Brainbuilders, LLC v. Optum, Inc.
| Decision Date | 31 May 2019 |
| Docket Number | Civil Action No. 18-638 |
| Parties | BRAINBUILDERS, LLC, Plaintiff, v. OPTUM, INC., et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Not for Publication
This matter comes before this Court on the February 4, 2019 Amended Report and Recommendation (the "R&R") of Magistrate Judge James B. Clark. D.E. 35. The R&R addressed a motion made by Plaintiff Brainbuilders, LLC ("Brainbuilders") for leave to file an amended complaint and to remand this matter. Among other things, the proposed amended complaint adds fifteen additional defendants, one of which would defeat diversity jurisdiction. D.E. 20. Defendant Optum, Inc. ("Optum") opposed Plaintiff's motion, D.E. 27, and Plaintiff filed a reply, D.E. 32. The R&R recommends that this Court grant Plaintiff's motion to amend and accordingly, that the case be remanded to the New Jersey Superior Court, Bergen County. D.E. 35. Optum filed a timely objection to the R&R, D.E. 37, and Plaintiff filed a response, D.E. 38.1 The Court reviewed all relevant documents and submissions, and for the reasons stated below, the Courtadopts the R&R in its entirety. Accordingly, Plaintiff's motion to amend is GRANTED and this matter shall be REMANDED to the New Jersey Superior Court, Bergen County.
The factual details of this dispute are explained in detail in the R&R. In short, Plaintiff is an out-of-network healthcare provider that offers services to children with autism related disorders and their parents. Optum provides consulting services to insurance plans, administrators, and/or healthcare providers. Plaintiff alleges that Optum and the additional proposed Defendants are engaged in a scheme to target its patients in an attempt to induce the patients to switch to in-network providers. See R&R at 1-2.
Plaintiff initially filed its five-count complaint in state court, and Optum removed the matter to this Court on January 16, 2018 on the basis of diversity jurisdiction, 28 U.S.C. § 1332. See Notice of Removal ¶¶ 6-7, D.E. 1. Optum then filed a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(6) on March 30, 2018. D.E. 8. After the motion to dismiss was fully briefed,2 Brainbuilders filed its motion for leave to file an amended complaint and to remand this matter. In addition to adding two new claims, Brainbuilders seeks to join fifteen new defendants. Oxford NJ, one of the proposed new defendants, is not diverse to Brainbuilders, thus granting Plaintiff's motion to amend would divest this Court of jurisdiction. D.E. 20. Optum filed a brief in opposition, D.E. 27, to which Plaintiff replied, D.E. 32.
Judge Clark issued the R&R on February 4, 2019, recommending that Plaintiff's motion to amend be granted and this case be remanded to state court. Judge Clark first considered the Hensgens factors, which courts in this district use to analyze post-removal motions to amend thatseek to join non-diverse defendants. Judge Clark determined that the Hensgens factors weighed in favor of permitting Plaintiff to amend the Complaint. Moreover, in analyzing the Hensgens factors, Judge Clark determined that because Plaintiff did not assert any causes of action pursuant to the Employment Retirement Income Security Act ("ERISA"), there was no basis for federal question jurisdiction. Because the Hensgens factors weighed in favor of granting the amendment, Judge Clark determined that remand was appropriate. R&R at 7-11. Judge Clark also determined that in light of the remand, Defendant's arguments as to futility should be left to the state court. Id. at 12.
On February 19, 2019, Optum filed objections to the R&R. Optum argues that (1) the Hensgens factors weigh against granting Plaintiff's motion to amend and remand; (2) the proposed amended complaint is preempted by Section 502(a) of ERISA, 29 U.S.C. § 1132(a); and (3) the proposed amended complaint is futile. D.E. 37.
Local Civil Rule 72.1(c)(2) allows a party to object to a Magistrate Judge's report and recommendation within 14 days of service. The district court "shall make a de novo determination of those portions to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the Magistrate Judge." L. Civ. R. 72.1(c)(2); see Edelson V., L.P. v. Encore Networks, Inc., No. 11-5802, 2012 WL 4891695, at *2 (D.N.J. Oct. 12, 2012). The district court "need not normally conduct a new hearing and may consider the record developed before the Magistrate Judge, making his or her own determination on the basis of that record." L. Civ. R. 72.1(c)(2); see Edelson V., L.P., 2012 WL 4891695, at *2. Edelson V., L.P., 2012 WL 4891695, at *3 (internal quotations, citations, and brackets omitted). "[W]here no objections are made in regard to a report or parts thereof, the district court will adopt the report and accept the recommendation if it is 'satisf[ied] . . . that there is no clear error on the face of the record.'" Sportscare of Am., P.C. v. Multiplan, Inc., No. 10-4414, 2011 WL 500195, at *1 (D.N.J. Feb. 10, 2011) (quoting Fed. R. Civ. P. 72 Advisory Committee's Notes).
A motion to amend is ordinarily governed by Fed. R. Civ. P. 15(a)(2). Motions for leave to amend pursuant to Rule 15(a)(2) are liberally granted. Fed. R. Civ. P. 15(a)(2). When a party seeks to add a non-diverse defendant that would destroy diversity jurisdiction, however, courts in the Third Circuit apply 28 U.S.C. § 1447(e). City of Perth Amboy v. Safeco Ins. Co. of Am., 539 F. Supp. 2d 742, 746 (3d Cir. 2008). In such a scenario, "a court must scrutinize motions to amend more carefully." Id. While not addressed by the Third Circuit, district courts in the Circuit "have adopted a flexible and equitable approach developed by the Fifth Circuit Court of Appeals in Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987)." City of Perth Amboy, 539 F. Supp. 2d at 746. The Hensgens factors are as follows; "(1) whether the purpose of the plaintiff's motion is to defeat diversity jurisdiction; (2) whether the plaintiff was dilatory in seeking to amend the complaint; (3) whether plaintiff will be prejudiced if the motion is not granted; and (4) any other equitable factors." Stavitski v. Safeguard Props. Mgmt., LLC, No. 17-2033, 2018 WL 501646, at *2 (D.N.J. Jan. 22, 2018) (quoting Rodriguez v. Walmart, No. 16-9338, 2017 WL 6508357, at *2 (D.N.J. Dec. 20, 2017)). Here, Optum argues that Judge Clark incorrectly analyzedeach of the Hensgens factors such that Plaintiff's motion to amend should be denied. Def's Br. at 3-8.
For the first factor, courts must focus on the specific facts of the case, and the parties' actions "between the filing of the complaint and the motion to amend is an appropriate matter for consideration." Id. at *3. "Generally, if a proposed claim is viable, and there is a genuine intent to prosecute the claim in good faith, the primary purpose of joinder is not to defeat federal jurisdiction." Winograd v. Mercedes-Benz USA, LLC, No. 16-4914, 2017 WL 2926040, at *4 (D.N.J. June 14, 2017). Judge Clark determined that Brainbuilders' primary purpose for amending the Complaint was not to defeat federal jurisdiction. As a result, Judge Clark determined that the first Hensgens factor weighed in favor of Plaintiff. R&R at 7-9. Specifically, Judge Clark concluded that although Plaintiff was aware of Oxford NJ from the outset and that it may have had claims against Oxford NJ since initially filing the Complaint, Plaintiff's allegations in the proposed amended complaint demonstrated that Oxford NJ's "conduct has continued and/or magnified." R&R at 9. As a result, Judge Clark found that Plaintiff's intent to name Oxford NJ at an early juncture in the litigation pointed to "a genuine intent to prosecute the claim in good faith." Id.
Optum argues that Judge Clark erred because Plaintiff's allegations of magnified conduct are general, and not specific as to Oxford NJ. Moreover, Optum contends that the characterization of Oxford NJ's conduct as continued necessarily demonstrates that it existed when Plaintiff initially filed suit. Def's Br. at 4-5. But as recognized by Judge Clark, Plaintiff's proposed amended complaint includes new factual allegations regarding conduct that occurred after the original complaint was filed, and specifically identifies conduct of the Oxford Defendants, whichincludes Oxford NJ.3 R&R at 9; see also Proposed Amended Complaint (the "PAC") 128-40, D.E. 20-2. While not detailed, the level of specificity in the PAC is sufficient as to Oxford NJ, especially given the fact that discovery has not yet begun. Further, the fact that Plaintiff's allegations include conduct that occurred after the Complaint was filed evidence a strategic decision by Plaintiff to include additional defendants as a result of the alleged continuing conduct. This Court "will not ascribe an improper purpose" to what likely amounts to a strategic litigation decision without more specific evidence of wrongdoing. See City of Perth Amboy, 539 F. Supp. 2d at 753-54 ().
Judge Clark also recognized that the timing of Plaintiff's motion at "this early juncture of the litigation" also points to a genuine interest to prosecute a claim against Oxford NJ. R&R at 9. Although the initial complaint was filed over a year ago, the case has not significantly progressed-Optum has yet to file an answer, a Rule 16 conference has not occurred, and no discovery has been exchanged....
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