Allstate Insurance Company et al v. Tacoma Therapy, Inc et al, No. 3:2013cv05214 - Document 90 (W.D. Wash. 2014)
Court Description: ORDER granting in part and denying in part 64 Plaintiff's Motion to Dismiss; DENYING anti-SLAPP motion to strike; GRANTING Conspiracy to defraud and extort counterclaim and claim is Dismissed with prejudice; GRANTING Defamation Counterclaim and Dismissing with prejudice; DENYING Consumer Protection Act counterclaim; and GRANTING tortious interference counterclaim and Dismissing with prejudice. Signed by Judge Ronald B. Leighton.(DN)
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Allstate Insurance Company et al v. Tacoma Therapy, Inc et al 1 Doc. 90 HONORABLE RONALD B. LEIGHTON 2 3 4 5 6 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 7 8 9 ALLSTATE INSURANCE COMPANY, et al., 10 ORDER DENYING PLAINTIFFS’ MOTION TO STRIKE OR DISMISS COUNTERCLAIMS Plaintiffs, 11 CASE NO. 13-CV-05214-RBL v. [DKT # 64] 12 TACOMA THERAPY, INC., et al., 13 Defendants. 14 15 16 17 18 19 20 21 I. Introduction THIS MATTER is before the Court on Plaintiff1 Allstate’s motion to strike or dismiss Defendant McLaughlin’s Counterclaims. Defendants are Tacoma Therapy, Inc., Tacoma Rehabilitation, Inc., and the Law Office of McLaughlin & Associates, Inc. The individual owners of these entities and their spouses are also named in the suit. Plaintiffs are four related 22 23 1 The Plaintiffs are separate Allstate-related entities. For clarity, this Order will reference 24 them in the singular “Allstate,” unless the context requires otherwise. ORDER DENYING PLAINTIFFS’ MOTION TO STRIKE OR DISMISS COUNTERCLAIMS - 1 Dockets.Justia.com 1 insurance companies. The Defendants have provided medical and legal services to Allstate’s 2 insureds. Allstate claims that the Defendants conspired to obtain insurance payments for medical 3 services that were either not medically necessary or not actually performed. Wesley McLaughlin 4 and his law firm counterclaimed, asserting claims for conspiracy, defamation, Washington 5 Consumer Protection Act violations and tortious interference. McLaughlin alleges that Allstate 6 committed all of these violations by filing this lawsuit. Allstate now seeks to strike or dismiss 7 the counterclaims under Washington’s Anti-SLAPP law or Fed. R. Civ. P. 12b(6). For the 8 reasons stated below, Allstate’s motion to strike is DENIED. Allstate’s motion to dismiss the 9 conspiracy, defamation or tortious interference counterclaims is GRANTED. Allstate’s motion 10 to dismiss the CPA claim is DENIED. 11 II. 12 Background Allstate alleges that the Defendants used a referral scheme to commit insurance fraud. It 13 claims that the provider Defendants overbilled Allstate’s insureds and third-party claimants. 14 Then, McLaughlin and his law firm submitted claims to Allstate and recovered payment for 15 treatment that was not necessary or, in some cases, not provided at all. 16 McLaughlin not only denies all of Allstate’s allegations, he has counterclaimed alleging 17 that by filing this lawsuit, Allstate has defamed him, conspired to defraud and extort him, 18 violated the Washington Consumer Protection Act, and tortiously interfered with his business 19 expectations. To be clear, all of McLaughlin’s counterclaims are based solely on the fact that 20 Allstate’s filed this lawsuit. 21 McLaughlin alleges that the multiple Allstate entities conspired to defraud and extort him 22 and others who accept liens on insurance claims as payment. According to McLaughlin, Allstate 23 filed this lawsuit and similar lawsuits around the country in an attempt to drive these providers 24 -2 1 out of business. He further alleges that Allstate’s allegedly fraudulent litigation violates the 2 Washington Consumer Protection Act. 3 Allstate moves to dismiss or strike the counter claims, arguing that they are asserted in 4 retaliation for its original complaint. Allstate first claims that the suit is a SLAPP suit and subject 5 to a motion to strike under the Washington Anti- SLAPP law. In the alternative, Allstate argues 6 dismissal is warranted under Rule 12b(6) for failure to state a claim. 7 III. Discussion 8 A. Washington Anti-SLAPP Law 9 Allstate claims that McLaughlin’s counterclaims are barred by Washington’s Anti-SLAPP 10 law. Specifically, Allstate claims that McLaughlin’s counterclaims are retaliatory and an attempt 11 to silence Allstate’s public participation. McLaughlin contends that the Anti-SLAPP law does 12 not apply because this is a private dispute, not an issue of public concern. 13 Strategic lawsuits against public participation (SLAPP suits) are suits filed in retaliation for 14 speaking out on an issue of public concern and are designed to silence the speaker. Aronson v. 15 Dog Eat Dog Films, Inc., 738 F.Supp.2d 1104, 1109 (2010). 16 17 [S]trategic lawsuits against public participation (or SLAPP suits) are “filed against individuals or organizations on a substantive issue of some public interest or social significance,” and “are designed to intimidate the exercise of First Amendment rights.” 18 Id. The party subject to the SLAPP suit can move to strike the SLAPP claim. R.C.W. 19 4.24.525(4). 20 (4)(a) A party may bring a special motion to strike any claim that is based on an action involving public participation and petition, as defined in subsection (2) of this section. 21 Id. Actions involving public participation are in furtherance of free speech and connected to an 22 issue of public concern. Id. at (2)(e). 23 24 -3 1 (2) This section applies to any claim, however characterized, that is based on an action involving public participation and petition. As used in this section, an “action involving public participation and petition” includes: (e) Any other lawful conduct in furtherance of the exercise of the constitutional right of free speech in connection with an issue of public concern, or in furtherance of the exercise of the constitutional right of petition. 2 3 4 Id. The key to protection under the Anti-SLAPP statute is a direct connection between the 5 actions of the party faced with a SLAPP suit and an issue of public concern; the balance of 6 power between the parties does not matter. Aronson, 738 F.Supp.2d at 1111. 7 That Defendant may be considered a powerful business entity as compared with the private party Plaintiff is of no import under the modern framework of the statute. Nor is it critical that Plaintiff is not a public figure… a private individual satisfies this requirement so long as there is a direct connection with the individual to a discussion of a topic of widespread public interest. 8 9 10 Id. The moving party has the initial burden of showing by a preponderance of the evidence that 11 the claim to be stricken is based on an action involving public participation and petition. Id., at 12 1009. The act is to be construed liberally to effectuate the general purpose of protecting 13 participants in public controversies from an abusive use of the courts. Id. at 1110. 14 In order to win on an anti-SLAPP motion, Allstate must establish that the SLAPP suit seeks 15 to chill its rights—that it was triggered by Allstate’s filing its lawsuit on an issue of public 16 concern. Allstate has not articulated any issue of public concern. Allstate’s claims arise from its 17 own overpayment on its insured’s claims, not from any larger issue of public concern. There is 18 no direct connection to an issue of public concern, Allstate is simply attempting to recover 19 money. There is also no first amendment issue in this case. Allstate’s motion to strike 20 McLaughlin’s counterclaims under the Washington Anti-SLAPP law is DENIED. 21 B. 12(b)(6) Standard 22 Dismissal under Rule 12(b)(6) may be based on either the lack of a cognizable legal 23 theory or the absence of sufficient facts alleged under a cognizable legal theory. Balistreri v. 24 -4 1 Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). A complaint must allege facts to state 2 a claim for relief that is plausible on its face. See Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 3 (2009). A claim has “facial plausibility” when the party seeking relief “pleads factual content 4 that allows the court to draw the reasonable inference that the defendant is liable for the 5 misconduct alleged.” Id. Although the Court must accept as true a complaint’s well-pled facts, 6 conclusory allegations of law and unwarranted inferences will not defeat an otherwise proper 7 Rule 12(b)(6) motion. Vasquez v. L.A. County, 487 F.3d 1246, 1249 (9th Cir. 2007); Sprewell v. 8 Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001). “[A] plaintiff’s obligation to provide 9 the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a 10 formulaic recitation of the elements of a cause of action will not do. Factual allegations must be 11 enough to raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 12 U.S. 544, 555 (2007) (citations and footnote omitted). This requires a plaintiff to plead “more 13 than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Iqbal, 129 S. Ct. at 1949 14 (citing Twombly). 15 1. Conspiracy to Defraud & Extort 16 McLaughlin alleges that Allstate (and the related Allstate entities) conspired to “defraud 17 and extort” service providers doing work in exchange for liens on future payments. McLaughlin 18 alleges that the goal of this alleged conspiracy was to drive such providers out of business. 19 McLaughlin claims that this lawsuit is the vehicle Allstate used in an effort to accomplish this 20 conspiracy. Allstate seeks dismissal of the conspiracy counterclaim, arguing that there is no 21 evidence of any actionable overt act. It argues that filing a lawsuit is not unlawful as a matter of 22 law, and that the identity(ies) of the co-conspirators is unclear. 23 24 -5 1 A conspiracy is a combination of two or more persons contriving to commit a criminal or 2 unlawful act, or to commit a lawful act for criminal or unlawful purposes. Adams v. King 3 County., 164 Wn.2d 640, 660, 192 P.3d 891 (2008). To establish a civil conspiracy, a plaintiff 4 must prove that: (1) two or more people combined to accomplish an unlawful purpose or 5 combined to accomplish a lawful purpose by unlawful means; and (2) the conspirators entered 6 into an agreement to accomplish the conspiracy. Newton Ins. Agency & Brokerage, Inc. v. 7 Caledonian Ins. Grp., Inc., 114 Wn.App. 151, 160, 52 P.3d 30 (2002). Civil conspiracy is not, by 8 itself, an actionable claim. W.G. Platts, Inc. v. Platts, 73 Wn.2d 434, 439, 438 P.2d 867 (1968). 9 The plaintiff must be able to show an underlying actionable claim which was actually 10 accomplished by the conspiracy for the civil claim of conspiracy to be valid. Id. at 439. An act 11 consistent with a lawful and honest undertaking cannot form the basis of a civil conspiracy. 12 Lewis Pac. Dairymen's Ass'n v. Turner, 50 Wn.2d 762, 772, 314 P.2d 625 (1957). 13 Here, the only basis for the conspiracy is Allstate’s filing this lawsuit. McLaughlin has 14 not cited any case (and the Court can find none) suggesting that filing a lawsuit can form the 15 “illegal act” element of a civil conspiracy claim. McLaughlin has not alleged (and apparently 16 cannot allege) a completed overt act. This claim is deficient as a matter of law. Allstate’s motion 17 to dismiss for failure to state a claim for conspiracy to defraud and extort is GRANTED, and 18 that claim is DISMISSED with prejudice. 19 2. Defamation 20 McLaughlin’s defamation counterclaim alleges that Allstate’s complaint falsely claims 21 that McLaughlin participated in a fraudulent scheme, and misrepresented information to Allstate. 22 Allstate argues that the allegedly defamatory statements were made in the course of this 23 litigation, and that they are privileged as a matter of law. 24 -6 1 A defamation plaintiff must prove four elements: (1) falsity, (2) an unprivileged 2 communication, (3) fault, and (4) damages. Paterson v. Little, Brown and Company, 502 F. 3 Supp. 2d 1124, 1132 (W.D. Wash 2007). Statements are privileged if they are made: (1) in good 4 faith; (2) if there is an interest to be upheld; (3) if the statement was limited in its scope to this 5 purpose; (4) if the statement was made at a proper occasion; and (5) if publication was made in a 6 proper manner to the appropriate parties only. See 50 Am. Jur. 2d Libel and Slander § 25. 7 Statements made during the course of and relevant to judicial proceeding are absolutely 8 privileged. Story v. Shelter Bay Co., 52 Wn.App. 334, 338, 760 P.2d 368 (1988). The judicial 9 proceeding privilege applies when authorities have the power to discipline with perjury sanctions 10 and strike impermissible statements from the record. Id. The privilege applies to in-court 11 statements and out-of-court statements that are pertinent or material to the redress or relief 12 sought. Demopolis v. Peoples Nat. Bank of Washington, 59 Wash. App. 105, 109, 796 P.2d 426, 13 429 (1990). The statements forming the basis for McLaughlin’s defamation claim originate in 14 15 Allstate’s complaint. This Court retains the power to impose sanctions for perjury or Rule 11 16 violations and can strike statements if necessary. The litigation privilege applies to these 17 statements and they cannot form the basis for a defamation claim as matter of law. Allstate’s 18 motion to dismiss the defamation counterclaim is GRANTED, and that claim is DISMISSED 19 with prejudice. 20 3. Violation of the Washington Consumer Protection Act 21 McLaughlin asserts that, by filing this lawsuit and others like it, Allstate is engaging in an 22 unfair method of competition. He claims that the lawsuits are an attempt to drive providers (like 23 him) who do work for Allstate’s insureds in exchange for liens on future recoveries, out of 24 -7 1 business. Allstate responds that filing cannot be an unfair method of competition because a 2 lawsuit is not a part of “in trade or commerce.” 3 To prevail in a private CPA action, a plaintiff must establish five elements: (1) an unfair 4 or deceptive act or practice, (2) that occurs in trade or commerce, (3) a public interest, (4) injury 5 to the plaintiff in his or her business or property, and (5) a causal link between the unfair or 6 deceptive act and the injury suffered. Indoor Billboard/Washington, Inc. v. Integra Telecom of 7 Washington, Inc., 162 Wash. 2d 59, 73, 170 P.3d 10 (2007). If plaintiff cannot establish all five 8 elements, his CPA claim must be dismissed. Id. 9 The terms “trade” and “commerce” include the sale of assets or services, and any 10 commerce directly or indirectly affecting Washington citizens. Hangman Ridge Training Stables, 11 Inc. v. Safeco Title Ins. Co. 105 Wn.2d 778, 785, 719 P.2d 531 (1986), citing RCW 19.86.010(2). 12 Generally, once a lawsuit is filed, the matter is under the control of the court, and as such is a 13 private dispute not occurring in trade or commerce. Blake v. Fed. Way. Cycle Ctr., 40 Wash.App. 14 302, 312, 698 P.2d 578, 584. However, if a party routinely files lawsuits as part of its business, 15 its conduct, pleadings, affidavits and testimony within those lawsuits are within the sphere of 16 trade or commerce. Cruson v. A.A.A.A., Inc., 140 Wash. App. 1012 (2007). 17 McLaughlin’s CPA counterclaim is sufficiently plausible to survive a motion to dismiss. 18 Insurance companies are frequently engaged in litigation as part of their business and therefore 19 such litigation is within the sphere of trade or commerce. McLaughlin has adequately pled his 20 CPA claim. The sufficiency of McLaughlin’s evidence may be tested in a Motion for summary 21 judgment, or at trial. Allstate’s motion to dismiss the CPA counterclaim is DENIED. 22 23 24 -8 1 4. Tortious Interference 2 McLaughlin’s tortuous interference counterclaim alleges Allstate’s lawsuit intentionally 3 caused the termination of his business expectancy (presumably by driving away clients or 4 hindering referrals). He claims Allstate’s ultimate object is to destroy the business of medical 5 and legal service providers, including McLaughlin. Allstate seeks dismissal of this claim, 6 arguing that any interference was privileged as a matter of law. 7 Under Washington law, a claim for tortious interference with a contractual relationship or 8 business expectancy requires plaintiff prove five elements: (1) the existence of a valid 9 contractual relationship or business expectancy; (2) that defendants had knowledge of that 10 relationship; (3) an intentional interference inducing or causing a breach or termination of the 11 relationship or expectancy; (4) that defendants interfered for an improper purpose or used 12 improper means; and (5) damage. Topline Equipment, Inc. v. Stan Witty Land, Inc., 31 Wn.App. 13 86, 92, 639 P.2d 825 (1982). A person is not liable for interference with prospective economic advantage if the 14 15 interference is privileged. Cherberg v. Peoples Nat'l Bank, 88 Wash.2d 595, 604-05, 564 P.2d 16 1137 (1977). Statements privileged from defamation are also privileged under the law of 17 interference with prospective economic advantage. Stidham v. Department of Licensing, 30 18 Wash.App. 611, 615- 16, 637 P.2d 970 (1981). Exercising one’s legal interest in good faith is not 19 improper interference. Tacoma Auto Mall, Inc. v. Nissan N. Am., Inc., 169 Wn.App. 111, 132-33, 20 279 P.3d 487 (2012). A party is not guilty of tortious interference when (1) he has a legally 21 protected interest, (2) which he in good faith asserts or threatens to protect, and (3) the threat is 22 to protect the interest by appropriate means. Quadra Enterprises, Inc. v. R.A. Hanson Co., Inc., 23 35 Wash. App. 523, 527, 667 P.2d 1120, 1122 (1983). 24 -9 1 McLaughlin’s tortious interference claim is based solely on Allstate’s lawsuit against him. 2 Allstate’s allegations are privileged in the defamation context, and they are privileged in the 3 tortious interference context. 4 McLaughlin’s claim for tortious interference fails as a matter of law. Allstate’s motion to 5 dismiss the tortious interference counterclaim is GRANTED, and that claim is DISMISSED 6 with prejudice. 7 8 9 10 11 12 13 IV. Conclusion Allstate’s anti-SLAPP motion to strike is DENIED. Allstate’s Motion to Dismiss McLaughlin’s conspiracy to defraud and extort counterclaim is GRANTED and that claim is DISMISSED with prejudice. Allstate’s Motion to Dismiss McLaughlin’s defamation counterclaim is GRANTED and that claim is DISMISSED with prejudice. Allstate’s Motion to Dismiss McLaughlin’s Consumer Protection Act counterclaim is DENIED. Allstate’s Motion to Dismiss McLaughlin’s tortious interference counterclaim is GRANTED and that claim is DISMISSED with prejudice. IT IS SO ORDERED. 14 Dated this 16th day of April, 2014. 15 16 A 17 RONALD B. LEIGHTON UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 - 10
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