Sheppard v. Liberty Mutual Insurance Company et al, No. 2:2016cv02401 - Document 381 (E.D. La. 2017)

Court Description: ORDER granting 205 Motion to Dismiss for Failure to State a Claim; denying as moot 205 Motion to Strike. Signed by Judge Sarah S. Vance on 1/24/2017. (mmm)
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Sheppard v. Liberty Mutual Insurance Company et al Doc. 381 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA J ESSE FRANK SHEPPARD CIVIL ACTION VERSUS NO. 16-240 1 LIBERTY MUTUAL INSURANCE COMPANY, ET AL. SECTION “R” (3) ORD ER AN D REAS ON S Mosaic Global Holdings Inc. m oves to dism iss Plaintiff J esse Frank Sheppard’s fraud claim s under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Because the Court finds that Sheppard has failed to plead with adequate specificity what inform ation was withheld, Mosaic’s m otion is granted. I. BACKGROU N D This suit was originally filed in the Civil District Court for the Parish of Orleans. 1 Defendant Mosaic Global Holdings Inc. rem oved the action to this Court on March 22, 20 16. 2 In his com plaint, Sheppard alleges that he was exposed to asbestos “[o]n a daily basis” as an em ployee of Mosaic’s predecessor com pany, Freeport Sulphur Com pany. 3 This exposure allegedly caused Sheppard to develop asbestos-related can cer, lung cancer, 1 2 3 R. Doc. 1 at 1. Id. R. Doc. 1-1 at 5. and/ or m esotheliom a. 4 Although Sheppard stopped working for Freeport in the early- to m id-1990 s, 5 Sheppard’s asbestos-related ailm ents were first diagnosed in October 20 15. 6 In addition to Freeport/ Mosaic, Sheppard sues several defendants in volved in the m anufacture, distribution, and sale of asbestos-containing products that Sheppard allegedly encountered in the course of his work. 7 Sheppard also brings claim s again st insurance com panies that allegedly provided coverage to defendants for asbestos-related claim s and withheld inform ation from Sheppard about the danger of asbestos. 8 Sheppard brings claim s for “negligen ce, inten tional tort, fraud, and strict liability,” and alleges that all defendants are “jointly, severally, an d in solidio liable.”9 He seeks dam ages for, am ong other things, physical and m ental pain, loss of life, loss of incom e, and m edical expenses. 10 On Novem ber 17, 20 16, the Court granted Mosaic’s first m otion to dism iss Sheppard’s fraud claim against Mosaic under the heightened pleading standards of Federal Rule of Civil Procedure 9(b). 11 In doing so, the Court found that Sheppard had failed to individually plead what Mosaic gained by allegedly withholding inform ation from Sheppard. 12 In its order, the Court granted Sheppard leave to am end his claim . 13 4 Id. at 6. Sheppard’s com plaint is inconsistent on this point. Sheppard alleges variously that his tenure at Freeport, and exposure to asbestos, ran from “approxim ately 1967 through 1992,” from “approxim ately 1967 through 1994,” and “from 1967 through 1976.” R. Doc. 1-1 at 5, 6. 6 R. Doc. 1-1 at 6. 7 Id. at 6, 7. 8 Id. at 3, 4, 8 . 9 Id. at 29. 10 Id. 11 R. Doc. 143. 12 Id. 13 Id. 5 2 On Decem ber 8 , 20 16, Sheppard m oved to am end his com plaint and reallege his fraud claim against Mosaic. 14 Mosaic now m oves to dism iss Sheppard’s am ended fraud claim , and argues that Sheppard’s allegations rem ain in adequate to state a claim under the heightened pleadin g standards of Federal Rule of Civil Procedure 9(b). 15 II. LEGAL STAN D ARD To survive a Rule 12(b)(6) m otion to dism iss, plaintiffs m ust plead enough facts “to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (20 0 9) (quoting Bell Atlantic Corp. v. Tw om bly , 550 U.S. 544, 547 (20 0 7)). A claim is facially plausible when the plaintiff pleads facts that allow the court to “draw the reasonable inferen ce that the defendant is liable for the m isconduct alleged.” Iqbal, 556 U.S. at 678. A court m ust accept all well-pleaded facts as true and m ust draw all reasonable inferen ces in favor of the plaintiff. Lorm and v. U.S. Unw ired, Inc., 565 F.3d 228, 232-33 (5th Cir. 20 0 9); Baker v. Putnal, 75 F.3d 190 , 196 (5th Cir. 1996). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678. Generally, a court ruling on a m otion to dism iss m ay rely on only the com plaint and its proper attachm ents. Fin. Acquisition Partners LP v. Blackw ell, 440 F.3d 278, 286 (5th Cir. 20 0 6). A court is perm itted, however, to rely on “docum ents incorporated into the com plaint by reference, and m atters of which a court m ay take judicial notice.” Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 30 8, 322 (20 0 7). The court m ay not 14 15 R. Doc. 164. R. Doc. 20 5. 3 consider new factual allegations m ade outside the com plaint. See Fin. Acquisition Partners, LP, 440 F.3d at 289. Federal Rule of Civil Procedure 9(b) im poses a heightened pleading requirem ent for fraud claim s. The purpose of Rule 9(b) is to “ensur[e] the com plaint ‘provides defendants with fair notice of the plaintiffs’ claim s, protects defendants from harm to their reputation and goodwill, reduces the n um ber of strike suits, and prevents plaintiffs from filing baseless claim s then attem pting to discover unknown wrongs.’” United States ex. rel. Grubbs v. Kanneganti, 565 F.3d 180 , 190 (5th Cir. 20 0 9) (quoting Melder v. Morris, 27 F.3d 10 97, 110 0 (5th Cir. 1994)). Under Rule 9(b), a party alleging fraud or m istake “m ust state with particularity the circum stances constituting fraud or m istake.” Fed. R. Civ. P. 9(b). The required conditions of a person’s m in d, however, m ay be alleged generally. Id. The Fifth Circuit “interprets Rule 9(b) strictly, requiring the plaintiff to specify the statem ents contended to be fraudulent, identify the speaker, state when and where the statem ents were m ade, and explain why the statem ents were fraudulent.” Flaherty & Crum rine Preferred Incom e Fund, Inc. v. TXU Corp., 565 F.3d 20 0 , 20 7 (5th Cir. 20 0 9), cert. denied, 588 U.S. 873 (20 0 9). In other words, “Rule 9(b) requires ‘the who, what, when, where, and how’ to be laid out.” Benchm ark Elecs., Inc. v. J.M. Huber Corp., 343 F.3d 719, 723 (5th Cir. 20 0 3) (quoting Tel– Phonic Servs., Inc. v. TBS Int’l, Inc., 975 F.2d 1134, 1139 (5th Cir. 1992)). The requirem ents of Rule 9(b) are “supplem ental to the Suprem e Court’s recent interpretation of Rule 8(a) requiring enough facts [taken as true] to state a claim to relief that is plausible on its face.” Lentz v. Trinchard, 730 F.Supp.2d 567, 579 (E.D. La. 20 10 ) (citing Grubbs, 565 F.3d at 185) (quoting Tw om bly , 550 U.S. at 570 ). State-law fraud claim s, such as those alleged by plaintiff here, are subject to the pleading requirem ents of Federal Rule of Civil Procedure 4 9(b). Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 339 (5th Cir. 20 0 8 ). Louisiana law defines fraud as “a m isrepresentation or a suppression of the truth m ade with the intention either to obtain an unjust advantage for one party or to cause a loss or inconvenience to the other.” La. Civ. Code art. 1953. “Fraud m ay also result from silence or inaction.” Id. The elem ents of a Louisiana fraud or intentional m isrepresentation claim are: 1) a m isrepresentation of a m aterial fact; 2) m ade with intent to deceive; an d 3) causing justifiable reliance with resultant injury. Kadlec Medical Center v. Lakeview Anesthesia Assoc., 527 F.3d 412, 418 (5th Cir. 20 0 8), cert. denied, 555 U.S. 10 46 (20 0 8); see also Gonzalez v. Gonzalez, 20 So.3d 557, 563 (La. Ct. App. 20 0 9), w rit denied, 27 So.3d 30 5 (La. 20 10 ). In cases concerning “om ission of facts, Rule 9(b) typically requires the claim ant to plead the type of facts om itted, the place in which the om issions should have appeared, and the way in which the om itted facts m ade the m isrepresentations m isleading.” Carroll v. Fort St. Jam es Corp., 470 F.3d 1171, 1174 (5th Cir. 20 0 6). To state a claim for fraud by silence or inaction, plaintiffs also m ust show that the there was a duty to disclose the inform ation. Kadlec M edical Center, 527 F.3d at 418 (“To establish a claim for intentional m isrepresentation when it is by silence or inaction, plaintiffs also m ust show that the defendant owed a duty to the plaintiff to disclose the inform ation.”); see also Greene v. Gulf Coast Bank, 593 So.2d 630 , 632 (La. 1992) (“To find fraud from silence or suppression of the truth, there m ust exist a duty to speak or to disclose inform ation.”). III. D ISCU SSION As stated in the Court’s earlier order on this point, courts in this district recogn ize that “[f]raud by silence . . . ‘is, by its very nature, difficult to plead with particularity.’” In 5 re Ford Motor Co. Vehicle Paint Litig., No. 10 63, 1997 WL 539665, at *3 (E.D. La. Aug. 27, 1997) (quoting Chry sler Credit Corp. v. W hitney N at’l Bank, 824 F. Supp. 58 7, 598 (E.D. La. 1993)). This does not, however, excuse plaintiffs alleging such fraud from the requirem ents of Rule 9(b). Therefore, to plead a claim for fraudulent concealm ent, the plaintiff m ust specifically allege: “(1) the inform ation that was withheld, (2) the general tim e period during which the fraudulent conduct occurred, (3) the relationship giving rise to the duty to speak, and (4) what the person or entity engaged in the fraudulent conduct gained by withholding the inform ation.” First Am . Bankcard, Inc. v . Sm art Bus. Tech., Inc., No. 15-638, 20 16 WL 5869787, at *9 (E.D. La. Oct. 7, 20 16); see also Sarrat v. Univar U.S.A., Inc., No. 14-10 17, 20 14 WL 3588849, at *2 (E.D. La. J uly 18, 20 14) (applying test); In re Ford Motor Co. Vehicle Paint Litig., 1997 WL 539665, at *3 (sam e). The Court finds that Sheppard has once again failed to plead the “who, what, when, where, and how” that is necessary to m eet Rule 9(b)’s heightened pleading requirem ent. A claim for fraudulent concealm ent is based on an im balance of knowledge between the plaintiff and the defendant. Accordingly, to bring such a claim , a plaintiff m ust allege both: (1) that the defendant concealed inform ation; and (2) that the plaintiff “did not have actual or constructive knowledge of the inform ation and could not have learned of the inform ation through the exercise of due diligence.” In re Ford Motor Co. Bronco II Prod. Liab. Litig., 982 F. Supp. 388, 396-97 (E.D. La. 1997) (citing Landry v. Air Line Pilots Ass’n Int’l AFL-CIO, 90 1 F.2d 40 4, 412– 13 (5th Cir. 1990 )). Sheppard alleges that Mosaic knew that asbestos was hazardous at the tim e of Sheppard’s exposure. But to do so, Sheppard relies alm ost entirely on allegations that the hazards of asbestos were generally known at that tim e. For instance, Sheppard alleges that “[s]tandards regarding the proper handling of asbestos have been in existence sin ce 6 at least the early 1950s” and that “asbestosis was listed as a com pensable occupational disease under the Louisiana Worker’s Com pensation Act of 1952.”16 Sheppard further alleges that “[t]he health hazards of asbestos have been recognized by those in the business for two thousand years,” and attributes knowledge of this danger to Strabo, the ancient Greek geographer, and Pliny the Elder, the Rom an historian. 17 Finally, Sheppard alleges that, by the tim e he began working with asbestos “virtually every state in the Unite[d] States recognized asbestosis as com pensable claim s under workers’ com pensation laws.”18 Inform ation prom ulgated by legislators and other public sources is not unique to Mosaic, and could be learned through the exercise of due diligence, and therefore does not support a claim for fraudulent concealm ent. Sheppard’s attem pts to attribute unique knowledge of asbestos dangers to Mosaic are com paratively slim . These allegations center around Mosaic’s m em bership in a group called the National Safety Council (NSC). According to Sheppard, the NSC “would publish inform ation to its m em bers regarding hazards in the workplace, including asbestos.”19 Mem bers of the NSC, therefore, “would have had access to inform ation about the hazards of asbestos and the m eans to control those hazards relating to asbestos-contain ing m aterials by even the early 1940 s.”20 Sheppard includes no allegations of what specific inform ation was conveyed from the NSC to Mosaic, or how the NSC’s inform ation com pared to generally-available inform ation on asbestos danger. In other words, Sheppard fails to allege any specific inform ation concerning the danger of asbestos that 16 17 18 19 20 R. Doc. 166 at 3-4. R. Doc. 1-1 at 9-10 . Id. R. Doc. 166 at 4. Id. 7 was, at the tim e of Sheppard’s exposure, both: (1) known to Mosaic; and (2) not generally known such that it could not have been obtained by Sheppard though reasonable diligence. Accordingly, Sheppard’s fraud claim against Mosaic m ust be dism issed. The Court further finds, for two reasons, that it is appropriate to dism iss this claim with prejudice. First, Sheppard did not ask the Court for leave to further am end his com plaint, and this alone provides sufficient grounds to enter dism issal with prejudice. See W entzell v. JPMorgan Chase Bank, N at. Ass’n, 627 F. App’x 314, 319 (5th Cir. 20 15) (“a party m ust ‘expressly request’ leave to am end” (quoting United States ex rel. W illard v. Hum ana Health Plan of Tex., Inc., 336 F.3d 375, 38 7 (5th Cir. 20 0 3)). Second, the Court finds that Sheppard’s vague allegations, even on this second attem pt, are not m aking progress towards an actionable claim for fraud. The Court therefore finds that further leave to am end is unwarranted. See Jacquez v. Procunier, 80 1 F.2d 789, 792 (5th Cir. 198 6) (“At som e point a court m ust decide that a plaintiff has had fair opportunity to m ake his case; if, after that tim e, a cause of action has not been established, the court should finally dism iss the suit.”). Finally, Mosaic also m oves to strike Sheppard’s am endm ents concerning his work at Mosaic’s Cam inada plant. The Court has already struck these am endm ents in its order denying Sheppard’s second m otion for rem and. This portion of Mosaic’s m otion is accordingly denied as m oot. 8 IV. CON CLU SION For the foregoing reasons, the Court GRANTS Mosaic’s m otion to dism iss Sheppard’s fraud claim against Mosaic for failure to state a claim . Mosaic’s claim s are DISMISSED WITH PREJ UDICE. Mosaic’s m otion to strike is DENIED AS MOOT. New Orleans, Louisiana, this _24th_ day of J anuary, 20 17. ___ _____________________ SARAH S. VANCE UNITED STATES DISTRICT J UDGE 9