# Bearden v. Ballad Health

> District Court, E.D. Tennessee · December 11, 2019

URL: https://www.frixlaw.com/law-library/cases/10433622

## Case

- **Court:** District Court, E.D. Tennessee
- **Decided:** December 11, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10433622

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT GREENEVILLE

CHRISTINE BEARDEN, DAVID BEARDEN, )
TERRI COOK, CAROLYN GIBBONS, )
ELMER DARRELL GREER, LADONNA )
F. GREER, MARK HUTCHINS, KEVIN )
MITCHELL, JAMIE STRANGE PIERSON, )
and CRYSTAL GAIL REGAN, )
) Case No.: 2:19-cv-55
Plaintiffs, )
)
v. ) Judge Curtis L. Collier
)
BALLAD HEALTH, MEDICAL )
EDUCATION ASSISTANCE )
CORPORATION, BARBARA ALLEN, )
JULIE BENNETT, DAVID GOLDEN, )
DAVID LESTER, ALAN LEVINE, DAVID )
MAY, SCOTT M. NISWONGER, BRIAN )
NOLAND, GARY PEACOCK, DOUG )
SPRINGER, and KEITH WILSON )
)
Defendants. )

M E M O R A N D U M

Before the Court are four motions: a motion to dismiss by Defendants Ballad Health and
the individually named Defendants (the “Ballad Health Directors”) (Doc. 27); a motion to dimsiss
by Defendant Medical Education Assistance Corporation (“MEAC”) (Doc. 44); a motion to strike
by Defendants Ballad Health and the Ballad Health Directors (Doc. 51); and a motion to amend
their complaint by Plaintiffs (Doc. 48). For the reasons outlined below, the Court will GRANT
both motions to dismiss, will DENY Defendants Ballad Health and Ballad Health Directors’
motion to strike, and will DENY Plaintiffs’ motion to amend their complaint.
I. BACKGROUND1

On or about January 31, 2018, the Tennessee Department of Health permitted a merger of
Mountain States Health Alliance and Wellmont Health Systems under the terms of a Certificate of
Public Advantage (“COPA”). (Doc. 1 at 3.) The resulting entity, Ballad Health, became the
dominant economic entity in the relevant geographic market for health-related services. (Id. at 4.)
On April 12, 2019, Plaintiffs filed suit against Ballad Health, the Ballad Health Directors,
and MEAC. (Id.) Plaintiffs allege that Defendants Brian Noland, Scott Niswonger, and David
Golden have conflicts that prohibit them from serving on the Ballad Health Board of Directors.
(Id. at 5.) Specifically, Defendants Niswonger and Golden are members of the Board of Trustees
of East Tennessee State University (“ETSU”) and Defendant Noland is a member of the Board of
Directors of ETSU Physicians and is ETSU’s president. (Id.) Plaintiffs allege this creates an
unlawful interlocking directorate under 15 U.S.C. § 19. (Id.)
Defendants Ballad Health and Ballad Health Directors filed a motion to dismiss,
contending (1) Plaintiffs have failed to allege Article III standing to bring this suit; (2) Plaintiffs

have failed to state a claim for which relief can be granted; and (3) Ballad Health has state-action
immunity from liability. (See Doc. 28.) Defendant MEAC also filed a motion to dismiss, raising
identical issues with Plaintiffs’ complaint. (See Doc. 45.) Plaintiffs responded to both motions,
asserting (1) they have sufficiently alleged Article III standing and a claim for relief; and (2) state-
action immunity does not apply in this case. (Docs. 49, 59.) Defendants have replied. (Docs. 52,
61.) Defendants Ballad Health and Ballad Health Directors then filed a motion to strike portions
of Plaintiffs’ response to their motion to dismiss because Plaintiffs attached exhibits and referenced

1 This summary of the facts accepts all of the factual allegations in Plaintiffs’ Complaint
as true. See Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir. 2009).
news articles not included in their pleadings. (Doc. 51.) Plaintiffs have not filed a response to the
motion to strike and the time to do so has expired.2
Finally, Plaintiffs filed a motion to amend their complaint to “more particularly set forth
the grounds for relief and the cause of relief.” (Doc. 48 at 2.) Defendants Ballad Health and Ballad
Health Directors filed a response in opposition, arguing the proposed complaint could not survive

a motion to dismiss and it fails to comply with Rule 8(a). (Doc. 54.) Defendants also contend that
Plaintiffs have engaged in bad faith conduct by delaying their motion to amend, filing briefs
“containing objectionable and distasteful language[,]” and noted that “their lawyer took to social
media to start a smear campaign against a director[.]”3 (Id.) Defendants Golden, Niswonger, and
Noland filed a separate response in opposition to Plaintiffs’ motion to amend, providing additional
background information. (Doc. 55.) Plaintiffs have replied. (Docs. 56, 58.)
II. STANDARDS OF REVIEW

A. Motion to Dismiss Under 12(b)(1)
Under Federal Rule of Civil Procedure 12(b)(1), a party may move to dismiss a claim for
lack of subject-matter jurisdiction. A motion to dismiss under 12(b)(1) may raise a facial attack
or a factual attack. Golden v. Gorno. Bros., Inc., 410 F.3d 879, 881 (6th Cir. 2005). A facial attack
“questions merely the sufficiency of the pleading” in alleging subject-matter jurisdiction and thus
the court takes the allegations raised in the complaint as true. Gentek Bldg. Prods., Inc. v. Sherwin-

2 Although the docket text for Doc. 56 indicates Plaintiffs filed a response to the motion to
strike, the document itself addresses only Defendants’ response in opposition to Plaintiff’s motion
to amend. (See Doc. 56.)
3 The Court expects attorneys practicing before it, as officers of the Court, to adhere to the
highest standards of ethics. The Court does not approve of Plaintiffs’ counsel casting aspersions
on individual defendants. See In re Moncier, 550 F. Supp. 2d 768, 800 n.43 (E.D. Tenn. 2008).
The Court also reminds all counsel to adhere to Local Rule 83.2 regarding public statements by
attorneys associated with an ongoing civil action. See E.D. Tenn. L.R. 83.2.
Williams Co., 491 F.3d 320, 330 (6th Cir. 2007). In contrast, a factual attack challenges the factual
existence of subject-matter jurisdiction, requiring the court to “weigh the conflicting evidence to
arrive at the factual predicate that subject-matter does or does not exist.” Id. The plaintiff bears
the burden of proving jurisdiction is proper. Cob Clearinghouse Corp. v. Aetna U.S. Healthcare,
Inc., 362 F.3d 877, 881 (6th Cir. 2004) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)).

B. Motion to Dismiss Under 12(b)(6)
A party may move to dismiss a claim for failure to state a claim upon which relief can be
granted. Fed. R. Civ. P. 12(b)(6). In deciding a 12(b)(6) motion to dismiss, a court must first
accept all of the complaint’s factual allegations as true and construe the complaint in the light most
favorable to the plaintiff. See Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir. 1998). All
ambiguities must be resolved in the plaintiff’s favor. Carter by Carter v. Cornwell, 983 F.2d 52,
54 (6th Cir. 1993) (citing Jackson v. Richards Med. Co., 961 F.2d 575, 577 (6th Cir. 1992)). Bare
legal conclusions, however, need not be accepted as true. See Papasan v. Allain, 478 U.S. 265,
286 (1986).

After assuming the veracity of factual allegations and construing ambiguities in the
plaintiff’s favor, the Court must then determine whether those allegations “state a claim to relief
that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). Sufficient
factual allegations are pleaded when a court is able “to draw the reasonable inference that the
defendant is liable for the misconduct alleged” and there is “more than a sheer possibility that a
defendant has acted unlawfully.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To determine
whether the complaint satisfies facial probability, the court must “draw on its judicial experience
and common sense.” See id. at 679.
If a party presents matters outside the pleadings in connection with a pending motion to
dismiss, the court must either exclude those matters from consideration or treat the motion as one
for summary judgment. Fed. R. Civ. P. 12(d). Documents attached to the pleadings are considered
part of the pleadings, Fed. R. Civ. P. 10(c), and a court’s consideration of documents referenced
in a complaint that are integral to the claims does not convert a motion to dismiss into a motion

for summary judgment. Commercial Money Ctr., Inc. v. Ill. Union Ins. Co., 508 F.3d 327, 335–
36 (6th Cir. 2007).
C. Motion to Amend
Under Federal Rule of Civil Procedure 15(a)(2), a party may amend its pleading before
trial with the court’s leave, which “[t]he court should freely give . . . when justice so requires.”
The district court’s discretion is “limited by Fed. R. Civ. P. 15(a)’s liberal policy of permitting
amendments to ensure the determination of claims on their merits.” Gen. Elec. Co. v. Sargent &
Lundy, 916 F.2d 1119, 1130 (6th Cir. 1990) (quoting Marks v. Shell Oil Co., 830 F.2d 68, 69 (6th
Cir. 1987)). In evaluating whether to grant leave to amend, the Court may consider “undue delay

in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to
cure deficiencies by previous amendments, undue prejudice to the opposing party, and futility of
amendment . . . .” Hageman v. Signal L.P. Gas, Inc., 486 F.2d 479, 484 (6th Cir. 1973) (citing
Foman v. Davis, 371 U.S. 178, 182 (1962)).
III. DISCUSSION

Because standing is “the threshold question in every federal case[,]” Warth v. Seldin, 422
U.S. 490, 498 (1975), the Court will first consider whether Plaintiffs have sufficiently alleged
Article III standing to file this suit, and then will address the remaining motions before it.
A. Article III Standing

Under Article III, § 2, of the United States Constitution, federal courts only have
jurisdiction over certain “Cases” or “Controversies.” There is “[n]o principle more fundamental
to the judiciary’s proper role in our system of government than the constitutional limitation of
federal-court jurisdiction to actual cases or controversies.” Raines v. Byrd, 521 U.S. 811, 818
(1997) (quoting Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 27 (1976))). A core component
of the cases or controversies requirement is that a plaintiff must have standing to file suit in federal
court. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 (2006). Requiring a plaintiff to have
standing ensures “[t]he exercise of judicial power, which can so profoundly affect the lives, liberty,
and property of those to whom it extends, is . . . restricted to litigants who can show ‘injury in fact’
resulting from the action which they seek to have the court adjudicate.” Valley Forge Christian
Coll. v. Ams. United for Separation of Church & State, Inc., 454 U.S. 464, 473 (1982).
At a minimum, the Constitution requires the following three elements to establish Article
III standing: (1) the plaintiff must have suffered an “injury in fact;” (2) the injury must be fairly

traceable to the action in question; and (3) it must be likely that the injury will be redressed by a
favorable decision. Lujan, 504 U.S. at 560–61. “The party invoking federal jurisdiction bears the
burden of establishing these elements.” Id. at 561. At the pleading stage, the plaintiff must “clearly
. . . allege facts demonstrating each element.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016)
(quoting Warth, 422 U.S. at 518).
Defendants contend Plaintiffs have failed to sufficiently allege Article III standing in their
complaint. Thus, the Court must take all the factual allegations as true and then determine if the
complaint adequately alleges Article III standing. See Gentek Bldg. Prods., Inc., 491 F.3d at 330.
The Court finds it does not.
The first element of Article III standing, “injury in fact,” requires the invasion of a legally
protected interest, which “is (a) concrete and particularized . . . and (b) actual or imminent, not
conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal quotations omitted). An injury is
“concrete” if it actually exists and is “particularized” if it affects the plaintiff personally and
individually. Spokeo, 136 S. Ct. at 1548. While a threatened injury can be sufficient to satisfy

Article III standing, the threatened injury must be certainly impending; hypothetical or speculative
future injuries will not suffice. Clapper v. Amnesty Int’l USA, 568 U.S. 389, 409 (2013). Standing
does not exist merely because an individual is a “concerned bystander[].” Valley Forge Christian
Coll., 454 U.S. at 473 (quoting United States v. SCRAP, 412 U.S. 669, 687 (1973)).
Here, Plaintiffs have not alleged any facts to demonstrate a concrete, particularized injury.
The complaint alleges injury as a result of an “improper and unlawful interlocking directorate.”
(Doc. 1.) Plaintiffs contend three directors have conflicts regarding their “fiduciary duties, or at
the very least quasi-fiduciary duties,” which could potentially cause an injury. (Id.) The
complaint, however, fails to state the nature of the alleged injury beyond asserting a violation of

15 U.S.C. § 9. It is insufficient to claim injury based solely on the existence of a statutory violation;
there must be an allegation of harm as a result of the violation. See Spokeo, 136 S. Ct. at 1549
(“Article III standing requires a concrete injury even in the context of a statutory violation.”). The
only mention of a specific injury in the complaint is that “[i]n the extreme, as Trustees of East
Tennessee State University, Niswonger and Golden have the authority, in conjunction with their
fellow trustees, to dissolve the defendant, ETSU Physicians, and thus completely stifle its status
as a market competitor with Ballad.” (Doc. 1 at 5.) However, this allegation fails to describe a
concrete harm to Plaintiffs, nor does an event “in the extreme” demonstrate a certainly impending
injury. See Clapper, 568 U.S. at 409.
In addition, the complaint does not provide any factual allegations of any potential injury
to the named plaintiffs beyond averring that each plaintiff “has or will sustain [an] injury[.]” (Id.
at 2.) “It is a long-settled principle that standing cannot be ‘inferred argumentatively from
averments in the pleadings,’” FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990) (quoting
Grace v. Am. Cent. Ins. Co., 109 U.S. 278, 284 (1883)), “but rather ‘must affirmatively appear in

the record.’” Id. (quoting Mansfield C. & L.M.R. Co. v. Swan, 111 U.S. 379, 392 (1884)). The
complaint fails to affirmatively link any potential harm to Plaintiffs, and thus it fails to sufficiently
allege a particularized injury.
Even construing the evidence in the light most favorable to Plaintiffs, there are no factual
allegations demonstrating an “injury in fact,” as required by Article III. As a result, the Court finds
Plaintiffs have failed to sufficiently allege Article III standing to bring this lawsuit, and the Court
will grant both motions to dismiss (Docs. 27, 44) under Rule 12(b)(1).
B. Motion to Strike
Defendants Ballad Health and Ballad Health Directors have filed a motion to strike portions

of Plaintiffs’ response to their motion to dismiss because the response includes exhibits and
references to news articles that were not included in Plaintiffs’ pleadings. (Doc. 51.) Under
Federal Rule of Civil Procedure 12(f), “the court may strike from a pleading an insufficient defense
or any redundant, immaterial, impertinent, or scandalous matter.” Rule 7(a) defines “pleadings”
as “a complaint; an answer to a complaint; an answer to a counterclaim designated as a
counterclaim; an answer to a crossclaim; a third-party complaint; an answer to a third-party
complaint; and if the court orders one, a reply to an answer.” Fed. R. Civ. P. 7(a). “Exhibits
attached to a dispositive motion are not ‘pleadings’ within the meaning of Fed. R. Civ. P. 7(a) and
are therefore not subject to a motion to strike under Rule 12(f).” Fox v. Mich. State Police Dep’t,
173 F. App’x 372, 375 (6th Cir. 2006). Because the attached exhibits and news article references
appeared in Plaintiffs’ response to a motion to dismiss, they are not subject to Rule 12(f).
Accordingly, Defendants’ motion to strike (Doc. 51) will be denied.
C. Motion to Amend Complaint

When determining whether to permit an amendment under Federal Rule of Civil Procedure
15, a court may consider several factors, including, “[u]ndue delay in filing, lack of notice to the
opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous
amendments, undue prejudice to the opposing party, and futility of amendment . . . .” Hageman,
486 F.2d at 484 (citing Foman, 371 U.S. at 182). A court may deny a motion to amend as futile if
the amended complaint could not withstand a Rule 12(b) motion to dismiss. See Riverview Health
Inst. LLC v. Med. Mut. of Ohio, 601 F.3d 505, 512 (6th Cir. 2010) (citing Rose v. Hartford
Underwriters Ins. Co., 203 F.3d 417, 420 (6th Cir. 2000)).
Here, Plaintiffs’ proposed amended complaint still fails to adequately allege Article III
standing. While Plaintiffs do provide more specific facts regarding the alleged injury, (Doc. 48-1

at 13–14), the complaint lacks any factual allegations that the injury is particularized to the named
plaintiffs. Plaintiffs allege the interlocking directorate has caused facilities to close, has increased
travel times to intensive care units, and could potentially lead to increased healthcare costs. (Id.
at 16.) The complaint, however, does not indicate how Plaintiffs, as individuals, are impacted by
these events. Plaintiffs cannot simply state a harm occurred in order to establish injury in fact;
they must provide some factual allegations to demonstrate the harm is specific to them. See Valley
Forge Christian Coll., 454 U.S. at 473.
Thus, Plaintiffs’ proposed amended complaint could not survive a 12(b) motion to dismiss.
As such, the Court finds the amendment would be futile and will deny Plaintiffs’ motion to amend
(Doc. 48).
IV. CONCLUSION

For the foregoing reasons, the Court will GRANT both motions to dismiss (Docs. 27, 44), will
DENY Defendants’ motion to strike (Doc. 51), and will DENY Plaintiffs’ motion to amend (Doc.
48).

An appropriate order will enter.

/s/
CURTIS L. COLLIER
UNITED STATES DISTRICT JUDGE

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10433622. Public record. Not legal advice.