Prime Healthcare Servs., Inc. v. Servs. Emps. Int'l Union

• Decision Date: 01 April 2015
• Docket Number: Case No. 14cv2553–GPC–RBB.
• Citation: 97 F.Supp.3d 1169
• Court: U.S. District Court — Southern District of California
• Parties: PRIME HEALTHCARE SERVICES, INC., Plaintiff, v. SERVICES EMPLOYEES INTERNATIONAL UNION, et al., Defendants.

97 F.Supp.3d 1169

PRIME HEALTHCARE SERVICES, INC., Plaintiff

v.SERVICES EMPLOYEES INTERNATIONAL UNION, et al., Defendants.

Case No. 14cv2553–GPC–RBB.

United States District Court, S.D. California.

Signed April 1, 2015.

Amanda Catherine Fitzsimmons, DLA Piper LLP, San Diego, CA, David S. Durham, Kathleen Sue Kizer, DLA Piper LLP, San Francisco, CA, Edward Smith Scheideman, III, Victoria Ann Bruno, DLA Piper LLP, Washington, DC, for Plaintiff.

Glenn Rothner, Rothner Segall and Greenstone, Pasadena, CA, Andrew Dean Roth, Leon O. Dayan, Bredhoff & Kaiser PLLC, Washington, DC, Fern M. Steiner, Smith, Steiner, Vanderpool & Wax, APC, San Diego, CA, Theodore Franklin, Bruce A. Harland, Jannah Manansala, Weinberg Roger and Rosenfeld, Alameda, CA, for Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS PLAINTIFF'S FIRST AMENDED COMPLAINT

GONZALO P. CURIEL, District Judge.

INTRODUCTION

Plaintiff Prime Healthcare, Inc. (“Prime Healthcare”) brings this civil action alleging violations of the Racketeering Influenced and Corrupt Organizations Act (“RICO”) and the Labor Management and Relations Act (“LMRA”). Before the Court is a motion to dismiss filed by Defendants Service Employees International Union (“SEIU”), Service Employees International Union–United Healthcare Workers West (“UHW”), Change to Win, CTW Investment Group, Mary Kay Henry, Dave Regan, and Tom Woodruff (collectively, “Defendants”). (Dkt. No. 50.) The Parties have fully briefed the motion. (Dkt. Nos. 57–58.) For the reasons set forth below, the Court GRANTS IN PART AND DENIES IN PART Defendants' motion to dismiss.

FACTUAL BACKGROUND

Prime Healthcare brings this action against various union-related entities and individuals for allegedly unlawfully conspiring to unionize hospitals owned by Prime Healthcare. (Dkt. No. 47, First Amended Complaint (“FAC”) ¶ 5.)

A. The Parties

Plaintiff Prime Healthcare is a hospital management company which, along with an affiliated foundation, operates twenty-eight acute care hospitals in eight states, including fifteen hospitals in California. (Id. ¶¶ 1, 22–23.) Prime Healthcare describes itself as “largely non-union.” (Id. ¶ 3.)

Defendant SEIU is an unincorporated labor association that represents units of workers and negotiates terms and conditions of employment for the workers it represents. (Id. ¶ 24.) Defendant UHW is a local union affiliate of SEIU located in California. (Id. ¶ 25.) UHW represents individuals working in California's hospitals and clinics, including nurses, aids, case managers, clerks, maintenance workers, and housekeeping staff, and negotiates terms and conditions of employment for the healthcare workers it represents. (Id. )

Defendant Change to Win is a union federation made up of three member unions: SEIU, the International Brotherhood of Teamsters, and the United Farm Workers of America. (Id. ¶ 30.) Defendant CTW Investment Group is the investment arm of Change to Win. (Id. ¶ 36.) Prime Healthcare alleges that Change to Win approves of SEIU's tactics, and supports them through CTW Investment Group. (Id. ¶¶ 31–35.)

The remaining Defendants are individual executives of the above entities. Defendant Mary Kay Henry is the President of SEIU and Secretary–Treasurer of Change to Win. (Id. ¶ 27.) Defendant Dave Regan is President of UHW, Vice President of SEIU, and Vice President of the SEIU Leadership Council. (Id. ¶ 28.) Finally, Defendant Tom Woodruff is the Executive Director of Change to Win's Strategic Organizing Center, and also previously served as an SEIU International Executive Vice President for more than a decade. (Id. ¶ 36.)

B. Alleged Unlawful Conduct

Prime Healthcare alleges that Defendants have unlawfully conspired to force Prime Healthcare to unionize its hospitals through a “corporate campaign” that employs extortion. (Id. ¶¶ 5, 8, 47.) For example, since around 2010, Defendants have allegedly:

• attempted to thwart Prime Healthcare's acquisition of additional hospitals;

• attacked investment partners of Prime Healthcare through false and disparaging public accusations of wrongdoing;

• produced false and misleading reports and studies for the sole purpose of damaging Prime Healthcare's business goodwill;

• worked with complicit media outlets to publicize sham and baseless allegations;

• initiated certain sham and baseless complaints causing regulatory and administrative investigations, sham and baseless litigation, and inquiries by accreditation agencies;

• coerced, harassed, and threatened patients who use Prime Healthcare's services;

• persuaded writers, government agencies, and politicians to raise specious allegations about Prime Healthcare's conduct;

• targeted the California Hospital Association with sham ballot initiatives to impose a top-down neutrality agreement on its members (including Prime Healthcare); and

• violated federal labor laws.

(Id. ¶¶ 9, 115.)

Prime Healthcare alleges that through their extortionate activities, Defendants have acquired and are attempting to acquire substantial money and property, including tens of millions of dollars, Prime Healthcare's goodwill, Prime Healthcare's rights to grow its business through hospital acquisitions and oppose unionization of its employees, and Prime Healthcare's customers and related revenues. (Id. ¶¶ 14, 110.)

C. Prior Prime Healthcare Litigation

On November 15, 2011, Prime Healthcare previously brought an antitrust action alleging that SEIU, UHW, and several Kaiser-related entities had conspired to eliminate Prime Healthcare from the healthcare services market and increase healthcare workers wages. See Prime Healthcare Servs., Inc. v. Serv. Emps. Int'l Union, No. 11–CV–2652–GPC–RBB (S.D.Cal.) (“Prime Healthcare I” ). On September 21, 2012, Prime Healthcare filed a first amended complaint. (Id. at Dkt. No. 46.) On July 25, 2013, this Court dismissed Prime Healthcare's first amended complaint under Federal Rule of Civil Procedure 12(b)(6), but granted leave to amend. See Prime Healthcare I, 2013 WL 3873074 (S.D.Cal. July 25, 2013). After Prime Healthcare did not file a second amended complaint, this Court granted the defendants' motion to dismiss with prejudice for lack of prosecution under Federal Rule of Civil Procedure 41(b). See Prime Healthcare II, 2013 WL 6500069 (S.D.Cal. Dec. 11, 2013). Prime Healthcare's appeal of this Court's dismissal orders is still pending. See Prime Healthcare I, No. 13–57185 (9th Cir.).

PROCEDURAL HISTORY

On August 25, 2014, Prime Healthcare filed the instant action in the Northern District of California (“Prime Healthcare II ” ). (Dkt. No. 1.) On October 24, 2014, the Northern District of California ordered the case transferred to the Southern District of California. (Dkt. No. 38.) On November 14, 2014, the case was reassigned to the undersigned judge. (Dkt. No. 45.)

On November 17, 2014, Prime Healthcare filed the operative First Amended Complaint (“FAC”), which superseded its original complaint. (Dkt. Nos. 47, 52.) Prime Healthcare alleges eight RICO claims, 18 U.S.C. § 1961 et seq. (counts I–VIII) and three LMRA claims, 29 U.S.C. § 186 et seq. (counts IX–XI). (Dkt. No. 47 ¶¶ 270–340.)

On December 16, 2014, Defendants filed a motion to dismiss the FAC.¹ (Dkt. No. 50.) Prime Healthcare filed its opposition on January 16, 2015. (Dkt. No. 57.) Defendants filed their reply on January 30, 2015. (Dkt. No. 58.)

On February 20, 2015, the Court held a hearing regarding Defendants' motion to dismiss.² (Dkt. No. 67.) Attorneys Ed Scheiderman, Amanda Fitzsimmons, and David Durham appeared for Prime Healthcare. Attorneys Theodore Franklin, Andrew Roth, and Glenn Rothner appeared for Defendants.

LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir.2001). Dismissal is warranted under Rule 12(b)(6) where the complaint lacks a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 534 (9th Cir.1984) ; see also Neitzke v. Williams, 490 U.S. 319, 326, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989) (“Rule 12(b)(6) authorizes a court to dismiss a claim on the basis of a dispositive issue of law.”). Alternatively, a complaint may be dismissed where it presents a cognizable legal theory yet fails to plead essential facts under that theory. Robertson, 749 F.2d at 534. While a plaintiff need not give “detailed factual allegations,” a plaintiff must plead sufficient facts that, if true, “raise a right to relief above the speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 547, 127 S.Ct. 1955 ). A claim is facially plausible when the factual allegations permit “the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. In other words, “the non-conclusory ‘factual content,’ and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir.2009). “Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679, 129 S.Ct. 1937.

In reviewing a motion to dismiss under Rule 12(b)(6), the court must assume the truth of all factual allegations and must construe all inferences from them in the light most favorable to the nonmoving party. Thompson v. Davis, 295 F.3d 890, 895 (9th Cir.2002) ; Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337–38 (9th Cir.1996). Legal conclusions, however, need not be taken as true merely because they are cast in the form of factual allegations....