Allen v. Sherman Operating Co.

520 F.Supp.3d 854

Carolyn Sue ALLEN, Plaintiff,

v.SHERMAN OPERATING COMPANY, LLC d/b/a Texoma Healthcare, Defendant.

Civil No. 4:20-cv-290-SDJ-KPJ

United States District Court, E.D. Texas, Sherman Division.

Signed February 18, 2021

Jonathan Whitlock Wharton, The Law Office of Jonathan Wharton - Longview, Longview, TX, for Plaintiff.

David Michael Hymer, Hermes Sargent Bates LLP, Jack Lawrence Oliver, III, Quintairos Prieto Wood & Boyer, PA - Dallas, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

KIMBERLY C. PRIEST JOHNSON, UNITED STATES MAGISTRATE JUDGE

Pending before the Court is Plaintiff Carolyn Sue Allen's ("Mrs. Allen") Motion for Leave (the "Motion") (Dkt. 16). In the Motion, Mrs. Allen requests leave to file a First Amended Complaint, which would add her husband, Christopher James Allen ("Mr. Allen"), as a co-Plaintiff and assert an additional cause of action. See id. Defendant Sherman Operating Company, LLC d/b/a Texoma Healthcare ("Sherman Operating") filed a response (Dkt. 18), to which Mr. and Mrs. Allen (collectively, "the Allens") filed a reply (Dkt. 21).

The Court held a hearing (the "Hearing"), heard oral argument, and ordered additional briefing. See Dkts. 24, 32. Both parties timely filed supplemental briefs. See Dkts. 33, 34.

Having considered the applicable authorities, pleadings, and oral arguments, the Court finds the Motion (Dkt. 16) is hereby GRANTED .

IT IS FURTHER ORDERED that Defendant's Motion for Summary Judgment (Dkt. 23) is DENIED AS MOOT .

I. BACKGROUND

In 2018, Mrs. Allen was an employee of Sherman Operating, a Texas limited liability company. See Dkt. 1 at 2; Dkt. 3 at 1. Sherman Operating maintained a telephone at its business location in Sherman, Texas, which Mrs. Allen alleges had a "long, straight" wire that "would frequently end up in the path of employees as they walked." Dkt. 1 at 2; Dkt. 3 at 2.

Mrs. Allen alleges that, on July 13, 2018, while she was walking through the office, the telephone cord caught and wrapped around her ankle, causing her to trip and fall. See Dkt. 1 at 2. Mrs. Allen alleges she hit her head against a wall, fell on her stomach, broke her teeth, and suffered a catastrophic brain injury. Id. Mrs. Allen contends she can never work again. Id.

Sherman Operating is a worker's compensation non-subscriber. Dkt. 1 at 2; Dkt. 3 at 2. Instead of offering worker's compensation, the company offers its employees a defined injury benefit plan under the Employee Retirement Income Security Act ("ERISA"). Id. Mrs. Allen alleges Sherman Operating refused to provide her full benefits under the ERISA plan, which, according to Mrs. Allen, includes paying medical and disability benefits. See Dkt. 1 at 2.

On April 8, 2020, Mrs. Allen filed an Original Complaint (Dkt. 1) against Sherman Operating, alleging premises liability under Texas law and a violation of ERISA. Id. at 3. Sherman Operating filed an Original Answer (Dkt. 3), and the Court entered an Order Governing Proceedings (Dkt. 4) and Scheduling Order (Dkt. 10).

On August 27, 2020, Mrs. Allen filed the present Motion (Dkt. 16), wherein she seeks leave to file a First Amended Complaint. The First Amended Complaint seeks to add her husband, Mr. Allen, as a co-Plaintiff, who would assert a cause of action for "loss of household services," a claim arising under Texas law. See Dkt. 16; Dkt. 17 at 4.

On September 10, 2020, Sherman Operating filed its response, wherein it advances three arguments for denial of the Motion: (1) Mr. Allen's loss of household services claim is barred by a two-year statute of limitations; (2) the Texas Supreme Court's Emergency Orders Regarding the COVID-19 State of Disaster ("Emergency Orders"), which affect certain deadlines, do not apply in federal courts; and (3) under Federal Rule of Civil Procedure 15(a), the Allens exhibited undue delay in filing the present Motion for leave. See Dkt. 18 at 3, 5, 7.

The Allens filed a reply, arguing the following: (1) the Emergency Orders apply in federal court; (2) Rule 15(a) weighs in favor of granting leave to amend the Original Complaint; and (3) Rule 15(c)'s "relating back" doctrine should apply to Mr. Allen's loss of household services claim. See id. at 1, 3. The Allens do not dispute that loss of household services carries a two-year statute of limitations.

The Court heard oral argument during the Hearing. See Dkt. 24. At the Hearing, the Court noted the question presented—whether, under Erie R.R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), and its progeny, the Texas Supreme Court's Emergency Orders Regarding the COVID-19 State of Disaster are substantive or procedural—may be one of first impression. See Dkt. 24. The Court then ordered the parties to file supplemental briefing, which both parties timely filed. See Dkts. 32, 33, 34.

II. LEGAL STANDARD

A. THE ERIE DOCTRINE

Under the Erie doctrine, "federal courts apply substantive state law when adjudicating diversity-jurisdiction claims, but in doing so apply federal procedural law to the proceedings." Cates v. Sears, Roebuck & Co. , 928 F.2d 679, 687 (5th Cir. 1991) (describing the holding in Erie ). Before deciding a law is procedural or substantive, a federal court sitting in diversity should not apply a state law if a Federal Rule is in direct conflict with the state law and the Federal Rule does not violate the Rules Enabling Act. See Klocke v. Watson , 936 F.3d 240, 244 (5th Cir. 2019). If the court does not find a direct conflict, it must "wade into the ‘murky’ waters of Erie itself." All Plaintiffs v. All Defendants , 645 F.3d 329, 333 (5th Cir. 2011).

To determine whether the state law reflects a substantive state policy, federal courts look to the final decisions of the state's highest court. See Shanks v. AlliedSignal, Inc. , 169 F.3d 988, 993 (5th Cir. 1999). If there is no ruling from a final decision of the state's highest court, "it is the duty of the federal court to determine as best it can, what the highest court of the state would decide." Lampton v. Diaz , 661 F.3d 897, 899 (5th Cir. 2011).

Federal courts also evaluate the state law under the United States Supreme Court's Erie "touchstones":

• whether the state law is outcome determinative;

• whether the state law is "bound up" with the state's substantive rights and obligations;

• whether the state law affects forum shopping behavior; and

• whether applying state law will avoid inequitable administration of the laws.

All Plaintiffs , 645 F.3d at 335–36 ; see Hanna v. Plumer , 380 U.S. 460, 468, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965) (forum shopping and inequitable administration); Byrd v. Blue Ridge Rural Elec. Coop., Inc. , 356 U.S. 525, 538–39, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958) (bound up); Guaranty Tr. of N.Y. v. York , 326 U.S. 99, 109, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945) (outcome determinative).

In Gasperini v. Center for Humanities, Inc. , 518 U.S. 415, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996), the Supreme Court clarified that discouraging forum shopping and avoiding inequitable administration of the laws guides the application of the outcome-determinative test. See id. at 428, 116 S.Ct. 2211 ; see also All Plaintiffs , 645 F.3d at 336.

Further, because a statute of limitations is substantive under Erie , federal courts apply state statutes of limitations and related state law governing tolling of the limitation period. See Guaranty Trust , 326 U.S. at 110, 65 S.Ct. 1464 ; Hensgens v. Deere & Co. , 869 F.2d 879, 880 & n.3 (5th Cir. 1989) (citing West v. Conrail , 481 U.S. 35, 39 & n.4, 107 S.Ct. 1538, 95 L.Ed.2d 32 (1987) ; Walker v. Armco Steel Corp. , 446 U.S. 740, 752–53, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980) ).

B. RULE 15(a)

Rule 15(a) provides that, at any time before a responsive pleading is served, a party may amend its pleading once without seeking leave of court or the consent of the adverse party. FED. R. CIV. P. 15(a). However, after a responsive pleading is served, "a party may amend only with the opposing party's written consent or the court's leave." Id. Rule 15(a) instructs the court to "freely give leave when justice so requires," "evinc[ing] a bias in favor of granting leave to amend." Id. ; Jones v. Robinson Prop. Grp., L.P. , 427 F.3d 987, 994 (5th Cir. 2005) (quoting Lyn-Lea Travel Corp. v. American Airlines, Inc. , 283 F.3d 282, 286 (5th Cir. 2002) ). "The policy of the federal rules is to permit liberal amendment to facilitate determination of claims on the merits and to prevent litigation from becoming a technical exercise in the fine points of pleading. Thus, unless there is a substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial." Dussouy v. Gulf Coast Inv. Corp. , 660 F.2d 594, 598 (5th Cir. 1981) ) (internal citations omitted).

C. RULE 15(c)

" Rule 15(c) is based on the notion that once litigation involving particular conduct or a given transaction or occurrence has been instituted, the parties are not entitled to the protection of the statute of limitations against the later assertion by amendment of defenses or claims...." 6A ARTHUR R. MILLER , MARY KAY KANE & A. BENJAMIN SPENCER , FEDERAL PRACTICE & PROCEDURE § 1496 (3d ed.) (October 2020 update). Under Rule 15(c)(1)(B), an amended complaint may "relate back" to the date of the original complaint when "the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading." FED. R. CIV. P. 15(c). However, as many courts have noted, Rule 15(c) "does not specifically address relation back of amendments that propose to add or substitute plaintiffs." Efthemes v. Amguard Ins. Co. , No. 2:19-cv-01409, 2020 WL 4043227, at *2 (W.D. La. July 17, 2020).

III. ANALYSIS

Overall, the Court makes the following findings: Under Texas law, the statute of limitations for loss of household services is two years. In normal circumstances, Mr. Allen's claim would be time-barred. However, pursuant to the...