Phillips 66 Co. v. Sacks, CASE NO. C19-0174JLR

• Decision Date: 10 September 2019
• Docket Number: CASE NO. C19-0174JLR
• Parties: PHILLIPS 66 COMPANY, et al., Plaintiffs, v. Joel SACKS, Defendant, and Association of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 12-590, Intervenor.
• Court: U.S. District Court — Western District of Washington

409 F.Supp.3d 972

PHILLIPS 66 COMPANY, et al., Plaintiffs,

v.Joel SACKS, Defendant,andAssociation of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 12-590, Intervenor.

CASE NO. C19-0174JLR

United States District Court, W.D. Washington, at Seattle.

Signed September 10, 2019

Christine Hawkins, Davis Wright Tremaine, Bellevue, WA, Richard J. Birmingham, Davis Wright Tremaine, Seattle, WA, for Plaintiffs.

Cynthia J. Gaddis, Diana Sheythe Cartwright, Attorney General's Office, Olympia, WA, for Defendant.

ORDER GRANTING MOTIONS TO DISMISS

JAMES L. ROBART, United States District Judge

I. INTRODUCTION

Before the court are two motions to dismiss Plaintiffs Phillips 66 Company and Manager HR Shared Services' (collectively, "Phillips 66") complaint—one filed by Defendant Joel Sacks, Director of the State of Washington Department of Labor and Industries (the "Director") (Director MTD (Dkt. # 4)), and one filed by Intervenor Association of United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, Local 12-590 ("USW Local") (USW Local MTD (Dkt. # 13)). Phillips 66 opposes both motions. (Resp. to Director MTD (Dkt. # 20); Resp. to USW Local MTD (Dkt. # 22).) The Director and USW Local filed replies.¹ (Director Reply (Dkt. # 24); USW Local Reply (Dkt. # 23).) The court has reviewed the motions, the parties' submissions concerning the motions, the relevant portions of the record, and the applicable law. Being fully advised,² the court GRANTS the Director's and USW Local's motions to dismiss and DIMISSES Phillips 66's complaint WITH PREJUDICE and without leave to amend.

II. BACKGROUND

The facts necessary to adjudicate this motion are not complex. Phillips 66 does not offer its employees "sick leave"; instead, it offers its employees short and long-term disability benefits under a disability plan (the "Plan"). (Compl. (Dkt. # 1) at 3-4.) In 2013, two Washington-based Phillips 66 employees—Rachelle Honeycutt and Gabriel Westergreen—took leave from work to care for ill family members. (Id. at 4.) Both employees sought to use the short-term disability benefits under the Plan to cover those absences. (Id. at 3-4.) Phillips 66 rejected both requests. (Id. at 4.)

Although this factual background is straightforward, it yielded a long-winding procedural history. After Phillips 66 denied their benefits requests, Ms. Honeycutt and Mr. Westergreen filed protected leave complaints with the Washington State Department of Labor and Industries (the "Department"). (Id. at 4.) Those complaints alleged that Phillips 66's benefits denials violated the Washington Family Care Act ("WFCA"), which entitles Washington employees to take leave from work to care for ill family members. (Id. ) The Department initially found that Phillips 66 did not violate WFCA and, as such, it issued Determinations of Compliance. (Id. ) Ms. Honeycutt and Mr. Westergreen appealed those decisions to the Whatcom County Superior Court, which affirmed the Department's decisions. (Id. )

The Washington Court of Appeals reversed and remanded. (Id. at 4-5); see also Honeycutt v. State, Dep't of Labor & Indus. , 197 Wash.App. 707, 389 P.3d 773 (2017). Specifically, the court held that, where an employer does not offer paid leave for illness, WFCA entitles employees to access disability benefits for family care. Honeycutt , 389 P.3d at 778 (interpreting RCW 49.12.265(5) ). Thus, if WFCA applied to Phillips 66's Plan, Ms. Honeycutt and Mr. Westergreen would be entitled to use short-term disability benefits to cover absences for family care. Id. at 780. The court noted, however, that WFCA exempts disability plans covered by the Employee Security Retirement Income Security Act of 1974 ("ERISA"). Id. The Department did not make findings on whether the Plan was governed by ERISA. Id. Accordingly, the court remanded the case to the Department to adjudicate that issue. Id.

On remand, a Department investigator and an Administrative Law Judge both determined that the Plan is governed by ERISA. (Compl. at 6, 9.) But, on October 25, 2018, the Director reversed and determined that the short-term disability benefits that Ms. Honeycutt and Mr. Westergreen sought to use for family care leave did not fall under an ERISA plan. (Id. at 9.) Thus, the Director found that WFCA applied and that Phillips 66 violated WFCA by denying Ms. Honeycutt and Mr. Westergreen's benefits requests. (See id. , Ex. C at 3-7.³ ) The Director assessed a $200 penalty against Phillips 66 for each violation. (Id. , Ex. C at 7.) Phillips 66 moved for reconsideration of the Director's order, but the Director denied that motion on January 8, 2019. (Id. , Ex. C at 11-12.)

Phillips 66 filed the current action on February 5, 2019. (See Compl.) Phillips 66 contends that "[t]he sole issue here is whether the Plan, including its short-term disability benefit, is an ERISA Plan and, therefore, excluded from coverage under the WFCA, RCW 49.12.265(5)." (Id. at 2.) The day after filing this case, Phillips 66 filed a petition for judicial review in Whatcom County Superior Court that sought direct review of the Director's decision on Ms. Honeycutt and Mr. Westergreen's complaints (the "State Court Action"). (See Director MTD, Ex. B.) Phillips 66 moved to stay the State Court Action while the current case was pending, and, on March 22, 2019, the Whatcom County Superior Court granted that motion and stayed the State Court Action "until the federal court has issued an order on Petitioner's Complaint for Declaratory Judgment and Injunctive Relief." (Birmingham Decl. (Dkt. # 21-1) ¶ 2.)

The Director filed his motion to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) on February 28, 2019. (See Director MTD.) In that motion, the Director presents three challenges to Phillips 66's complaint: (1) the court is barred from granting the relief Phillips 66 seeks under the Anti-Injunction Act, 28 U.S.C. § 2283 ("AIA"); (2) the court should abstain from deciding this case under the Younger abstention doctrine; and (3) the court lacks subject matter jurisdiction over this case under the Rooker-Feldman doctrine. (See Director MTD at 6-13.) The Director also requests his fees. (Id. at 13-14.) USW Local successfully moved to intervene in this case and filed its motion to dismiss on April 4, 2019.⁴ (See USW Local MTD.) USW Local offers three arguments in support of dismissal in its motion: (1) the Director's order that the Plan is not an ERISA plan is preclusive in this court and deprives this court of subject matter jurisdiction; (2) Phillips 66's complaint does not arise under federal law; and (3) the AIA bars the relief that Phillips 66 seeks. (See USW Local MTD at 7-22.) On reply, USW Local also challenged Phillips 66's standing to bring this case. (USW Local Reply at 9-10.) The court considers these arguments in turn.

III. DISCUSSION

A. Standards

1. Rule 12(b)(1)

USW Local and the Director allege a number of facial attacks on the court's subject matter jurisdiction to hear this case. (See USW Local MTD at 6-16; USW Local Reply at 9-10; Director MTD at 12-13.) "In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction." Safe Air for Everyone v. Meyer , 373 F.3d 1035, 1039 (9th Cir. 2004). "The district court resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6) : Accepting the plaintiff's allegations as true and drawing all reasonable inferences in the plaintiff's favor, the court determines whether the allegations are sufficient as a legal matter to invoke the court's jurisdiction." Leite v. Crane Co. , 749 F.3d 1117, 1121 (9th Cir. 2014) (citing Pride v. Correa , 719 F.3d 1130, 1133 (9th Cir. 2013) ). The party asserting its claims in federal court bears the burden of establishing subject matter jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).

USW Local also alleges that Phillips 66's claim is not ripe for review (see USW Local Reply at 9-10), which presents a Rule 12(b)(1) issue, Maya v. Centex Corp. , 658 F.3d 1060, 1067 (9th Cir. 2011) ("[L]ack of Article III standing requires dismissal for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1)." (citations omitted)). "The ripeness doctrine is drawn both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction."⁵ Nat'l Park Hospitality Ass'n v. Dep't of Interior , 538 U.S. 803, 808, 123 S.Ct. 2026, 155 L.Ed.2d 1017 (2003) (internal quotations omitted); see also Wolfson v. Brammer , 616 F.3d 1045, 1058 (9th Cir. 2010) ("Ripeness has both constitutional and prudential components."). To satisfy the constitutional ripeness requirement, there must be a case or controversy with issues that are "definite and concrete, not hypothetical or abstract." Thomas v. Anchorage Equal Rights Comm'n , 220 F.3d 1134, 1139 (9th Cir. 2000) (citations and internal quotation marks omitted). To evaluate prudential ripeness, courts weigh two factors: "the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration." Abbott Labs. v. Gardner , 387 U.S. 136, 149, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967), overruled on other grounds by Califano v. Sanders , 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). "A claim is fit for decision if the issues raised are primarily legal, do not require further factual development, and the challenged action is final." Wolfson , 616 F.3d at 1060. "To meet the hardship requirement, a litigant must show that withholding review would result in direct and immediate hardship[.]" Id. (citations and internal quotations omitted).

2. Rule 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) provides for dismissal for ...