C.J. v. Truman Med. Ctr.

C.J., a minor by and through his next friend JANICE BRADY,and on behalf of all others similarly situated, Plaintiff, v. TRUMAN MEDICAL CENTER, INC., Defendant.

No. 4:20-CV-00261-DGK

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI WESTERN DIVISION

June 25, 2020

ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION

This putative class-action lawsuit arises out of the theft of laptop from Defendant Truman Medical Center, Inc.'s ("TMC") employee, which purportedly contained Plaintiff C.J.'s and other class members' personal information. Plaintiff asserts that because of the theft, TMC is liable for damages under seven state-law tort and contract theories.

Now before the Court is TMC's Motion to Dismiss (Doc. 6). Because this Court does not have subject-matter jurisdiction over this action, the motion is GRANTED.

Background

TMC is a healthcare system in the Kansas City, Missouri, area. Although not explicitly alleged in the Complaint, Plaintiff presumably was a patient at TMC and gave TMC his personal information, which it stored on its internal database. In July 2019, health system officials learned that a TMC-owned laptop, which contained the private information of more than 114,000 patients, including Plaintiff's,¹ had been stolen.

On April 2, 2020, Plaintiff brought this lawsuit on his own behalf and on behalf of all others similarly situated, alleging negligence (Count I), invasion of privacy (Count II), breach of express and implied contract (Counts III and IV), negligence per se (Count V), breach of fiduciary duty (Count VI), and violation of the Missouri Merchandising Practices Act ("MMPA") (Count VII) arising from the theft of TMC's laptop and the potential disclosure of his personal, private information. Plaintiff alleges TMC inadequately safeguarded his information, leaving him at risk of its improper disclosure and vulnerable to a stolen identity. He claims he must now closely monitor his financial accounts and "may" incur out of pocket costs to ensure his information is not compromised. Compl. at ¶ 10. Plaintiff seeks damages for these expenses, as well as equitable relief compelling TMC to utilize proper methods and policies to safeguard private information and to disclose with specificity the type of private information compromised in the breach. Id. at 38-39.

In lieu of an answer, TMC filed the instant motion to dismiss, claiming this Court lacks subject-matter jurisdiction to hear this case.

Discussion

"Federal courts are courts of limited jurisdiction," possessing "only that power authorized by Constitution and statute." Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). Here, Plaintiff alleges this Court possesses federal-question jurisdiction under 28 U.S.C. § 1331, which authorizes federal district courts to exercise original jurisdiction in "all civil actions arising under the Constitution, laws, or treaties of the United States."

"For statutory purposes, a case can 'aris[e] under' federal law in two ways." Gunn v. Minton, 568 U.S. 251, 257 (2013). First, and "[m]ost directly, a case arises under federal law whenfederal law creates the cause of action asserted." Id. A case may also arise under federal law where "a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Id. at 258 (summarizing the standard previously outlined by the Supreme Court in Grable & Sons Metal Prods. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005)) (hereinafter referred to as "the Grable/Gunn standard"). Only a "special and small category" of cases will meet the Grable/Gunn standard. Id. (citation omitted). To determine whether a case "arises under" federal law in either of these two ways, the Court looks to the facts of the plaintiff's properly pleaded complaint. Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citations omitted).

It is clear from Plaintiff's complaint that this case does not fall within the first category because Plaintiff has pled no federal causes of action. Thus, this Court has federal-question jurisdiction over this case only if it is one of the "special and small category" of cases that meet the Grable/Gunn standard.

Plaintiff contends it does because the Health Insurance Portability and Accountability Act of 1996, 42 U.S.C. § 1320d et seq., ("HIPAA"), the Federal Trade Commission Act, 15 U.S.C. § 45, ("FTC Act"), and the Gramm-Leach-Bliley Act, 15 U.S.C. § 6801, ("GLBA")² set the standard of care in his negligence, negligence per se, and breach of fiduciary duty claims. Compl. at ¶ 1, 37, 83-85 (negligence), 131-35 (negligence per se), 146-55 (breach of fiduciary duty). His complaint also contains allegations that TMC violated the MMPA by failing to, among other things, comply with these statutes. Id. at ¶ 163. He argues the Eighth Circuit's recent decision in Wullschleger v. Royal Canin U.S.A., Inc., 953 F.3d 519 (8th Cir. 2020), is "nearly identical" to this case and, therefore, requires this Court to find that the exercise of jurisdiction is proper.

In Wullschleger, the plaintiffs alleged in their complaint that the defendants—prescription pet food manufacturers—violated Missouri's MMPA, antitrust laws, and unjust enrichment laws. Id. at 520. The alleged basis for these claims was that the defendants' "conduct amounted to a joint and coordinated violation of the Food, Drug and Cosmetic Act (FDCA) and the [United States Food and Drug Administration's ("FDA")] regulatory guidance." Id. The plaintiffs' prayer for relief included money damages, as well as declaratory and injunctive relief finding that the defendants violated federal law, and requiring they comply with federal laws in the future. Id.

The Eighth Circuit held the federal court had jurisdiction because federal law "permeate[d] the allegations such that the antitrust and unjust enrichment claims cannot be adjudicated without reliance on and explication of federal law." Id. at 522. Specifically, "[a]s evidence of coordination and conspiracy, plaintiffs explicitly claim that defendants violated the FDCA, were non-compliant with FDA guidance, and that their refusal to submit the prescription pet food to FDA review was improper." Id. The Court also noted that "plaintiffs' prayer for relief [also] invokes federal jurisdiction because it seeks injunctive and declaratory relief that necessarily requires the interpretation and application of federal law." Id. Thus, the federal court could properly maintain jurisdiction. Id.

Plaintiff's reliance on Wullschelger is misplaced. Wullschleger has nothing to do with HIPPA, the FTC Act, the GLBA, or the circumstances presented here. Unlike in Wullschleger, Plaintiff's complaint does not request any declaratory or injunctive relief requiring application of federal law. Nor does it contain claims which cannot be adjudicated without reliance on and explication of federal law.

In fact, courts analyzing this issue have consistently held that HIPPA, the FTC Act, and the GLBA do not provide a basis for federal question jurisdiction under the Grable/Gunn standard. See, e.g., I.S. v. Washington Univ., No. 4:11-CV-235-SNLJ, 2011 WL 2433585, at *5 (E.D. Mo.June 14, 2011) ("Although HIPAA is clearly implicated in the claim for negligence per se, said claim 'fall[s] within that broad class of state law claims based on federal regulations in the state court, as described in Grable.'") (citation omitted); Inst. For Truth in Mktg. v. Total Health Network Corp., 321 F. Supp. 3d 76, 84-88 (D.D.C. Aug. 13, 2018) (finding that federal jurisdiction did not exist under the Grable/Gunn standard for a District of Columbia Consumer Protection Procedures Act claim based on the FTC Act). This Court agrees that standard is not met here.

To be sure, Plaintiff's negligence, breach of fiduciary duty, and MMPA claims fail on the first element because they do not necessarily raise a federal issue. Plaintiff has alleged alternative bases for those claims that are not reliant on any issue of federal law. Thus, their adjudication will not necessarily require the application of federal law to the facts of this case. See Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 810 (1988) (holding it is well established that "a claim supported by alternative theories in the complaint may not form the basis for [federal] jurisdiction unless [federal] law is essential to each of those theories.").

And even though the negligence per se claim relies exclusively on a standard of care derived from HIPPA, the FTC Act, and the GLBA, none of Plaintiff's claims satisfy the third and fourth elements of the Grable/Gunn standard. First, the federal issues purportedly giving rise to federal jurisdiction—whether TMC violated HIPPA, the FTC Act, and the GLBA—are not substantial. Although the information that is the subject of this litigation is protected by HIPPA, and although the disclosure of such information is arguably governed by the FTC Act, any reference to these statutes is simply a standard upon which to measure TMC's negligence, not necessarily an assertion that TMC violated them and should be held liable. Indeed, only the administrative agencies overseeing these statutes are vested with the authority to determine and adjudicate violations. Thus, Plaintiff's complaint simply uses federal law to establish one element of a state-law claim, which does not create a substantial issue of federal law. See Merrell Dow Pharm. Inc. v. Thompson, 478U.S. 804, 814 (1986) (holding "the presence of a claimed violation of [federal law] as an element of a state cause of action" is insufficient on its own to confer federal jurisdiction).

That these claims are not substantial is further supported by the fact that neither HIPPA, the FTC Act, nor the GLBA give rise to a private cause of action. See Adams v. Eureka Fire Prot. Dist., 352 F. App'x 137, 139 (8th Cir. 2009) (...