

ORDER GRANTING NUTRISHARE'S MOTION FOR CERTIFICATION OF INTERLOCUTORY APPEAL

JOHN A. MENDEZ, District Judge.

This matter is before the Court on Plaintiff and Counter-Defendant Nutrishare, Inc.'s ("Nutrishare") Motion for Certificate of Appealability (Doc. #29).[1] Defendants and Counter-Claimants Connecticut General Life Insurance Company and CIGNA Health and Life Insurance Company (collectively "CIGNA") opposed the motion (Doc. #37) and Nutrishare replied (Doc. #40).

I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

The Counterclaim states 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, in order to redress 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.

The allegations of the Counterclaim are well known at this point and will not be repeated here. The current motion comes in response to the Court's order (Doc. #25) denying Nutrishare's Motion to Strike (Doc. #12) and Motion to Dismiss (Doc. #13). In that order, which Nutrishare now seeks to have certified for immediate appeal, the Court found the allegations in the Counterclaim established CIGNA had standing to bring the counterclaims as a fiduciary of the underlying ERISA plans. Order at p. 7.

The Court further found that CIGNA's claims did not involve "adverse benefits determinations" and therefore did not trigger any exhaustion requirements as Nutrishare contended. Order at pp. 7-8. Nutrishare's Motion to Dismiss also contended that CIGNA's state law claims were preempted under ERISA sections 502(a) and 514(a). The Court found the claims did not require "significant interpretation of the ERISA plans" and therefore were not subject to conflict preemption under section 514(a). Id. at pp. 11-14. It further found that the state law claims did not "conflict with the enforcement scheme laid out by ERISA or with Congress' intent in passing it into law" and therefore were not preempted under section 502(a). Id. at pp. 14-16. Finally, the Court rejected Nutrishare's contention that the actions alleged by CIGNA to be unfair and fraudulent were actually lawful under California law. Id. at pp. 17-18.

II. OPINION

Nutrishare requests that the Court grant certification for immediate interlocutory appeal of its Order regarding the viability of CIGNA's counterclaims. After having made an order not otherwise appealable in a civil action, if a district court finds "that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order." 28 U.S.C. § 1292(b).

Thus, a district court may certify an appeal of an interlocutory order only if three factors are present. First, the issue to be certified must be a "controlling question of law." 28 U.S.C. § 1292(b). Establishing that a question of law is controlling requires a showing that the "resolution of the issue on appeal could materially affect the outcome of the litigation in the district court." In re Cement Antitrust Litig. , 673 F.2d 1020, 1026 (9th Cir. 1982).

Second, there must be "substantial ground for difference of opinion" on the issue. 28 U.S.C. § 1292(b). "This is not established by a party's strong disagreement with the court's ruling; the party seeking an appeal must make a greater showing." Zone Sports Ctr., LLC v. Rodriguez, 1:11-CV-00622-SKO, 2013 WL 3766749, at *4 (E.D. Cal. 2013) (citing Mateo v. M/S Kiso , 805 F.Supp. 792, 800 (N.D. Cal. 1992)).

To determine if a "substantial ground for difference of opinion" exists under § 1292(b), courts must examine to what extent the controlling law is unclear. Courts traditionally will find that a substantial ground for difference of opinion exists where "the circuits are in dispute on the question and the court of appeals of the circuit has not spoken on the point, if complicated questions arise under foreign law, or if novel and difficult questions of first impression are presented." 3 Federal Procedure, Lawyers Edition § 3:212 (2010) (footnotes omitted). However, "just because a court is the first to rule on a particular question or just because counsel contends that one precedent rather than another is controlling does not mean there is such a substantial difference of opinion as will support an interlocutory appeal." Id . (footnotes omitted).

Couch v. Telescope Inc. , 611 F.3d 629, 633 (9th Cir. 2010).

Third, an interlocutory appeal must be likely to "materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). Whether such a likelihood exists is linked to whether an issue of law is "controlling" in that the court should consider the effect of a reversal on the management of the case. Zone Sports Ctr., LLC, 2013 WL 3766749, at *4.

"The standard to certify a question of law is high and a district court generally should not permit such an appeal where it would prolong the litigation rather than advance its resolution.'" Davis Moreno Constr., Inc. v. Frontier Steel Bldgs. Corp., 1:08-cv-00854-OWW-SMS, 2011 WL 347127, at *1 (E.D. Cal. 2011) ...


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