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Bauer v. Metropolitan Life Insurance Co.

June 23, 2010

DONNA J. BAUER, PLAINTIFF,
v.
METROPOLITAN LIFE INSURANCE COMPANY, AND PROVIDENCE HEALTH & SERVICES, DEFENDANTS.



The opinion of the court was delivered by: Honorable Larry M. Boyle United States Magistrate Judge

MEMORANDUM DECISION AND ORDER

Before the Court is Defendant Providence Health & Services's ("Providence") Motion to Dismiss (Docket No. 54) and Defendant Metropolitan Life Insurance Company's ("Met Life") Motion to Dismiss Certain Claims (Docket No. 55). Pursuant to Federal Rule of Civil Procedure 12(b)(6), Defendants request summary dismissal of Bauer's Amended Complaint (Docket No. 48).

In large part, both Defendants argue that the principles of Federal Rule of Civil Procedure 8, describing the requirements of a "well-pleaded complaint," require that Bauer's complaint be dismissed for failing to adequately set forth a "short and plain statement of the claim showing that the pleader is entitled to relief." Defendants also argue that a higher pleading standard applies to Bauer's fraud and punitive damages claims. Providence, moving for complete dismissal, argues that it is not a proper party to this litigation and that Bauer does not and can not allege an adequate factual basis for asserting a claim against it. Drawing support from the same law, Met Life argues for dismissal of Bauer's bad faith, fraud, and punitive damages claims. At this, the motion to dismiss stage, Met Life does not move to dismiss Bauer's remaining claims alleging improper denial of benefits and breach of contract.

The Court heard oral argument on May 10, 2010, and took the motions under advisement. (Docket No. 63). After conducting a careful review of Bauer's Amended Complaint, considering each of the parties' briefs, oral arguments of counsel, conducting its own independent legal research, and applying the governing legal authorities, the Court issues the following Memorandum Decision and Order.

BACKGROUND

1. Factual Background

Bauer was a full time employee of Providence. As an employee, Bauer was eligible for accidental death and dismemberment benefits under a group insurance policy ("the Plan") issued by Met Life, for the benefit of Providence employees. Particularly, this policy provided for accidental death benefits payable to Bauer in the event of the death of her husband, Terry Bauer.

On October 15, 2007, Terry Bauer fell down the stairs at his home resulting in serious personal injuries including a fracture to the head of his right femur. Four days later, on October 19, 2007, while in the hospital he suffered a fatal pulmonary embolus and died.

Bauer filed a claim for accidental death benefits which was denied initially and again on review. Bauer alleges in her initial complaint that "Defendants" denied her claim. Bauer does not specify, however, which, or if both, Defendants denied the claim. Pursuant to stipulation (Docket No. 43), Bauer filed an amended complaint alleging claims against both Defendants for: (1) improper denial of benefits pursuant to 29 U.S.C. 1132(a)(1)(B); (2) breach of contract; (3) breach of good faith and fair dealing; (4) fraud; and (5) punitive damages.

2. Procedural Background

Bauer filed this action on July 8, 2008. Defendants, having failed to plead or otherwise defend, a clerk's default was entered on September 16, 2008. Clerk's Entry of Default (Docket No. 9). Shortly thereafter, Defendants appeared and filed a motion to set aside the defaults (Docket Nos. 11--15), which was granted on January 30, 2009. Order (Docket No. 22). Pursuant to stipulation, Bauer's amended complaint was filed on September 1, 2009. Amended Complaint (Docket No. 48).

ANALYSIS

1. Standard of Review

Put simply, a Rule 12(b)(6) motion to dismiss tests the sufficiency of a party's claim for relief. When considering such a motion, the Court's inquiry is whether the allegations in a pleading are sufficient under applicable pleading standards. Federal Rule of Civil Procedure 8(a) sets forth minimum pleading rules, requiring only a "short and plain statement of the claim showing that the pleader is entitled to relief." Id. Notably, however, Bauer's fraud claims must be plead "with particularity." Fed. R. Civ. P. 9. In addition, Idaho law requires specific procedural and substantive pleading standards when seeking a claim for punitive damages. See Strong v. Unumprovident Corp., 393 F. Supp. 2d 1012, 1025 (D. Idaho 2005) ("The question of whether to permit a claim for punitive damages is substantive in nature and accordingly is controlled by relevant Idaho case law." ); Idaho Code § 6-1604.

A. The Rule 8 notice pleading standard under Conley v. Gibson

Under the pleading standard of Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Prior to 2007, the Supreme Court's decision in Conley v. Gibson, 355 U.S. 41, 45--46 (1957), provided that, under Rule 12(b)(6), "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim, which would entitle him to relief."

As a result of the Conley standard, a complaint would be dismissed only if it was legally deficient. Id. As the Ninth Circuit noted, "[d]ismissal for failure to state a claim is proper only if it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts that could be proved." Kelson v. City of Springfield, 767 F.2d 651, 653 (9th Cir. 1985). Thus, until 2007, a complaint's lack of specific factual allegations was usually a non-factor at the Rule 12(b)(6) motion to dismiss stage. In the Court's view, that long-standing pleading standard was based on the principle that "all pleadings shall be so construed as to do substantial justice." Fed. R. Civ. P. 8(f).

B. Rule 8 after Twombly and Iqbal

1. Bell Atlantic v. Twombly

In 2007, the United States Supreme Court changed the legal landscape considerably when it decided Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). By way of summary, the plaintiffs in Twombly, a putative class, sued four major telecommunications companies for antitrust violations under the Sherman Act. Id. at 549. However, the allegations in the Twombly complaint were held to be inadequate. Plaintiffs alleged, in a conclusory fashion, that the defendants in that action had an "agreement" to not compete and fix prices through "parallel conduct." Id. at 566. The Supreme Court held that the plaintiffs' complaint failed to "set forth a single fact" supporting the allegation that such an agreement existed. Id. at 561--62. Although the complaint alleged a seven-year span of conduct, it "mentioned no specific time, place, or persons involved in the alleged conspiracies." Id. at 565.

This shortage of factual detail proved fatal to the Twombly plaintiffs' case. Facing nothing more than what were described as "conclusory assertions," the Supreme Court held that dismissal was required because "parallel conduct does not suggest conspiracy, and a conclusory allegation of agreement at some unidentified point does not supply facts adequate to show illegality." Id. at 557. In reaching this conclusion, the Supreme Court also retired the "no set of facts" language from Conley, which the Court concluded "is best forgotten as an incomplete, negative gloss on an accepted pleading standard." Id. at 563.

Instead, the Supreme Court styled a new Rule 12(b)(6) "plausibility standard," holding that a complaint must offer "enough facts to state a claim for relief that is plausible on its face." Id. at 570. The Court explained that this standard requires "more than labels and conclusions, and [that] a formulaic recitation of the elements of a cause of action will not do." Id. at 555. To determine the level of factual detail needed, the Supreme Court concluded that "[f]actual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the compliant are true (even if doubtful in fact)." Id. In sum, ...


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