The Travelers Indemnity Co. v. New Orleans Louisiana Saints ( 2016 )

FILED
NOT FOR PUBLICATION
MAY 19 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
THE TRAVELERS INDEMNITY No. 14-55838
COMPANY, a Connecticut corporation,
D.C. No. 8:13-cv-01998-JLS-JPR
Plaintiff - Appellant,
v. MEMORANDUM*
NEW ORLEANS LOUISIANA SAINTS,
L.L.C., a Texas limited liability company,
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
Josephine L. Staton, District Judge, Presiding
Argued and Submitted May 3, 2016
Pasadena, California
Before: FISHER, M. SMITH, and NGUYEN, Circuit Judges.
The Travelers Indemnity Company (Travelers) filed an action against the
New Orleans Louisiana Saints (Saints) for reimbursement, subrogation, and
indemnity related to a workers’ compensation claim that Travelers settled on
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
behalf of an insured, the Kansas City Chiefs. In its complaint, Travelers alleged
that an injured football player, Jim Rourke, played for both the Saints and the
Chiefs during the last year of his exposure to a cumulative injury. Travelers prayed
for “that portion of the settlement . . . which represents the percentage of time that
Mr. Rourke was employed by the Saints during his last year of injurious exposure,”
damages under a subrogation theory, and equitable indemnity. The district court
dismissed the claims on the grounds that the California Workers’ Compensation
Appeals Board (WCAB) had exclusive jurisdiction over the dispute. It also
declined to hear Travelers’ declaratory judgment action and denied leave to amend.
We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm.
1. California’s workers’ compensation statute confines recovery of benefits for
a cumulative injury to the employer that employed the employee during the last
year of the cumulative injury. See Cal. Lab. Code § 5500.5. If there is more than
one employer in that final year, the claimant “may elect to proceed against any one
or more of the employers.” Id. § 5500.5(c). Any employers held liable are jointly
and severally liable for the award, id., and “may institute proceedings before the
appeals board for the purpose of determining an apportionment of liability or right
of contribution.” Id. § 5500.5(e).
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“In the event that none of the employers during the . . . periods of . . .
cumulative injury are insured for workers’ compensation coverage,” liability is
pushed back to the last employer who was insured during the period of cumulative
injury. Id. § 5500.5(a).
As a general matter, the WCAB has “exclusive authority to hear claims
‘[f]or the recovery of [workers’] compensation, or concerning any right or liability
arising out of or incidental thereto.” U.S. Fid. & Guar. Co. v. Lee Invs. LLC, 641
F.3d 1126, 1134 (9th Cir. 2011) (alterations in original) (quoting Cal. Lab. Code
§ 5300(a)). A limited exception exists where a plaintiff is pursuing a “claim for
damages against an uninsured employer” under the push-back scenario described
in the third paragraph of subsection 5500.5(a). Graphic Arts Mut. Ins. Co. v. Time
Travel Int’l, Inc., 23 Cal. Rptr. 3d 864, 870 (Cal. Ct. App. 2005).
Here, although Travelers characterizes its claim as one for “reimbursement
and subrogation” under subsection 5500.5(a) and alleges that the Saints were
unlawfully uninsured during the relevant time period, it cannot state a claim for
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reimbursement and subrogation under that subsection.1 According to Travelers’
own pleading, the Chiefs employed Rourke during his last year of exposure to the
cumulative injury. Thus, even under Travelers’ version of the facts, it was not
liable “as a result of” the Saints’ alleged failure to secure workers’ compensation
insurance pursuant to the third paragraph of subsection 5500.5(a). Travelers may
well have claims for apportionment and contribution pursuant to subsections
5500.5(c) and (e), but exclusive jurisdiction lies with the WCAB, and the district
court properly dismissed the case. See U.S. Fid. & Guar. Co., 641 F.3d at 1133.
2. “[D]istrict courts’ decisions about the propriety of hearing declaratory
judgment actions . . . should be reviewed for abuse of discretion.” Wilton v. Seven
Falls Co., 515 U.S. 277, 289–90 (1995). “A district court should avoid needless
determination of state law issues; it should discourage litigants from filing
declaratory actions as a means of forum shopping; and it should avoid duplicative
litigation.” Huth v. Hartford Ins. Co. of the Midwest, 298 F.3d 800, 803 (9th Cir.
2002).
1
We do not view In re George, 361 F.3d 1157 (9th Cir. 2004), and In re
Lorber Industries of California, 564 F.3d 1098 (9th Cir. 2009), as controlling this
issue. In those cases, liability had been pushed back to the state’s Uninsured
Employers Fund due to the bankruptcy debtors’ undisputed failure to carry
workers’ compensation insurance. The only question before the court was how to
treat the reimbursement claim as a debt of the bankruptcy estate. They say nothing
about the nature of Travelers’ claim.
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Travelers sought a declaratory judgment that the Saints’ insurance policy did
not constitute workers’ compensation coverage. In a similar case filed in the state
system, however, a workers’ compensation judge made a ruling adverse to
Travelers, determining that the Saints’ policy was appropriate insurance. In this
context, the district court concluded that Travelers was forum shopping, as it
sought a declaratory judgment in an “attempt to have that interpretation enforced in
ongoing workers’ compensation proceedings” before the WCAB. That conclusion
was reasonable.
3. The district court did not abuse its discretion in denying leave to amend the
complaint. See Airs Aromatics, LLC v. Opinion Victoria’s Secret Stores Brand
Mgmt., Inc., 744 F.3d 595, 600 (9th Cir. 2014). “A district court may dismiss a
complaint without leave to amend if ‘amendment would be futile.’” Id. (quoting
Carrico v. City & County of San Francisco, 656 F.3d 1002, 1008 (9th Cir. 2011)).
“A party cannot amend pleadings to ‘directly contradic[t] an earlier assertion made
in the same proceeding.’” Id. (alteration in original) (quoting Russell v. Rolfs, 893
F.2d 1033, 1037 (9th Cir. 1990)).
Given leave to amend, Travelers would be unable to allege a set of facts
showing it was liable “as a result of” the Saints’ alleged failure to carry lawful
insurance, or that it would otherwise be entitled to “reimbursement and
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subrogation” from the Saints. Cal. Lab. Code § 5500.5(a). Even considering the
additional facts related to Rourke’s NFL career after 1986, Travelers does not
dispute that the Chiefs (and only the Chiefs) employed Rourke again in 1987, more
than a year after he played his final game for the Saints. Travelers also concedes
that the WCAB had jurisdiction over the Chiefs.
The judgment of the district court is AFFIRMED.
The Appellee’s Motion to Take Judicial Notice (Dkt. 18) is DENIED.
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