Bradley v. Phillips Petroleum Co.

• Decision Date: 18 December 2007
• Docket Number: Civil Action No. H-05-3912.
• Parties: Adrienne BRADLEY, et al., Plaintiffs, v. PHILLIPS PETROLEUM COMPANY d/b/a/ Phillips Chemical Company, et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

527 F.Supp.2d 625 Adrienne BRADLEY, et al., Plaintiffs,
v.
PHILLIPS PETROLEUM COMPANY d/b/a/ Phillips Chemical Company, et al., Defendants. Civil Action No. H-05-3912. United States District Court, S.D. Texas, Houston Division. December 18, 2007.

Page 626

COPYRIGHT MATERIAL OMITTED

Page 627

COPYRIGHT MATERIAL OMITTED

Page 628

COPYRIGHT MATERIAL OMITTED

Page 629

COPYRIGHT MATERIAL OMITTED

Page 630

COPYRIGHT MATERIAL OMITTED

Page 631

COPYRIGHT MATERIAL OMITTED

Page 632

COPYRIGHT MATERIAL OMITTED

Page 633

Grover G. Hankins, The Hankins Law Firm, John Orville Jones, Jones and Young, Melvin Houston, Attorney at Law, Houston, TX, for Plaintiffs.

Edward J. Patterson, III, Jennifer Diane O'Sullivan, Fulbright and Jaworski LLP, George W. Billy Shepherd, III, Allison Standish Miller, Cruse Scott Henderson & Allen LLP, Patrick M.

Page 634

Flynn, Attorney at Law, James Lloyd Mount, Jeffry Paul O'Dea, Burt Barr and O'Dea, Houston, TX, Bruce Alan Fickman, Associate General Counsel, Pittsburgh, PA, Stuart M. Israel, Martens Ice et al., Royal Oak, MI, for Defendants.

MEMORANDUM AND ORDER (CURRY PLAINTIFFS)

ATLAS, District Judge.

Pending before the Court are three Motions to Dismiss the Curry Plaintiffs' [Fourth Amended Complaint] filed by "the Phillips Defendants,"¹ Williams & Bailey Law Firm, LLP ("Williams & Bailey"), and Pacific Employers Insurance Company ("Pacific") [Does. # 130, # 133, and # 138, respectively]. The Curry Plaintiffs² have responded [Does. # 145, # 146, and # 147], as have the Jones Plaintiffs³ [Does. # 153, # 154, and # 155]. Williams & Bailey and Pacific have filed replies [Does. # 151 and # 150]. Upon review of the motions, responses, and replies, all pertinent matters of record, and applicable law, the Court concludes that Defendants' motions to dismiss should be granted.⁴

I. BACKGROUND

The factual record is set out in detail in the Court's Memorandum and Order of March 22, 2007 [Doc. # 89], 484 F.Supp.2d 604 ("March 2007 Order"). Briefly, this controversy centers around Defendants' response to an industrial accident that occurred at Phillips Chemical Company's ("Phillips") Pasadena Plastics Complex "K-Resin" Unit on March 27, 2000. The accident left one Phillips employee dead and many more injured. Within days of the event, the injured employees were called to a meeting and allegedly informed by representatives from Williams & Bailey law firm that Phillips' workers' compensation insurance would cover their injuries, and that under Texas law, because Phillips had workers' compensation insurance, the employees could not bring personal injury lawsuits against the company.

Page 635

In November 2005, nine Plaintiffs—Phillips employees and spouses of employees— brought suit against the Phillips Defendants, Pacific (Phillips' workers' compensation carrier), Williams & Bailey, Paper Allied-Industrial, Chemical and Energy Workers International and Local ("PACE") (Plaintiffs' union), and PACE officials, alleging that they conspired to intentionally misrepresent the state of Phillips' workers' compensation insurance. Specifically, Plaintiffs alleged that Phillips used an internal employee benefit plan to pay some employees' personal injury claims so as to create the appearance that Phillips had valid workers' compensation insurance, and induce employees not to file individual personal injury lawsuits. Plaintiffs asserted numerous state and federal law claims arising from these events.⁵

Early in this litigation, while the case was pending before the Honorable Vanessa Gilmore, the Court determined that the question of Phillips' workers' compensation insurance status was best dealt with as a threshold issue.⁶ Thus, the parties were directed to focus their efforts on investigating that question and to submit motions on the issue by the middle of 2006.⁷ On March 22, 2007, after discovery and full briefing on summary judgment motions, this Court granted motions for partial summary judgment, holding that Phillips was a valid workers' compensation insurance subscriber and that Plaintiffs were covered under Phillips' policy.⁸ The Court ordered Plaintiffs to file, by April 22, 2007, a "Third Amended Complaint" that complied with the Court's ruling, holding that "Plaintiffs may not maintain any cause of action predicated on a contention that Phillips was not a valid subscriber to the Texas workers' compensation system, was uninsured, or was self-insured."⁹ In the interest of judicial economy, given the opacity of the pleadings, the Court stated it could not "ascertain ... which of Plaintiffs' claims [in the First Amended Complaint] remain[ed] viable" but surmised that "[m]any of [Plaintiffs'] claims [would be] foreclosed by Phillips'[ workers' compensation insurance coverage and the exclusivity of the workers' compensation scheme."¹⁰ The Court specifically admonished Plaintiffs to comply with Federal Rule of Civil Procedure 11(b)(2) and to assert only claims that were legally and factually warranted in light of the Court's decision.¹¹

After a variety of procedural events detailed in the Jones Memorandum [Doc. # 167],¹² the Curry Plaintiffs filed, on June 18, 2007, their Fourth Amended Complaint [Doc. # 116], which is the subject of Defendants' motions to dismiss and this Memorandum and Order. The Curry Plaintiffs' Fourth Amended Complaint asserts six claims against the Phillips Defendants, Pacific, and Williams & Bailey.¹³

Page 636

II. STANDARDS OF LAW

A motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure is viewed with disfavor and is rarely granted. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 725 (5th Cir.2002). The complaint must be liberally construed in favor of the plaintiff, and all facts pled in the complaint must be taken as true. Id. A claim is legally insufficient under Rule 12(b)(6) "only if there is no set of facts that could be proven consistent with the allegations in the complaint that would entitle the plaintiff to relief." Power Entm't, Inc. v. Nat'l Football League. Prop., Inc., 151 F.3d 247, 249 (5th Cir.1998). However, "a statement of facts that merely creates a suspicion that the pleader might have a right of action" is insufficient to overcome a motion to dismiss. Campbell v. City of San Antonio, 43 F.3d 973, 975 (5th Cir. 1995) (quoting 5 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE: CIVIL 2D § 1216 at 156-59).

A cause of action can fail to state a "claim upon which relief can be granted" if, inter alia, it fails to comply with the requirements of Rule 8(a)(2). See, e.g., Teachers' Ret. Sys. v. Hunter, 477 F.3d 162, 170 (4th Cir.2007) ("[T]he legal sufficiency of a complaint under Rule 12(b)(6) is determined by whether the complaint states a claim upon which relief can be granted in light of the pleading requirements of Rules 8 and 9...."); Bank of Abbeville & Trust Co. v. Commonwealth Land Title Ins. Co., 201 Fed.Appx. 988, 990 (5th Cir.2006) ("[A] Rule 12(b)(6) motion to dismiss for failure to state a claim may be a proper vehicle to challenge the sufficiency of a pleading under Rule 8."); Buerger v. Sw. Bell Tel. Co., 982 F.Supp. 1247, 1249-50 (E.D.Tex.1997). On its face, Federal Rule of Civil Procedure 8(a)(2) requires only "a short and plain statement of the claim showing that the pleader is entitled to relief." FED. R. Civ. P. 8(a)(2). The United States Supreme Court has made clear, however, that a plaintiff is obligated to provide "more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, ___ U.S. ___, 127 S.Ct. 1955, 1964-65, 167 L.Ed.2d 929 (2007) (quoting Papasan Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)) (On a motion to dismiss, courts "are not bound to accept as true a legal conclusion couched as a factual allegation."). "Factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 127 S.Ct. at 1965. "Rule 8(a)(2) still requires a showing, rather than a blanket assertion, of entitlement to relief. Without some factual allegation in the complaint, it is hard to see how a claimant could satisfy the requirement of providing not only fair notice of the nature of the claim, but also grounds on which the claim rests." Id. at 1965 n. 3 (internal quotations omitted). "When the complaint contains inadequate factual allegations, "this basic deficiency should ... be exposed at the point of minimum expenditure of time and money by the parties and the court." Id. at 1966. "[A] district court must retain the power to insist upon some specificity in pleading before allowing a potentially massive factual controversy to proceed." Id. at 1967 (quoting Associated Gen. Contractors of Cal., Inc. v. California State Council of Carpenters, 459 U.S. 519, 528 n. 17, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983)).

In addition, Rule 9 of the Federal Rules of Civil Procedure requires that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." FED. R. Civ. P. 9(b); see Leatherman v. Tarrant County Narcotics Intelligence Unit, 507 U.S. 163, 168-69, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993); Hart v. Bayer

Page 637

Corp., 199 F.3d 239, 247 n. 6 (5th Cir.2000). In particular, the pleadings should "specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent." Southland Sec. Corp. v. INSpire Ins. Solutions, Inc., 365 F.3d 353, 362 (5th Cir.2004) (quoting Williams v. WMX Tech., Inc., 112 F.3d 175, 177-78 (5th Cir.1997)). Rule 9(b) requires a plaintiff to allege the existence of facts sufficient to warrant the pled conclusion that fraud has occurred. See In re Haber. Oil Co., 12 F.3d 426, 439 (5th Cir.1994) (emphasis added). Because the requirements of Rule 9 are more stringent than those for Rule 8, the Supreme Court's decision in Twombly...