ReadyLink Healthcare v. SCIF, No. 12-56248 (9th Cir. 2014)
Annotate this CaseThis appeal involves parallel judicial proceedings initiated by ReadyLink in state court and in federal court. ReadyLink contended that a decision by the Commissioner was preempted by IRS regulations. The federal district court abstained pursuant to Younger v. Harris and while the district court judgment was pending, the California Court of Appeal rejected ReadyLink's preemption claim. The California Supreme Court denied review. The court applied the Supreme Court's guidance in Sprint Communications, Inc. v. Jacobs and found that the district court erred by abstaining. Applying the California issue preclusion test, the court concluded that the decision of the California Court of Appeals barred ReadyLink's preemption claim. Accordingly, the court affirmed the district court's dismissal of the complaint.
Court Description: Abstention/Issue Preclusion. Affirming the dismissal of an action challenging a decision of the Commissioner of the California Department of Insurance, the panel held that the district court erred by abstaining, but that issue preclusion barred the plaintiff’s claim that the Commissioner’s decision was preempted by Internal Revenue Service regulations. The panel held that under Sprint Communications, Inc. v. Jacobs, 134 S. Ct. 584 (2013), Younger abstention was not appropriate because parallel state court proceedings were not criminal proceedings, the Commissioner’s and the state court’s orders were not “core” orders involving the administration of the state judicial process, and the proceedings were not civil enforcement proceedings akin to a criminal prosecution. The panel held that the plaintiff’s preemption claim was barred by issue preclusion under California law because while this appeal was pending, the California Court of Appeal rejected the preemption claim, and the California Supreme Court denied review.
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