noting that finding that “a plan is 2 an ERISA plan is a finding of fact,” which meant that collateral estoppel could be applied 3 to prior finding that a plan was not an ERISA plan
How later courts described this case
- noting that finding that “a plan is 2 an ERISA plan is a finding of fact,” which meant that collateral estoppel could be applied 3 to prior finding that a plan was not an ERISA plan
- “[L]ack of Article III standing requires dismissal for 19 lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).” 20 (citations omitted)
- “Because Delaye’s employment contract is not a 15 ‘plan’ governed by ERISA, his claim that his contract was breached does not present a 16 federal question. The district court lacked jurisdiction to resolve this dispute.”
- “We do not consider 7 arguments raised for the first time in the reply brief.”
Written by the judges who cited it.
The opinion
1
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7
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
8
AT SEATTLE
9
10 PHILLIPS 66 COMPANY, et al., CASE NO. C19-0174JLR
11 Plaintiffs, ORDER GRANTING MOTIONS
v. TO DISMISS
12
JOEL SACKS,
13
Defendant,
14
and
15
ASSOCIATION OF UNITED
16
STEEL, PAPER AND FORESTRY,
17 RUBBER, MANUFACTURING,
ENERGY, ALLIED INDUSTRIAL
18 AND SERVICE WORKERS
INTERNATIONAL UNION,
19 LOCAL 12-590,
20
Intervenor.
21
22
1 I. INTRODUCTION
2 Before the court are two motions to dismiss Plaintiffs Phillips 66 Company and
3 Manager HR Shared Services’ (collectively, “Phillips 66”) complaint—one filed by
4 Defendant Joel Sacks, Director of the State of Washington Department of Labor and
5 Industries (the “Director”) (Director MTD (Dkt. # 4)), and one filed by Intervenor
6 Association of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
7 Industrial and Service Workers International Union, Local 12-590 (“USW Local”) (USW
8 Local MTD (Dkt. # 13)). Phillips 66 opposes both motions. (Resp. to Director MTD
9 (Dkt. # 20); Resp. to USW Local MTD (Dkt. # 22).) The Director and USW Local filed
10 replies.1 (Director Reply (Dkt. # 24); USW Local Reply (Dkt. # 23).) The court has
11 reviewed the motions, the parties’ submissions concerning the motions, the relevant
12 portions of the record, and the applicable law. Being fully advised,2 the court GRANTS
13 the Director’s and USW Local’s motions to dismiss and DIMISSES Phillips 66’s
14 complaint WITH PREJUDICE and without leave to amend.
15 II. BACKGROUND
16 The facts necessary to adjudicate this motion are not complex. Phillips 66 does
17 not offer its employees “sick leave”; instead, it offers its employees short and long-term
18 disability benefits under a disability plan (the “Plan”). (Compl. (Dkt. # 1) at 3-4.) In
19
20 1 The Director and USW Local also joined each other’s motions. (See Director Resp. to
USW Local MTD (Dkt. # 18); USW Local Resp. to Director MTD (Dkt. # 19).)
21
2 None of the parties request oral argument (see Director MTD; USW Local MTD; Resp.
to Director MTD; Resp. to USW Local MTD), and the court concludes that oral argument is
22
unnecessary to its disposition of the motions, see Local Rules W.D. Wash. LCR 7(b)(4).
1 2013, two Washington-based Phillips 66 employees—Rachelle Honeycutt and Gabriel
2 Westergreen—took leave from work to care for ill family members. (Id. at 4.) Both
3 employees sought to use the short-term disability benefits under the Plan to cover those
4 absences. (Id. at 3-4.) Phillips 66 rejected both requests. (Id. at 4.)
5 Although this factual background is straightforward, it yielded a long-winding
6 procedural history. After Phillips 66 denied their benefits requests, Ms. Honeycutt and
7 Mr. Westergreen filed protected leave complaints with the Washington State Department
8 of Labor and Industries (the “Department”). (Id. at 4.) Those complaints alleged that
9 Phillips 66’s benefits denials violated the Washington Family Care Act (“WFCA”),
10 which entitles Washington employees to take leave from work to care for ill family
11 members. (Id.) The Department initially found that Phillips 66 did not violate WFCA
12 and, as such, it issued Determinations of Compliance. (Id.) Ms. Honeycutt and Mr.
13 Westergreen appealed those decisions to the Whatcom County Superior Court, which
14 affirmed the Department’s decisions. (Id.)
15 The Washington Court of Appeals reversed and remanded. (Id. at 4-5); see also
16 Honeycutt v. State, Dep’t of Labor & Indus., 389 P.3d 773 (Wash. Ct. App. 2017).
17 Specifically, the court held that, where an employer does not offer paid leave for illness,
18 WFCA entitles employees to access disability benefits for family care. Honeycutt, 389
19 P.3d at 778 (interpreting RCW 49.12.265(5)). Thus, if WFCA applied to Phillips 66’s
20 Plan, Ms. Honeycutt and Mr. Westergreen would be entitled to use short-term disability
21 benefits to cover absences for family care. Id. at 780. The court noted, however, that
22 WFCA exempts disability plans covered by the Employee Security Retirement Income
1 Security Act of 1974 (“ERISA”). Id. The Department did not make findings on whether
2 the Plan was governed by ERISA. Id. Accordingly, the court remanded the case to the
3 Department to adjudicate that issue. Id.
4 On remand, a Department investigator and an Administrative Law Judge both
5 determined that the Plan is governed by ERISA. (Compl. at 6, 9.) But, on October 25,
6 2018, the Director reversed and determined that the short-term disability benefits that Ms.
7 Honeycutt and Mr. Westergreen sought to use for family care leave did not fall under an
8 ERISA plan. (Id. at 9.) Thus, the Director found that WFCA applied and that Phillips 66
9 violated WFCA by denying Ms. Honeycutt and Mr. Westergreen’s benefits requests.
10 (See id., Ex. C at 3-7.3) The Director assessed a $200 penalty against Phillips 66 for each
11 violation. (Id., Ex. C at 7.) Phillips 66 moved for reconsideration of the Director’s order,
12 but the Director denied that motion on January 8, 2019. (Id., Ex. C at 11-12.)
13 Phillips 66 filed the current action on February 5, 2019. (See Compl.) Phillips 66
14 contends that “[t]he sole issue here is whether the Plan, including its short-term disability
15 benefit, is an ERISA Plan and, therefore, excluded from coverage under the WFCA,
16 RCW 49.12.265(5).” (Id. at 2.) The day after filing this case, Phillips 66 filed a petition
17 for judicial review in Whatcom County Superior Court that sought direct review of the
18 Director’s decision on Ms. Honeycutt and Mr. Westergreen’s complaints (the “State
19 Court Action”). (See Director MTD, Ex. B.) Phillips 66 moved to stay the State Court
20 Action while the current case was pending, and, on March 22, 2019, the Whatcom
21
3 As discussed below, the court grants the parties’ requests to take judicial notice of the
22
records in the State Court Action. See infra § III.B.
1 County Superior Court granted that motion and stayed the State Court Action “until the
2 federal court has issued an order on Petitioner’s Complaint for Declaratory Judgment and
3 Injunctive Relief.” (Birmingham Decl. (Dkt. # 21-1) ¶ 2.)
4 The Director filed his motion to dismiss the complaint under Federal Rules of
5 Civil Procedure 12(b)(1) and 12(b)(6) on February 28, 2019. (See Director MTD.) In
6 that motion, the Director presents three challenges to Phillips 66’s complaint: (1) the
7 court is barred from granting the relief Phillips 66 seeks under the Anti-Injunction Act,
8 28 U.S.C. § 2283 (“AIA”); (2) the court should abstain from deciding this case under the
9 Younger abstention doctrine; and (3) the court lacks subject matter jurisdiction over this
10 case under the Rooker-Feldman doctrine. (See Director MTD at 6-13.) The Director also
11 requests his fees. (Id. at 13-14.) USW Local successfully moved to intervene in this case
12 and filed its motion to dismiss on April 4, 2019.4 (See USW Local MTD.) USW Local
13 offers three arguments in support of dismissal in its motion: (1) the Director’s order that
14 the Plan is not an ERISA plan is preclusive in this court and deprives this court of subject
15 matter jurisdiction; (2) Phillips 66’s complaint does not arise under federal law; and (3)
16 the AIA bars the relief that Phillips 66 seeks. (See USW Local MTD at 7-22.) On reply,
17 USW Local also challenged Phillips 66’s standing to bring this case. (USW Local Reply
18 at 9-10.) The court considers these arguments in turn.
19 //
20
21
4 Although USW Local did not label its motion to dismiss, USW Local’s motion presents
arguments for dismissal under Rules 12(b)(1) and 12(b)(6). (See generally USW Local MTD at
22
6-22.)
1 III. DISCUSSION
2 A. Standards
3 1. Rule 12(b)(1)
4 USW Local and the Director allege a number of facial attacks on the court’s
5 subject matter jurisdiction to hear this case. (See USW Local MTD at 6-16; USW Local
6 Reply at 9-10; Director MTD at 12-13.) “In a facial attack, the challenger asserts that the
7 allegations contained in a complaint are insufficient on their face to invoke federal
8 jurisdiction.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). “The
9 district court resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6):
10 Accepting the plaintiff’s allegations as true and drawing all reasonable inferences in the
11 plaintiff’s favor, the court determines whether the allegations are sufficient as a legal
12 matter to invoke the court’s jurisdiction.” Leite v. Crane Co., 749 F.3d 1117, 1121 (9th
13 Cir. 2014) (citing Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013)). The party
14 asserting its claims in federal court bears the burden of establishing subject matter
15 jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
16 USW Local also alleges that Phillips 66’s claim is not ripe for review (see USW
17 Local Reply at 9-10), which presents a Rule 12(b)(1) issue, Maya v. Centex Corp., 658
18 F.3d 1060, 1067 (9th Cir. 2011) (“[L]ack of Article III standing requires dismissal for
19 lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1).”
20 (citations omitted)). “The ripeness doctrine is drawn both from Article III limitations on
21
22
1 judicial power and from prudential reasons for refusing to exercise jurisdiction.”5 Nat’l
2 Park Hospitality Ass’n v. Dep’t of Interior, 538 U.S. 803, 808 (2003) (internal quotations
3 omitted); see also Wolfson v. Brammer, 616 F.3d 1045, 1058 (9th Cir. 2010) (“Ripeness
4 has both constitutional and prudential components.”). To satisfy the constitutional
5 ripeness requirement, there must be a case or controversy with issues that are “definite
6 and concrete, not hypothetical or abstract.” Thomas v. Anchorage Equal Rights Comm’n,
7 220 F.3d 1134, 1139 (9th Cir. 2000) (citations and internal quotation marks omitted). To
8 evaluate prudential ripeness, courts weigh two factors: “the fitness of the issues for
9 judicial decision and the hardship to the parties of withholding court consideration.”
10 Abbott Labs. v. Gardner, 387 U.S. 136, 149 (1967), overruled on other grounds by
11 Califano v. Sanders, 430 U.S. 99 (1977). “A claim is fit for decision if the issues raised
12 are primarily legal, do not require further factual development, and the challenged action
13 is final.” Wolfson, 616 F.3d at 1060. “To meet the hardship requirement, a litigant must
14 show that withholding review would result in direct and immediate hardship[.]” Id.
15 (citations and internal quotations omitted).
16 //
17 //
18
19 5 The Supreme Court has recently called the prudential ripeness doctrine into question.
Susan B. Anthony List v. Driehaus, 573 U.S. 149, 167 (2014) (“To the extent respondents would
20 have us deem petitioners’ claims nonjusticiable on grounds that are prudential, rather than
constitutional, that request is in some tension with our recent reaffirmation of the principle that a
federal court’s obligation to hear and decide cases within its jurisdiction is virtually unflagging.”
21
(citations and internal quotations omitted)). However, because neither the Supreme Court nor
the Court of Appeals for the Ninth Circuit have definitively invalidated this doctrine, the court
22
continues to consider it here.
1 2. Rule 12(b)(6)
2 Federal Rule of Civil Procedure 12(b)(6) provides for dismissal for “failure to
3 state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). When
4 considering a motion to dismiss under Rule 12(b)(6), the court construes the complaint in
5 the light most favorable to the nonmoving party. Livid Holdings Ltd. v. Salomon Smith
6 Barney, Inc., 416 F.3d 940, 946 (9th Cir. 2005). The court must accept all well-pleaded
7 facts as true and draw all reasonable inferences in favor of the plaintiff. Wyler Summit
8 P’ship v. Turner Broad. Sys., Inc., 135 F.3d 658, 661 (9th Cir. 1998). The court,
9 however, is not required “to accept as true allegations that are merely conclusory,
10 unwarranted deductions of fact, or unreasonable inferences.” Sprewell v. Golden State
11 Warriors, 266 F.3d 979, 988 (9th Cir. 2001).
12 “To survive a motion to dismiss, a complaint must contain sufficient factual
13 matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
14 v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
15 570 (2007)); see also Telesaurus VPC, LLC v. Power, 623 F.3d 998, 1003 (9th Cir.
16 2010). “A claim has facial plausibility when the plaintiff pleads factual content that
17 allows the court to draw the reasonable inference that the defendant is liable for the
18 misconduct alleged.” Iqbal, 556 U.S. at 677-78. “A pleading that offers ‘labels and
19 conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’
20 . . . Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further
21 factual enhancement.’” Id. at 678 (quoting Twombly, 550 U.S. at 555, 557). Dismissal
22 under Rule 12(b)(6) may also be based on the lack of a cognizable legal theory or the
1 absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica
2 Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990).
3 B. Requests for Judicial Notice
4 As a threshold matter, the court grants the parties’ requests to take judicial notice
5 of the relevant filings in the State Court Action. (See Director MTD at 9; Resp. to
6 Director MTD at 4.) The court may take judicial notice of “a fact that is not subject to
7 reasonable dispute because it . . . can be accurately and readily determined from sources
8 whose accuracy cannot reasonably be questioned.” Fed. R. Evid. 201(b)(2). Under this
9 rule, courts may take judicial notice of federal and state court proceedings, see, e.g.,
10 Shetty v. Wells Fargo Bank, NA, 696 F. App’x 828, 829 (9th Cir. 2017), without
11 converting a Rule 12 motion to a motion for summary judgment, United States v. 14.02
12 Acres of Land More or Less in Fresno Cty., 547 F.3d 943, 955 (9th Cir. 2008) (citations
13 omitted). Thus, the court takes judicial notice of the filings in the State Court Action
14 when considering the present motions to dismiss.
15 C. Subject Matter Jurisdiction
16 1. Ripeness
17 In its reply memorandum, USW Local argues that Phillips 66’s claims are not ripe.
18 (See USW Local Reply at 9-10.) Specifically, USW Local alleges that if the court credits
19 Phillips 66’s argument that it seeks only to enjoin future administrative proceedings (as
20 opposed to the State Court Action), this case is not ripe.6 (USW Local Reply at 9 (“[I]f
21
6 Phillips 66 made this argument in response to USW Local and the Director’s AIA
22
arguments. (See Resp. to USW Local MTD at 8.) As discussed in more detail below, Phillips 66
1 this Court were to take Phillips 66 at its word that it only seeks declaratory and injunctive
2 relief for the purposes of precluding future proceedings, the Court must nonetheless
3 dismiss the claims as unripe.”).) Typically, the court declines to consider arguments
4 raised for the first time in reply. See Coos Cnty. v. Kempthorne, 531 F.3d 792, 812 n.16
5 (9th Cir. 2008) (declining to consider an argument raised for the first time in a reply
6 brief); Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999) (“We do not consider
7 arguments raised for the first time in the reply brief.”). Given that standing implicates the
8 court’s subject matter jurisdiction, however, the court addresses standing at the threshold.
9 See Bates v. United Parcel Serv., Inc., 511 F.3d 974, 985 (9th Cir. 2007) (“We must
10 assure ourselves that the constitutional standing requirements are satisfied before
11 proceeding to the merits.” (citations omitted)); Nw. Envtl. Advocates v. U.S. Dep’t of
12 Commerce, 322 F. Supp. 3d 1093, 1096 (W.D. Wash. 2018) (“As a threshold matter, the
13 Court must ensure it has subject matter jurisdiction, a key component of which is Article
14 III standing.” (citations omitted)).
15 Phillips has alleged a sufficiently concrete injury to satisfy the constitutional
16 ripeness requirements. The Director ordered that “[Phillips 66’s] short-term disability
17 plan is a payroll practice exempt from ERISA.” (Compl. Ex. C at 7.) Phillips 66 seeks a
18 declaration from this court stating that the Plan is an ERISA plan. (Compl. at 2.) That is
19 a definite and concrete dispute. The court disagrees with USW Local’s argument that
20
claims that the AIA does not apply to this case because Phillips 66 does not seek to enjoin the
21
State Court Action. See infra § III.E.2. Instead, Phillips 66 alleges that it seeks declaratory relief
stating that ERISA applies to the Plan and injunctive relief against future administrative actions
22
by the Department. See id. The merits of this argument are discussed below. See id.
1 Phillips 66’s claim is not ripe until the Department initiates another enforcement action
2 against Phillips 66 for violation of WFCA. (See USW Local Reply at 9-10.) This is not a
3 hypothetical regulatory dispute that may impact Phillips 66 in the future. Phillips 66
4 continues to administer the Plan, and the Director has reviewed the Plan and determined
5 that it does not fall under ERISA. (Compl. Ex. C at 7.) Thus, Phillips 66 must either
6 administer the Plan under WFCA in compliance with the Director’s order and risk
7 depriving plan participants of ERISA benefits or flout the Director’s order by
8 administering the plan under ERISA and risk violating WFCA.7 That puts Phillips 66 “in
9 a dilemma that it was the very purpose of the Declaratory Judgment Act to ameliorate.”
10 Abbott Labs., 387 U.S. at 152.
11 Phillips 66’s claims also satisfy the prudential ripeness requirements—fitness for
12 judicial review and hardship. First, this case is fit for judicial review. The issue
13 presented—whether the Plan is governed by ERISA—needs no further factual
14 development. The parties agree that no facts beyond those contained in the
15 administrative record are needed to resolve this dispute. (JSR (Dkt. # 15) at 3 (“The
16 parties believe that no discovery is needed and that the facts of this matter are limited to
17 the Agency Record, Agency Case Number 2018-024-PL, supplemented by Agency Case
18 Number 2014-LI-0033, #000515-000687.”).) The court also agrees with USW Local that
19
20
21
7 That injury is particularly acute in this case given that Phillips 66 administers the Plan
nationwide and operates the Plan under ERISA in other jurisdictions. (See Compl. at 13-14.)
22
1 the Director’s order is a “final agency action.”8 See Ass’n of Am. Med. Colleges v.
2 United States, 217 F.3d 770, 780 (9th Cir. 2000) (internal quotations omitted) (“Agency
3 action is fit for review if the issues presented are purely legal and the regulation at issue
4 is a final agency action.”). And, as noted above, given that Phillips 66 continues to
5 administer the Plan and is now subject to a final agency order concluding that the Plan is
6 not subject to ERISA, there will be hardship to Phillips 66 if this dispute is not promptly
7 resolved.
8 In sum, the court finds that Phillips 66’s requests for declaratory and injunctive
9 relief satisfy both the constitutional and prudential requirements for ripeness.
10 2. Additional 12(b)(1) Arguments
11 Although the court finds that Phillips 66 has standing to bring this claim, the
12 Director and USW Local offer three additional arguments challenging the court’s subject
13 matter jurisdiction. First, USW Local argues that the court has subject matter jurisdiction
14 under ERISA only if the Plan is an ERISA plan, and the Director’s decision that the Plan
15 is not an ERISA plan is res judicata or entitled to preclusive effect in this action. (USW
16 Local MTD at 9 (“[A]bsent an ERISA plan, § 1132(a) does not provide a basis for
17
18 8 Under Washington law, an agency action is deemed “final” when it “imposes an
obligation, denies a right, or fixes a legal relationship as a consummation of the administrative
19 process.” Bock v. State, 586 P.2d 1173, 1176 (Wash. 1978). The Director’s order is the last
word by the Department on Ms. Honeycutt and Mr. Westergreen’s claims and the ERISA
20 interpretation issue presented in this case. See WAC 296-130-070(8) (“The director . . . will
serve the final decision on all parties.”). The fact that Phillips 66 appealed that order in the State
Court Action does not mean that the order is not “final” as far as the agency is concerned. See
21
Jones v. State, Dep’t of Health, 242 P.3d 825, 835 (Wash. 2010) (“A final agency action implies
a definitive act of the agency, action which is binding until and unless it is set aside by a court.”
22
(citations and internal quotations omitted)).
1 subject matter jurisdiction.”).) As such, according to USW Local, the court has no choice
2 but to dismiss for lack of subject matter jurisdiction. (Id. at 9-13.) Second, USW Local
3 alleges that Phillips 66’s claim does not arise under federal law under the well-pleaded
4 complaint rule. (Id. at 13-16.) Third, the Director alleges that the court lacks jurisdiction
5 under the Rooker-Feldman doctrine. (Director MTD at 12-13.) The court addresses each
6 of these arguments below.
7 First, USW Local’s res judicata argument is unavailing because that argument
8 does not bear on the court’s subject matter jurisdiction. Even if USW Local is correct
9 that the Director’s decision is entitled to preclusive effect, the existence (or lack thereof)
10 of an ERISA plan is a threshold factual issue that goes to the merits of Phillips 66’s
11 claims under ERISA, not the court’s subject matter jurisdiction.9 The court recognizes
12 that there is caselaw in the Ninth Circuit supporting USW Local’s argument that the
13 status vel non of an ERISA plan is a jurisdictional issue. See, e.g., Delaye v. Agripac,
14 Inc., 39 F.3d 235, 238 (9th Cir. 1994) (“Because Delaye’s employment contract is not a
15 ‘plan’ governed by ERISA, his claim that his contract was breached does not present a
16 federal question. The district court lacked jurisdiction to resolve this dispute.”). But the
17 continuing validity of that conclusion is doubtful in light of the Supreme Court’s holding
18 in Arbaugh v. Y&H Corp., 546 U.S. 500 (2006).
19 The Arbaugh Court noted that this area of the law—which the Court termed the
20 “subject-matter jurisdiction/ingredient-of-claim-for-relief dichotomy”—is one that has
21
9 The court addresses the merits of USW Local’s preclusion arguments below. See infra
22
§ III.D.
1 caused no shortage of consternation. 546 U.S. at 511 (“Judicial opinions . . . often
2 obscure the issue by stating that the court is dismissing ‘for lack of jurisdiction’ when
3 some threshold fact has not been established, without explicitly considering whether the
4 dismissal should be for lack of subject matter jurisdiction or for failure to state a claim.”).
5 To help draw the line between jurisdictional issues and questions that go to the merits, the
6 Court articulated the following bright line rule:
7 If the Legislature clearly states that a threshold limitation on a statute’s scope
shall count as jurisdictional, then courts and litigants will be duly instructed
8 and will not be left to wrestle with the issue. . . . But when Congress does not
rank a statutory limitation on coverage as jurisdictional, courts should treat
9 the restriction as nonjurisdictional in character.
10 Id. at 515-16 (citations omitted).
11 A number of courts have applied the Arbaugh rule to ERISA and concluded that
12 the question of whether a benefits plan falls under ERISA is not jurisdictional. See Dahl
13 v. Charles F. Dahl, M.D., P.C. Defined Ben. Pension Trust, 744 F.3d 623, 629 (10th Cir.
14 2014) (“[R]ecent Supreme Court decisions compel the conclusion that the existence of a
15 benefit plan subject to ERISA is not a jurisdictional requirement but an element of a
16 claim under ERISA.”); Daft v. Advest, Inc., 658 F.3d 583, 590-91 (6th Cir. 2011)
17 (“Therefore, in light of Arbaugh and its progeny, the existence of an ERISA plan must be
18 considered an element of a plaintiff’s claim . . . not a prerequisite for federal
19 jurisdiction.”). While the Ninth Circuit has not been presented with this specific question
20 post-Arbaugh, it has recently recognized that a similar threshold ERISA question went to
21 the merits of the plaintiff’s claim. See Leeson v. Transamerica Disability Income Plan,
22 671 F.3d 969, 979 (9th Cir. 2012) (holding that, due to “intervening Supreme Court
1 precedent,” questions pertaining to participant status under ERISA “go[] to the merits of
2 [the plaintiff’s] claim and not to the subject matter jurisdiction of the district court”). In
3 light of Arbaugh, Leeson, and recent decisions from other circuits, at least one other court
4 in this circuit has considered whether Delaye is still good law and determined that “the
5 fact that the plan at issue is not ERISA qualifie[d] means that plaintiff’s claims fail on the
6 merits, but does not deprive the court of subject matter jurisdiction.” See McVey v.
7 McVey, 26 F. Supp. 3d 980, 993-95 (C.D. Cal. 2014).
8 The court agrees with the decisions in Dahl, Daft, and McVey. Phillips 66 has
9 pleaded a colorable claim arising under 29 U.S.C. § 1132(a)(3) by alleging that the Plan
10 is covered by ERISA. To prevail on that claim, Phillips 66 must prove that the Plan is, in
11 fact, covered by ERISA. But nothing in ERISA states that the existence of an ERISA
12 plan is a jurisdictional pre-requisite for a § 1132 claim. Instead, as a growing number of
13 courts have concluded, that question goes to the merits of an ERISA plaintiff’s claim.
14 See, e.g., Dahl, 744 F.3d at 629; Daft v. Advest, Inc., 658 F.3d at 590-91; McVey, 26 F.
15 Supp. 3d at 995. As such, USW Local’s preclusion argument does not deprive the court
16 of subject matter jurisdiction, but the court will still consider the merits of USW Local’s
17 preclusion argument under Rule 12(b)(6). See infra § III.D.
18 USW Local’s second jurisdictional argument—that Phillips 66’s claim does not
19 arise under federal law under the well-pleaded complaint rule (USW Local MTD at 13-
20
21
22
1 16)—misconstrues Phillips 66’s complaint.10 Phillips 66 is not asking the court to “bless
2 its affirmative defense to purely state law claims.” (USW Local MTD at 15.) Instead,
3 Phillips 66 seeks declaratory relief stating that the Plan is covered by ERISA and
4 injunctive relief requiring the Department to construe the Plan as an ERISA plan.
5 (Compl. at 13-14.) ERISA explicitly grants Phillips 66, as the fiduciary of the Plan, the
6 authority to bring such an action. See 29 U.S.C § 1132(a)(3)(B)(ii) (“A civil action may
7 be brought . . . by a . . . fiduciary . . . to obtain other appropriate equitable relief . . . to
8 enforce any provisions of this subchapter or the terms of the plan.”). That statutory grant
9 of authority is sufficient to cloak this action with federal question jurisdiction under 28
10 U.S.C. § 1331. Further, in addition to federal question jurisdiction, ERISA contains a
11 statutory grant of jurisdiction that applies to this action. 29 U.S.C. § 1132(e)(1) (“[T]he
12 district courts of the United States shall have exclusive jurisdiction of civil actions under
13 this subchapter brought by the Secretary or by a participant, beneficiary, fiduciary, or any
14 person referred to in section 1021(f)(1) of this title.”). These two statutes provide the
15 court with subject matter jurisdiction over this case. The fact that Phillips 66’s requested
16 relief may be relevant to a pending state court action has no bearing on whether Phillips
17 66 presents a federal question under 28 U.S.C. § 1331 or an ERISA claim under 29
18 U.S.C. § 1132.
19
20
21
10 USW Local also notes, correctly, that the Declaratory Judgment Act cannot confer
jurisdiction over Phillips 66’s claims. (USW Local MTD at 13-14.) But Phillips 66 has not
22
alleged that the court has jurisdiction based on the Declaratory Judgment Act. (See Compl. at 2.)
1 Finally, contrary to the Director’s argument (Director’s MTD at 12-13), the
2 Rooker-Feldman doctrine is inapplicable to this case. “[U]nder what has come to be
3 known as the Rooker-Feldman doctrine, lower federal courts are precluded from
4 exercising appellate jurisdiction over final state-court judgments.” Lance v. Dennis, 546
5 U.S. 459, 463 (2006). Rooker-Feldman does not apply to decisions of administrative
6 agencies like the Director’s order. Verizon Maryland, Inc. v. Pub. Serv. Comm’n of
7 Maryland, 535 U.S. 635, 644 (2002) (“The [Rooker-Feldman] doctrine has no application
8 to judicial review of executive action, including determinations made by a state
9 administrative agency.”). And even if the doctrine could apply to agency action, state
10 court litigation must be concluded for Rooker-Feldman to apply. See Exxon Mobil Corp.
11 v. Saudi Basic Indus. Corp., 544 U.S. 280, 292 (2005). Here, the State Court Action is
12 ongoing. Finally, Phillips 66 is not appealing the Director’s order on Ms. Honeycutt and
13 Mr. Westergreen’s complaints; it is seeking a declaration that the Plan falls under ERISA.
14 Although this case and the State Court Action present essentially identical questions, that
15 is not an impediment to federal jurisdiction under the Rooker-Feldman doctrine because
16 Phillips 66 has filed an “independent claim” in this case. See Skinner v. Switzer, 562 U.S.
17 521, 532 (2011) (“Skinner’s litigation, in light of Exxon, encounters no Rooker-Feldman
18 shoal. If a federal plaintiff presents an independent claim, it is not an impediment to the
19 exercise of federal jurisdiction that the same or a related question was earlier aired
20 between the parties in state court.” (citing Exxon, 544 U.S. at 292-93) (internal quotation
21 marks omitted)).
22
1 D. Issue Preclusion
2 As noted above, USW Local’s preclusion argument does not bear on the court’s
3 jurisdiction to hear this case. See supra § III.C.2. But if USW Local is correct that the
4 Director’s order is entitled to preclusive effect, then Phillips 66 has failed to state a claim
5 for which relief can be granted under Rule 12(b)(6). Thus, the court construes USW
6 Local’s preclusion claim as a Rule 12(b)(6) motion to dismiss and considers USW
7 Local’s argument in light of that standard.
8 USW Local argues that the Director’s order in the State Court Action is res
9 judicata in this case. (See USW Local MTD at 10-13.) The term “res judicata”
10 encompasses two preclusion doctrines—claim preclusion and issue preclusion. Taylor v.
11 Sturgell, 553 U.S. 880, 892 (2008) (“The preclusive effect of a judgment is defined by
12 claim preclusion and issue preclusion, which are collectively referred to as ‘res
13 judicata.’”). USW Local does not specifically identify which preclusion doctrine it seeks
14 to apply, but it is clear from the context of USW Local’s argument that issue preclusion is
15 the relevant doctrine. USW Local argues that the Director has already resolved the key
16 issue in this case—whether the Plan is an ERISA plan. (USW Local MTD at 10 (“[T]he
17 Director previously determined that the STD Plan is a payroll practice, and . . . that
18 decision enjoys preclusive effect from collateral attack in these proceedings.”).) That is
19 an issue preclusion argument.11 Taylor, 553 U.S. at 892 (2008) (“Issue preclusion . . .
20
21
11 Claim preclusion forecloses “successive litigation of the very same claim, whether or
not relitigation of the claim raises the same issues as the earlier suit.” New Hampshire v. Maine,
22
532 U.S. 742, 748 (2001). That doctrine is inapplicable here because Phillips 66’s claim for
1 bars ‘successive litigation of an issue of fact or law actually litigated and resolved in a
2 valid court determination essential to the prior judgment,’ even if the issue recurs in the
3 context of a different claim.” (quoting New Hampshire, 532 U.S. at 748-49)).
4 Federal courts must give the same preclusive effect to state court judgments as
5 would be given in the courts of that state. Migra v. Warren City Sch. Dist. Bd. of Educ.,
6 465 U.S. 75, 81 (1984). This rule can apply to state agency fact finding. Univ. of Tenn.
7 v. Elliott, 478 U.S. 788, 799 (1986) (“[W]hen a state agency ‘acting in a judicial capacity
8 . . . resolves disputed issues of fact properly before it which the parties have had an
9 adequate opportunity to litigate,’ federal courts must give the agency’s factfinding the
10 same preclusive effect to which it would be entitled in the State’s courts.” (quoting
11 United States v. Utah Constr. & Mining Co., 384 U.S. 394, 422 (1966))). Thus, the key
12 question is whether the Director’s order is entitled to preclusive effect under Washington
13 law.12
14 In Washington, seven factors must be met in order to give preclusive effect to
15 agency fact finding—four generally applicable issue preclusion factors and three that are
16 specific to agency fact finding. First, for issue preclusion to apply to any Washington
17 findings—from an agency or otherwise—the party seeking to apply preclusion must
18 establish that:
19
20 declaratory and injunctive relief in this case is not the “very same claim” as Ms. Honeycutt and
Mr. Westergreen’s claims for benefits in the State Court Action.
12 Washington courts often use the terms “issue preclusion” and “collateral estoppel”
21
interchangeably. See, e.g., Christensen v. Grant Cty. Hosp. Dist. No. 1, 96 P.3d 957, 960 (Wash.
2004). For purposes of this order, however, the court follows the Taylor Court’s guidance and
22
uses the term “issue preclusion.”
1 (1) the issue decided in the earlier proceeding was identical to the issue
presented in the later proceeding, (2) the earlier proceeding ended in a
2 judgment on the merits, (3) the party against whom collateral estoppel is
asserted was a party to, or in privity with a party to, the earlier proceeding,
3 and (4) application of collateral estoppel does not work an injustice on the
party against whom it is applied.
4
Christensen, 96 P.3d at 961 (citations omitted). Three additional factors must be
5
considered before granting preclusive effect to agency findings: “(1) whether the agency
6
acted within its competence, (2) the differences between procedures in the administrative
7
proceeding and court procedures, and (3) public policy considerations.” Id. at 961-62
8
(citations omitted).
9
As a threshold matter, the court rejects Phillips 66’s argument that issue preclusion
10
cannot apply to the Director’s order because the key question—whether the Plan is an
11
ERISA plan—is a mixed issue of fact and law. (Resp. to USW Local MTD at 2-3.)
12
Phillips 66 is wrong that the ERISA status vel non of the Plan is a mixed question of fact
13
and law. Although Washington does not appear to have weighed in on this question, it is
14
well-settled in this circuit that “[t]he existence of an ERISA plan is a question of fact, to
15
be answered in the light of all the surrounding circumstances from the point of view of a
16
reasonable person.” Stuart v. UNUM Life Ins. Co. of Am., 217 F.3d 1145, 1149 (9th Cir.
17
2000) (quoting Zavora v. Paul Revere Life Ins. Co., 145 F.3d 1118, 1120 (9th Cir.
18
1998)); see also Steen v. John Hancock Mut. Life Ins. Co., 106 F.3d 904, 913 (9th Cir.
19
1997). Thus, the Director’s finding that the Plan was not governed by ERISA was a
20
factual conclusion that may be appropriate for issue preclusion if the other requirements
21
22
1 for preclusion are met.13 See Steen 106 F.3d at 913-14 (noting that finding that “a plan is
2 an ERISA plan is a finding of fact,” which meant that collateral estoppel could be applied
3 to prior finding that a plan was not an ERISA plan).
4 Of the seven issue preclusion factors, Phillips 66 disputes only three: (1) whether
5 the Director’s order constitutes a “judgment on the merits,” (2) whether the Department
6 acted within its area of competence, and (3) whether public policy considerations weigh
7 in favor of denying preclusive effect. (See Resp. to USW Local MTD at 4.) The court
8 agrees that the other factors are met. The key issue in this case is the same as the issue in
9 the State Court Action—whether the Plan is an ERISA plan; Phillips 66 was a full
10 participant in the State Court Action; there is no apparent procedural injustice that would
11 result from application of issue preclusion in this case; and there were no meaningful
12 differences between the Department’s adjudicatory procedures and the procedures
13 available in this court. Thus, each of these requirements for issue preclusion are met, and
14 the court focuses its analysis on the three disputed factors.
15 First, the Director’s order is a judgment on the merits. Phillips 66 argues that the
16 Director’s order is not final and, as such, cannot be preclusive because Phillips 66
17
18 13 Moreover, even if Phillips 66 was correct that ERISA status is a mixed question of fact
and law, Phillips 66 cited no authority in support of its argument that prior determinations on
19 mixed questions of fact and law are not entitled to preclusive weight. In fact, persuasive federal
authority holds that “[p]reclusion generally is appropriate if both the first and second action
20 involve application of the same principles of law to an historic fact setting that was complete by
the time of the first adjudication.” See Steen 106 F.3d at 913 n.5 (quoting 18 Charles A. Wright,
Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4425 (Supp. 1996)).
21
Absent Washington authority on point, the court sees no reason to adopt a per se rule that an
agency determination that otherwise meets the requirements for issue preclusion is not entitled to
22
preclusive effect simply because the determination involved a mixed question of law and fact.
1 appealed that order to the Whatcom County Superior Court. (Resp. to USW Local MTD
2 at 4.) Not so. As the court noted in its ripeness analysis, the Director’s order is final
3 agency action. See supra § III.C.1. The fact that Phillips 66 has appealed that decision
4 has no impact on the issue preclusion analysis. See Nielson v. Spanaway Gen. Med.
5 Clinic, Inc., 956 P.2d 312, 361 (Wash. 1998) (“In this state an appeal does not suspend or
6 negate the res judicata or collateral estoppel aspects of a judgment entered after trial in
7 the superior courts.”); Lejeune v. Clallam Cnty., 823 P.2d 1144, 1148-49 (Wash. Ct. App.
8 1992) (“[A] judgment or non-interlocutory administrative order becomes final for res
9 judicata purposes at the beginning, not the end, of the appellate process, although res
10 judicata can still be defeated by later rulings on appeal.”).
11 Second, the Department acted within its area of competence in deciding that the
12 Plan was not an ERISA plan. Phillips 66’s alleges that “the Department did not act
13 within its area of competence when it held that federal law required [the Plan] to be
14 artificially bifurcated into two component plans.” (Resp. to USW Local MTD at 4.) This
15 argument views the scope of the Department’s decision too narrowly. Although the
16 Department ultimately made a factual determination that the Plan was not an ERISA
17 plan—which is, admittedly, a federal issue—it did so in the context of resolving
18 Washington employment disputes that are well within the Department’s purview.
19 The State Court Action began with protected leave complaints filed by Ms.
20 Honeycutt and Mr. Westergreen that alleged violations of WFCA. (See Compl. at 4.)
21 The Department was indisputably within its authority to adjudicate those complaints.
22 The Department is statutorily authorized to “administer and investigate violations of
1 [WFCA].” RCW 49.12.280. And the Director, as the head of the Department, is
2 authorized to “supervise the administration and enforcement of all laws respecting the
3 employment and relating to the health, sanitary conditions, surroundings, hours of labor,
4 and wages of employees employed in business and industry in accordance with the
5 provisions of chapter 49.12 RCW.” RCW 43.22.270(4). Thus, as Phillips 66 put it, “as
6 the Department’s Director, Mr. Sacks has the power to enforce the WFCA.” (Compl. at
7 4.) WFCA states that employees are entitled to use “sick leave or other paid time off” to
8 care for sick family members. RCW 49.12.270(1). But plans that are covered by ERISA
9 are specifically exempted from WFCA’s definition of “[s]ick leave or other paid time
10 off.” RCW 49.12.265(5)(a). In order for the Department to exercise its statutory
11 directive to police WFCA, it had to determine whether the Plan was an ERISA plan.14
12 Thus, the Department’s decision on that issue flowed from its statutory mandate and was
13 within its competence for purposes of issue preclusion.
14 The fact that federal courts are vested with exclusive jurisdiction to adjudicate
15 Phillips 66’s 29 U.S.C. § 1132(a)(3) claim does not change the result. To argue
16 otherwise confuses claim and issue preclusion. Washington courts have held that, so
17 long as agency factfinding is done within the agency’s area of expertise, the fact that the
18 agency’s conclusions impact state or federal claims beyond the agency’s authority does
19 not mean that the agency acts outside its competence. See Christensen, 96 P.3d at 967-
20
21
14 Indeed, the Washington Court of Appeals explicitly recognized that the Department
needed to make this decision in the first instance. See Honeycutt v. State, Dep’t of Labor &
22
Indus., 389 P.3d 773, 780 (Wash. Ct. App. 2017).
1 68; Shoemaker v. City of Bremerton, 745 P.2d 858, 863 (Wash. 1987). In Christensen,
2 for example, the Washington Supreme Court held that Washington’s Public Employment
3 Relations Commission (“PERC”) was competent to determine that an employee was not
4 discharged because of union activities even though PERC had no authority to resolve tort
5 claims of wrongful discharge that arose in a separate action. 96 P.3d at 967-68.
6 Similarly, in Shoemaker, the Washington Supreme Court held that the Bremerton Civil
7 Service Commission’s factual determination that a public employee’s demotion was not
8 retaliatory was entitled to preclusive effect even though that determination precluded the
9 employee’s 42 U.S.C. § 1983 civil rights claim in another action. 745 P.2d at 863. In
10 both cases, the agency was not competent to resolve the claim that arose in the second
11 proceeding, but the factual determination at issue was well within the agency’s
12 competency, meaning that the agency’s determination on that issue was preclusive.
13 Christensen, 96 P.3d at 967 (“This case involves issue prelusion, and the same issue is
14 involved, i.e., whether Samaritan discharged Christensen in retaliation for his union
15 activity. It does not matter that the claim or cause of action that Christensen seeks to
16 pursue in superior court is not the same claim or cause of action that was decided by
17 PERC, or that PERC lacks authority to decide the tort claim[.]”); Shoemaker, 745 P.2d at
18 863 (“The fact that the issue determined is also a central element in the federal civil rights
19 claim does not mean . . . that the Commission has acted beyond its competence.”);
20 The same is true here. Although federal courts have exclusive jurisdiction over
21 Phillips 66’s claim, the Department did not adjudicate Phillips 66’s claim and USW
22 Local does not seek to apply claim preclusion. Instead, as part of its WFCA analysis, the
1 Department determined that the plan is not an ERISA plan and USW Local seeks to
2 apply issue preclusion to that decision. As discussed above, WFCA required the
3 Department to rule on that issue in order to adjudicate Ms. Honeycutt and Mr.
4 Westergreen’s complaint. See RCW 49.12.280 (granting the Department authority to
5 “administer and investigate violations of [WFCA]”); RCW 49.12.265(5)(a) (defining
6 “[s]ick leave or other paid time off” to exclude plans covered by WFCA). And nothing
7 in ERISA precludes the Department from ruling that the Plan was not an ERISA plan. In
8 fact, state courts have concurrent jurisdiction to determine the status of an ERISA plan.15
9 See Int’l Ass’n of Entrepreneurs of Am. v. Angoff, 58 F.3d 1266, 1269 (8th Cir. 1995)
10 (concluding that states have concurrent jurisdiction to determine whether a benefits plan
11 is an ERISA plan); Knapp v. Cardinale, 963 F. Supp. 2d 928, 933 (N.D. Cal. 2013)
12 (same). Although the court is aware that the Department is not a state court, Washington
13 state courts are entitled to review the Department’s WFCA adjudications under the
14 procedures of Washington’s Administrative Procedure Act. See RCW 34.05.510
15 (establishing authority for judicial review of agency action); RCW 34.05.570(3) (setting
16 forth standards for judicial review of agency orders); RCW 34.05.26 (noting that
17 appellate review is available for “any final judgment of the superior court under this
18 chapter”).
19
20
15 Although the Ninth Circuit has not yet weighed in on the issue of state court authority
to adjudicate the status vel non of an ERISA plan, our circuit has held that states have authority
21
to adjudicate ERISA preemption issues, which requires an inquiry into ERISA status. See, e.g.,
Delta Dental Plan of Cal., Inc. v. Mendoza, 139 F.3d 1289, 1296-97 (9th Cir. 1998) disapproved
22
of on other grounds by Green v. City of Tucson, 255 F.3d 1086 (9th Cir.2001).
1 Ultimately, the Department is well within its area of competence to adjudicate two
2 Washington employees’ claims that their employer violated Washington statutory
3 employment law by denying their claims for sick leave to care for family members. As
4 part of that adjudication, the Department resolved a factual dispute regarding whether the
5 Plan was an ERISA plan. But the Department’s resolution of a federal issue that closely
6 relates to the central state question before the Department does not change the
7 competency calculus. If this court were to hold otherwise, then the Department’s
8 adjudicatory authority would be rendered gutless in any situation in which the ERISA
9 exemption in RCW 49.12.265(5)(a) debatably applied to a benefits plan. Absent a
10 federal court decision that an applicable benefits plan was not an ERISA plan, any
11 Department decision on a WFCA complaint for denial of “sick leave or other paid time
12 off” to care for sick family members could be relitigated in federal court. Such a result
13 would be contrary to the Department’s statutory directive in RCW 49.12.280 to
14 “administer and investigate” violations of WFCA.
15 Finally, public policy does not warrant denying issue preclusion to the Director’s
16 order. To the contrary, WFCA evinces a strong public policy in favor of allowing the
17 Department and the Washington court system to adjudicate Washington employees’
18 claims that their employers wrongfully withheld sick leave to care for family members.
19 In enacting WFCA, the Washington legislature announced a strong policy in favor of
20 providing Washington employees with sick leave to care for family members:
21 The legislature recognizes the changing nature of the workforce brought
about by increasing numbers of working mothers, single parent households,
22 and dual career families. The legislature finds that the needs of families must
1 be balanced with the demands of the workplace to promote family stability
and economic security. The legislature further finds that it is in the public
2 interest for employers to accommodate employees by providing reasonable
leaves from work for family reasons. In order to promote family stability,
3 economic security, and the public interest, the legislature hereby establishes
a minimum standard for family care.
4
Family Leave, ch. 236, Sec. 1, 1988 Wash. Sess. Laws. 1094, http://leg.wa.gov/Code
5
Reviser/documents/sessionlaw/1988pam1.pdf. To help enforce this public policy, the
6
Washington legislature deputized the Department to police the bounds of WFCA. RCW
7
49.12.280. The court will not interfere with that legislative decision by refusing to cloak
8
the Department’s decisions with preclusive effect.16
9
Although each of the factors for issue preclusion are met, Phillips 66 claims that
10
application of issue preclusion means that this court can position itself in the shoes of the
11
Whatcom County Superior Court and review the Director’s decision. (Resp. to USW
12
Local MTD at 4-5.) Again, Phillips 66 misinterprets issue preclusion law. The
13
well-established principle that federal courts must give the same preclusive effect to state
14
court judgments as would be given in the courts of that state, see, e.g., Migra, 465 U.S. at
15
81, simply means that the court applies the state’s preclusion law in determining whether
16
a decision arising from that state is entitled to preclusion. See, e.g., Fowler v. Guerin,
17
899 F.3d 1112, 1119 (9th Cir. 2018) (applying Washington preclusion law to determine
18
19 16 Phillips 66’s only articulated public policy ground for denying issue preclusion in this
case is its claim that ERISA plans should be treated uniformly across jurisdictions, which
20 requires that federal courts decide whether a plan is an ERISA plan. (Resp. to USW Local at 4.)
This argument is not persuasive. The court will not assume, as Phillips 66 does, that allowing
state agencies and state courts to adjudicate ERISA status will yield an increase in incongruent
21
results. But even if it did, that would not outweigh Washington’s interest in WFCA and having
the Department enforce WFCA’s bounds.
22
1 whether the decision of a Washington agency that was affirmed by the Washington Court
2 of Appeals was entitled to issue preclusion). That rule does not mean that federal courts
3 can invade the province of state courts to sit in direct review of agency decisions.17
4 Ultimately, the court concludes that issue preclusion applies to the Director’s
5 decision that the Plan is an ERISA plan. The not-so-subtle subtext behind Phillips 66’s
6 complaint and its arguments in opposition to the preclusive effect of the Director’s
7 decision is Phillips 66’s fear that the Director’s decision was erroneous. (See Compl. at
8 9-13; Resp. to USW Local MTD at 5 (“In the instant case, Phillips 66 alleges the Director
9 erroneously applied federal law when he artificially bifurcated the Plan into two plans—a
10 short-term disability plan and a long-term disability plan. In addition, the Director’s
11 determination that there are two component plans is not supported by any evidence in the
12 administrative records, let alone ‘substantial evidence.’”).) But even assuming Phillips
13 66’s fear is well-founded, erroneous decisions are still entitled to issue preclusion. See
14 Thompson v. State, Dep’t of Licensing, 982 P.2d 601, 610 (Wash. 1999) (“[W]here . . . a
15 party to the prior litigation had a full and fair hearing of the issues . . . collateral estoppel
16 may apply, notwithstanding an erroneous result.”); Richey v. U.S. I.R.S., 9 F.3d 1407,
17 1412 (9th Cir. 1993) (“[I]t is only an intervening change in the law that defeats collateral
18 estoppel—the correctness of a prior ruling, even if based upon an erroneous application
19 of the law, is irrelevant.” (citations omitted)). Phillips 66 still has ample opportunity to
20
21
17 Indeed, such a rule would seemingly eviscerate Rooker-Feldman’s directive that
“lower federal courts are precluded from exercising appellate jurisdiction over final state-court
22
judgments.” See Lance, 546 U.S. at 463.
1 raise its grievances in the State Court Action. But the doctrine of issue preclusion
2 dictates that it may not relitigate the Director’s order in this court, which means that
3 Phillips 66 has not stated a claim on which relief can be granted. Accordingly, USW
4 Local’s motion to dismiss must be granted and this case must be dismissed.
5 E. Younger Abstention and the Anti-Injunction Act
6 Although the court’s conclusion that the Director’s order is preclusive is sufficient
7 to dismiss this action, the court will also address the Younger abstention arguments raised
8 by the Director (Director MTD at 8-12) and the AIA arguments raised by the Director
9 and USW Local (id. at 6-7; USW Local MTD at 16-22). For the reasons set forth below,
10 the court finds that, even if the Director’s order was not preclusive, dismissal would still
11 be warranted under Younger and the AIA.
12 1. Younger Abstention
13 As a general rule, a federal court has a “virtually unflagging obligation” to
14 adjudicate controversies properly before it. See Colo. River Water Conservation Dist. v.
15 United States, 424 U.S. 800, 817 (1976). However, the Younger abstention doctrine
16 “forbid[s] federal courts [from] stay[ing] or enjoin[ing] pending state court proceedings.”
17 Younger v. Harris, 401 U.S. 37, 41 (1971). “The goal of Younger abstention is to avoid
18 federal court interference with uniquely state interests such as preservation of these
19 states’ peculiar statutes, schemes, and procedures.” AmerisourceBergen Corp. v. Roden,
20 495 F.3d 1143, 1150 (9th Cir. 2007).
21 “In civil cases, Younger abstention is appropriate only when the state proceedings:
22 (1) are ongoing, (2) are quasi-criminal enforcement actions or involve a state’s interest in
1 enforcing the orders and judgments of its courts, (3) implicate an important state interest,
2 and (4) allow litigants to raise federal challenges.” ReadyLink Healthcare, Inc. v. State
3 Comp. Ins. Fund, 754 F.3d 754, 759 (9th Cir. 2014) (citing Sprint Commc’ns, Inc. v.
4 Jacobs, 571 U.S. 69, 73 (2013); Gilbertson v. Albright, 381 F.3d 965, 977-78 (9th Cir.
5 2004)). “If these ‘threshold elements’ are met, [courts] then consider whether the federal
6 action would have the practical effect of enjoining the state proceedings and whether an
7 exception to Younger applies.” Id. (quoting Gilbertson, 381 F.3d at 978, 983-84).
8 The State Court Action is ongoing. The law in this circuit holds that “the date for
9 determining whether Younger applies ‘is the date the federal action is filed.’” ReadyLink,
10 754 F.3d at 759 (quoting Gilbertson, 381 F.3d at 969 n.4). On the date Phillips 66 filed
11 its complaint in this case, it had not yet filed its petition for review in Whatcom County
12 Superior Court. (Compare Compl. (filing date of February 5, 2019) with Director MTD,
13 Ex. B (filing date of February 6, 2019).) But, for purposes of Younger, agency action and
14 subsequent state court review of that action are considered a “unitary process.” Mir v.
15 Kirchmeyer, No. 12CV2340-GPC-DHB, 2014 WL 2436285, at *11 (S.D. Cal. May 30,
16 2014) (“[T]he Court adopts the majority approach of treating judicial review of state
17 administrative proceedings as a unitary process that is not to be interrupted by federal
18 court intervention.” (citations omitted)); Howard Jones Invs., LLC v. City of Sacramento,
19 No. 2:15-CV-954-JAM-KJN, 2016 WL 1599511, at *2 (E.D. Cal. Apr. 21, 2016)
20 (adopting rule articulated in Mir); see also Maymo-Melendez v. Alvarez-Ramirez, 364
21 F.3d 27, 35 (1st Cir. 2004) (“Younger now has to be read as treating the state process [the
22 administrative proceeding and the possibility for state-court review] . . . as a continuum
1 from start to finish.”); Majors v. Engelbrecht, 149 F.3d 709, 713 (7th Cir. 1998) (holding
2 that the state proceeding is ongoing, even assuming that the administrative proceeding is
3 final and state-court review had not begun).18 Thus, the State Court Action was
4 “ongoing” long before Phillips 66 filed its federal action. (See Compl. at 4 (noting that
5 Ms. Honeycutt and Mr. Westergreen’s complaints have been pending since 2013).)
6 Phillips 66’s sole argument to the contrary is that a case cannot be “ongoing”
7 when it has been voluntarily stayed by the state court. (Resp. to Director MTD at 9.)
8 There appears to be a split within this circuit as to whether a stayed state court action is
9 “ongoing” for purposes of Younger. Compare Walnut Props., Inc. v. City of Whittier,
10 861 F.2d 1102, 1106-07 (9th Cir. 1988) (“The City misconstrues the nature of Younger
11 abstention. That doctrine is propelled by concerns of federalism and comity. Those
12 concerns are not present where a state court has stayed its own proceedings pending
13 resolution of the case in a federal forum.” (citations omitted)) with San Remo Hotel v.
14 City & Cty. of S.F., 145 F.3d 1095, 1104 (9th Cir. 1998) (“[F]or purposes of the
15 ‘ongoing’ prong,] [i]t is irrelevant that the state mandamus action was stayed by the
16 stipulation of the parties to allow the federal suit to proceed.”). On a closer view of the
17
18 The Supreme Court and Ninth Circuit have not squarely adopted this rule; instead,
18 those courts have assumed the rule applied. See Sprint, 571 U.S. at 78 (“We will assume without
deciding . . . that an administrative adjudication and the subsequent state court’s review of it
19 count as a ‘unitary process’ for Younger purposes.”); New Orleans Pub. Serv., Inc. v. Council of
City of New Orleans, 491 U.S. 350, 369 (1989) (same); ReadyLink, 754 F.3d at 760 (same); see
20 also San Jose Silicon Valley Chamber of Commerce Political Action Comm. v. City of San Jose,
546 F.3d 1087, 1093-94 (9th Cir. 2008) (recognizing that the “majority rule” amongst circuits
was that administrative proceedings and subsequent state court appeals were unitary proceedings,
21
but declining to resolve the issue). The court joins the Mir and Howard Jones Investments courts
and affirmatively adopts the rule that administrative proceedings and subsequent state court
22
review of those proceedings are unitary proceedings.
1 caselaw, however, the more recent rule of decision announced in San Remo Hotel appears
2 to have won the day. See Columbia Basin Apartment Ass’n v. City of Pasco, 268 F.3d
3 791, 801 (9th Cir. 2001) (citing San Remo Hotel and Walnut Properties but applying the
4 holding announced in San Remo Hotel that a “stayed state court proceeding is ‘ongoing’
5 under Younger”). To the extent that this split remains live, the court concludes that San
6 Remo Hotel is more persuasive. To hold otherwise would encourage parties to try to
7 forum shop and game their way around Younger’s reach, which would be contrary to the
8 purpose of Younger. See San Remo Hotel, 145 F.3d at 1104 (“Because the whole point of
9 Younger abstention is to stop federal interference with state proceedings, it seems
10 backwards to reject abstention because the state proceedings have been stayed to allow
11 the federal case to proceed. This is exactly the interference that Younger abstention is
12 designed to prevent.”). Thus, the court rejects Phillips 66’s argument that this case is not
13 “ongoing” because the State Court Action is currently stayed.
14 The second prong of the ReadyLink analysis—whether the state action is a
15 “quasi-criminal enforcement actions or involve[s] a state’s interest in enforcing the orders
16 and judgments of its courts”—is also met here. In Sprint, the Supreme Court noted that
17 the hallmark of what this circuit calls “quasi-criminal enforcement actions” is that they
18 are “characteristically initiated to sanction the federal plaintiff, i.e., the party challenging
19 the state action, for some wrongful act.” Sprint, 571 U.S. at 79. Additionally, “a state
20 actor is routinely a party to the state proceeding and often initiates the action,” and
21 “[i]nvestigations are commonly involved, often culminating in the filing of a formal
22 complaint or charges.” Id. at 79-80 (citations omitted). The State Court Action fits
1 squarely within this framework, which suggests that the State Court Action is a quasi-
2 criminal enforcement action. The Department initiated an investigation against Phillips
3 66 in response to Ms. Honeycutt and Mr. Wintergreen’s protected leave complaints.
4 (Compl. at 4-5.) After the conclusion of that investigation, the Director determined that
5 Phillips 66 violated WFCA and issued penalties against Phillips 66. (Id., Ex. C at 7.)
6 The facts and result from Ohio Civil Rights Commission v. Dayton Christian
7 Schools, Inc. also suggest that the State Court Action is a quasi-criminal enforcement
8 action. See 477 U.S. 619 (1986). In that case, a teacher filed a complaint with a state
9 civil rights agency alleging employment discrimination in violation of state employment
10 laws. Id. at 623-24. The agency launched an investigation and ultimately initiated a state
11 administrative proceeding against the school. Id. at 624. The school filed a subsequent
12 federal action, but the Supreme Court held that Younger barred the federal case.19 Id. at
13 628. The facts of Ohio Civil Rights Commission are analogous to the facts in the State
14 Court Action. In both cases, employees initiated state administrative actions against their
15 employers for violations of state employment law that were adjudicated in state
16 administrative agencies. Given the guidance provided by Sprint and the factual
17 similarities between Ohio Civil Rights Commission and the State Court Action, the court
18 concludes that the State Court Action is a “quasi-criminal enforcement action.”
19 The third and fourth threshold requirements of the ReadyLink test are also met.
20 The court has already concluded that Washington has an important state interest in
21
19 The Sprint Court cited this conclusion as a model example of the kind of civil
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enforcement action that falls within Younger’s reach. See Sprint, 571 U.S. at 79.
1 ensuring that its employees receive sick leave to care for family members. See supra
2 § III.D. Phillips 66 also had (and continues to have) opportunities to raise its federal
3 arguments in the State Court Action. Phillips 66 made its ERISA argument in the
4 Department and, as discussed above, the Department had authority to adjudicate that
5 issue. See id. Phillips 66 can also continue to raise its federal arguments on appeal in the
6 State Court Action.
7 Because the four threshold requirements are met, the court next considers whether
8 this action would have the “practical effect” of enjoining the State Court Action and
9 whether any exceptions to Younger apply. ReadyLink, 754 F.3d at 759. A federal action
10 has the “practical effect” of enjoining the state proceeding where the issues in the federal
11 action “go to the heart” of the relevant state proceeding. See Gilbertson, 381 F.3d at 982.
12 In San Jose Silicon Valley Chamber of Commerce Political Action Committee v. City of
13 San Jose, for example, the Ninth Circuit held that a request to enjoin state actors from
14 enforcing a state statute that was at issue in the parallel state proceeding had the
15 “practical effect” of enjoining that state proceeding because such an injunction would
16 have prohibited the state actors from applying the statute and issuing fines against the
17 federal plaintiff. 546 F.3d 1087, 1095 (9th Cir. 2008). The same result holds in this case.
18 Although Phillips 66 aims its requested injunction at the Director (as opposed to the State
19 Court Action) (see Compl. at 13) and claims that its requested relief would apply only to
20 “subsequent administrative proceeding[s]” (Resp. to USW Local MTD at 8), a
21 declaration from this court that the Plan was an ERISA plan and a permanent injunction
22 barring the Director from enforcing WFCA against Phillips 66 would squarely resolve the
1 State Court Action. The issue in this action does not just “go to the heart” of the State
2 Court Action, Gilbertson, 381 F.3d at 982; it is the only remaining issue in the State
3 Court Action. And, granting Phillips 66’s requested relief would prohibit the Department
4 from enforcing WFCA and issuing fines against Phillips 66—the same result that the San
5 Jose court prohibited under Younger. See San Jose, 546 F.3d at 1095.
6 The exceptions to Younger are narrow and inapplicable here. An exception to
7 Younger exists where there is a “showing of bad faith, harassment, or some other
8 extraordinary circumstance that would make abstention inappropriate.” Middlesex Cnty.
9 Ethics Comm. v. Garden State Bar Ass’n, 457 U.S. 423, 435 (1982). No such
10 circumstances are present here. Thus, the court concludes that the Younger doctrine
11 applies and provides additional grounds for dismissal of this action.
12 2. Anti-Injunction Act
13 The AIA prohibits federal courts from “grant[ing] an injunction to stay
14 proceedings in a State court except as expressly authorized by Act of Congress, or where
15 necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. §
16 2283. The AIA is an “absolute prohibition” against enjoining state court proceedings that
17 applies unless one of the three statutory exceptions in § 2283 applies. Atl. Coast Line
18 R.R. Co. v. Bhd. of Locomotive Eng’rs, 398 U.S. 281, 286 (1970); Negrete v. Allianz Life
19 Ins. Co. of N. Am., 523 F.3d 1091, 1100 (9th Cir. 2008) (“[The AIA] is not a minor
20 revetment to be easily overcome; it is a fortress which may only be penetrated through
21 the portals that Congress has made available.”).
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1 Phillips 66 does not argue that this case falls within one of the § 2283 exceptions
2 to the AIA. (See Resp. to Director MTD at 7-8; Resp. to USW Local MTD at 8-9.) The
3 court agrees with Phillips 66’s implicit concession. The only AIA exception that could
4 feasibly apply here is the “expressly authorized” exception, but courts in this circuit and
5 others hold that ERISA does not “expressly authorize” state court injunctions absent
6 extraordinary circumstances not present here.20 See, e.g., Knapp, 963 F. Supp. 2d at 936
7 (“Because there is no reason why the state courts cannot fairly apply ERISA and there is
8 no express exemption to the [AIA] apparent in the text of the law or clear Congressional
9 intent in the legislative history, the court finds the [AIA] applies to prohibit a federal
10 district court from enjoining a state court under ERISA.”); Trustees of Carpenters’
11 Health & Welfare Tr. Fund of St. Louis v. Darr, 694 F.3d 803, 807-08 (7th Cir. 2012)
12 (“[W]e agree with the Fourth Circuit that [§ 1132(a)(3)] does not expressly authorize
13 injunctions against state courts unless the state court suit will have the effect of making it
14 impossible for a fiduciary of a pension plan to carry out its responsibilities under
15 ERISA.” (emphasis omitted) (citations and internal quotations omitted)).
16
17 20 The “in aid of jurisdiction” exception generally does not apply to cases, such as this,
where state and federal courts have concurrent jurisdiction. See Lou v. Belzberg, 834 F.2d 730,
18 740 (9th Cir. 1987) (citing Atl. Coast Line, 398 U.S. at 295). (“The general rule under the
‘necessary in aid of its jurisdiction’ exception is that where state and federal courts have
19 concurrent jurisdiction over a case, neither court may prevent the parties from simultaneously
pursuing claims in both courts.”). The exception allowing a federal court to issue injunctions to
20 “protect or effectuate its judgments”—also known as the “relitigation” exception—applies only
where the federal court has previously decided the claims or issues presented in the state court
action. See Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 148 (1988) (“Thus, as Atlantic
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Coast Line makes clear, an essential prerequisite for applying the relitigation exception is that
the claims or issues which the federal injunction insulates from litigation in state proceedings
22
actually have been decided by the federal court.”). Neither exception applies here.
1 Instead of arguing that an AIA exception applies, Phillips 66 offers two arguments
2 that the court has already rejected. First, Phillips 66 claims that the AIA is inapplicable
3 because the State Court Action is currently stayed. (Resp. to Director MTD at 7-8; Resp.
4 to USW Local MTD at 8-9.) The court rejects this argument for the same reasons it
5 rejected it in the context of the Younger doctrine. See supra § III.E.1. Encouraging
6 litigants to end run around the AIA by petitioning state courts to temporarily stay parallel
7 proceedings would not serve the AIA’s central purpose—protecting “the fundamental
8 constitutional independence of the States and their courts.” See Atl. Coast Line, 398 U.S.
9 at 287.
10 Second, Phillips 66 argues that it seeks only declaratory relief that the Plan is an
11 ERISA plan and an injunction against the Director for future proceedings, not an
12 injunction against the State Court Action. (Resp. to Director MTD at 7-8; Resp. to USW
13 Local MTD at 8-9.) As the court has already noted, this argument unfairly elevates form
14 over function. See supra § III.E.1. Like the Younger doctrine, the AIA applies to
15 injunctions and requests for declaratory relief that are formally directed at litigants but
16 would functionally interfere with state court proceedings. See California v. Randtron,
17 284 F.3d 969, 975 (9th Cir. 2002) (“The [AIA] applies although the injunction would be
18 directed at a litigant (here, Randtron) instead of the state court proceeding itself. The
19 [AIA] also applies to declaratory judgments if those judgments have the same effect as an
20 injunction.” (citations omitted)); Monster Beverage Corp. v. Herrera, 650 F. App’x 344,
21 346 (9th Cir. 2016) (“[The AIA] prohibits courts from issuing declaratory judgments that
22 interfere with state court proceedings.”). Granting the relief Phillips 66 seeks would
1 effectively end the State Court Action. The AIA prevents the court from awarding that
2 relief. As such, the AIA provides additional grounds to dismiss Phillips 66’s claim for
3 failure to state a claim upon which relief can be granted.
4 F. Leave to Amend
5 When dismissing a case for failure to state a claim, the district court “should grant
6 leave to amend . . . unless [the court] determines that the pleading could not possibly be
7 cured by the allegation of other facts.” Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir.
8 2000) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)) (internal quotation
9 marks omitted). Here, the court finds that Phillips 66’s complaint cannot be cured. Thus,
10 the court denies leave to amend and dismisses this case with prejudice.
11 G. The Director’s Request for Fees
12 Pursuant to 29 U.S.C. § 1132(g)(1), the Director requests an award of its
13 attorney’s fees. (Director MTD at 13-14.) The decision to award fees under that statute
14 is left to the court’s discretion. See 29 U.S.C. § 1132(g)(1); Hardt v. Reliance Standard
15 Life Ins. Co., 560 U.S. 242, 254 (2010) (noting that § 1132(g)(1) vests judges with “broad
16 discretion” to award fees to a party who has achieved “some degree of success on the
17 merits” under ERISA). Assuming that a party establishes that it achieved “some degree
18 of success on the merits,” courts weigh five factors in determining whether to exercise
19 discretion and award fees:
20 (1) the degree of the opposing parties’ culpability or bad faith; (2) the ability
of the opposing parties to satisfy an award of fees; (3) whether an award of
21 fees against the opposing parties would deter others from acting under similar
circumstances; (4) whether the parties requesting fees sought to benefit all
22 participants and beneficiaries of an ERISA plan or to resolve a significant
1 legal question regarding ERISA; and (5) the relative merits of the parties’
positions.
2
Simonia v. Glendale Nissan/Infiniti Disability Plan, 608 F.3d 1118, 1121 (9th Cir. 2010)
3
(citations omitted).
4
Here, although the Director prevailed in this action and Phillips 66 made no effort
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to oppose the Director’s request for fees, the court finds that these factors weigh against
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awarding fees. Absent concrete evidence to the contrary, the court will not assume that
7
Phillips 66 acted in bad faith by filing simultaneous challenges to the Director’s order in
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this court and Whatcom County Superior Court. While Phillips 66 may be able to satisfy
9
an award of fees, such an award would have minimal deterrent effect given the
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uniqueness of the procedural history of this case and the issues presented. In this action,
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the Director is not seeking to vindicate ERISA rights or resolve significant legal
12
questions relating to ERISA; it seeks to have this case dismissed and asks this court not to
13
resolve questions relating ERISA. Finally, the parties presented complex arguments on
14
constitutional issues. Although the Director ultimately prevailed, Phillips 66’s arguments
15
were not devoid of merit. On these facts, an award of fees is not warranted.
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IV. CONCLUSION
17
For the foregoing reasons, the court GRANTS the Director’s motion (Dkt. # 4)
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and GRANTS USW Local’s motion (Dkt. # 13). The court DISMISSES Phillips 66’s
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complaint WITH PREJUDICE.
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Dated this 10th day of September, 2019.
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1 A
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JAMES L. ROBART
3 United States District Judge
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