Lundstrom v. Young

419 F.Supp.3d 1241

Brian LUNDSTROM, Plaintiff,

v.Carla YOUNG, an individual; Ligand Pharmaceuticals Incorporated, Ligand Pharmaceuticals Incorporated 401(k) Plan; and Does 1 through 20, Defendants.

Case No. 3:18-CV-2856-GPC-MSB

United States District Court, S.D. California.

Signed December 5, 2019

Marc S. Schechter, Paul Douglas Woodard, Jr., Butterfield Schechter LLP, San Diego, CA, for Plaintiff.

Brook T Barnes, Procopio Cory Hargreaves & Savitch, David F. Kowalski, John Thomas Ryan, Nicole C. Valco, Latham and Watkins, San Diego, CA, for Defendants.

ORDER GRANTING DEFENDANTS' MOTION TO DISMISS; GRANTING DEFENDANTS' MOTIONS TO SEAL; DENYING DEFENDANT YOUNG'S MOTION FOR SANCTIONS

[ECF Nos.: 46, 47, 48, 50, 56, 58]

Hon. Gonzalo P. Curiel, United States District Judge

Before the Court are Defendant Carla Young's ("Young") motion to dismiss the first amended complaint ("FAC"), ECF No. 46, and Defendant Ligand Pharmaceuticals Incorporated's ("Ligand") motion to dismiss the FAC. ECF No. 50. Oppositions were filed on July 22, 2019. ECF Nos. 52, 53. Replies were filed on July 29, 2019. ECF Nos. 54, 55.

On September 19, 2019, Young also filed a motion for sanctions. ECF No. 58. An opposition was filed on October 4, 2019. ECF No. 60. A reply was filed on October 11, 2019. ECF No. 61.

The Court held a hearing on October 25, 2019. Based on the reasoning below, the Court GRANTS Defendants' motions to dismiss and DENIES Young's motion for sanctions.

I. Background

Plaintiff and Defendant Young married on or around August 21, 1998 in Seattle, Washington, and divorced on July 30, 2014 in Texas. ECF No. 45 ("FAC") ¶¶ 13, 15. The FAC alleges that Lundstrom became employed by Defendant Ligand on or about January 8, 2016 and began participating in the Ligand 401(k) Plan on or about April 1, 2016. Id. ¶¶ 16, 18. As part of Plaintiff's employment compensation package, Ligand granted Plaintiff 18,010 company stock options in two lots ("Incentive Stock Options"). Id. ¶¶ 20, 21.

On September 13, 2017, the District Court 231st Judicial District of Tarrant County issued an order requiring Plaintiff to pay $55,533.03 in child support arrearages to Young. Id. ¶ 22. According to the FAC, Young subsequently submitted a 401(k) Qualified Domestic Relations Order ("401(k) QDRO") and Stock Domestic Relations Order ("Stock DRO") to the District Court 231st Judicial District of Tarrant County for the court's signature. Id. ¶¶ 24, 32. Plaintiff alleges that the 401(k) QDRO submitted sought to transfer to Young 100 percent of the benefits held in Plaintiff's account in the 401(k) Plan, and the Stock DRO sought the transfer of 18,010 Incentive Stock Options to Young. Id. ¶¶ 23, 31. Plaintiff also alleges that he was not given an opportunity to review, approve, or contest the validity of the 401(k) QDRO or the Stock DRO prior to Young's submission of both documents to the District Court 231st Judicial District of Tarrant County. Id. ¶¶ 26, 27, 34, 35. The Texas court signed the 401(k) QDRO on or about November 21, 2017, and signed the Stock DRO on or about January 22, 2018. Id. ¶¶ 28, 36.

According to the FAC, Young sent Ligand copies of the 401(k) QDRO and the Stock DRO in late 2017 and early February 2018, respectively. Id. ¶¶ 39, 48. On January 4, 2018, Ligand forwarded a copy of the 401(k) QDRO to Plaintiff. Id. ¶ 41. Plaintiff subsequently raised a number of issues concerning the validity of the 401(k) QDRO with Ligand. Id. ¶ 42. On January 27, 2018, Plaintiff notified Ligand that he was appealing the 401(k) QDRO with the 2nd Court of Appeals in Fort Worth, Texas. Id. ¶¶ 44. On February 1, 2018, the 2nd Court of Appeals in Fort Worth, Texas denied Plaintiff's appeal of the 401(k) and on February 9, 2018, Ligand transferred $62,063.47 from Plaintiff's 401(k) account to Young. Id. ¶¶ 45, 46.

On February 7, 2018, a Ligand employee notified Plaintiff that Ligand had received the Stock DRO which dictated the transfer all of Plaintiff's Incentive Stock Options to Young. Id. ¶ 49. Plaintiff subsequently raised a number of issues concerning the validity of the Stock DRO with Ligand. Id. ¶ 50. Plaintiff also notified Ligand that he was appealing the Stock DRO with the 2nd Court of Appeals in Fort Worth, Texas. Id. ¶¶ 44, 51. Plaintiff subsequently filed appeals with the Texas Supreme Court seeking to invalidate the 401(k) QDRO and Stock DRO. Id. ¶ 53. The FAC does not indicate the dates when these appeals were filed or the outcomes of the appeals.

On March 14, 2018, Ligand informed Plaintiff that if Ligand did not receive a hold or other standing order issued by a presiding judge before March 23, 2018, the company would proceed with distributing the Incentive Stock Options to Young on March 28, 2018. Id. ¶ 52. On March 14, 2018, Plaintiff informed Ligand that his appeals of the 401(k) QDRO and Stock DRO were pending in the Texas Supreme Court. Id. ¶ 53. On May 8, 2018, Ligand informed Plaintiff that the Incentive Stock Option transfer to Young would be processed on that day. Id. ¶ 55. Plaintiff alleges that 18,010 Incentive Stock Options were transferred to Young pursuant to the Stock DRO. Id. ¶ 57.

The FAC was filed on June 19, 2019. ECF No. 45. The FAC alleges the following causes of action:

First Cause of Action: Breach of fiduciary duty under ERISA as to Defendants Ligand and Does 1-20 for improperly approving the 401(k) QDRO

Second Cause of Action: Breach of fiduciary duty as to Defendant Ligand for ignoring information that called into question the validity of the 401(k) QDRO

Third Cause of Action: Breach of fiduciary duty as to Defendant Ligand for failure to follow ERISA procedures

Fourth Cause of Action: Declaratory relief as to all Defendants to establish that the 401(k) QDRO is not a QDRO as defined by ERISA and the Internal Revenue Code and attorneys' fees

Fifth Cause of Action: Supplemental state claim seeking declaratory relief as to all Defendants

Sixth Cause of Action: Equitable and injunctive relief as to Ligand and Young

Seventh Cause of Action: Equitable and injunctive relief as to Young

Eighth Cause of Action: Unjust enrichment supplemental state claim as to Young

Ninth Cause of Action: Breach of common law fiduciary duty supplemental state claim against Defendants Ligand and Does 1-20

II. Requests for Judicial Notice

Defendants filed requests for judicial notice accompanying their motions to dismiss. ECF No. 46-3 ("Young RJN"); ECF No. 50-19 (Ligand RJN). Plaintiff opposes. ECF No. 52 at 21-22.

As a general rule, "a district court may not consider any material beyond the pleadings in ruling on a Rule 12(b)(6) motion." Lee v. City of Los Angeles , 250 F.3d 668, 688 (9th Cir. 2001). However, two exceptions to this rule exist.

First, a district court may consider "material which is properly submitted as part of the complaint." Id. If the documents are not attached to the complaint, an exception exists if the documents' "authenticity ... is not contested" and "the plaintiff's complaint necessarily relies" on them. Id. (citations omitted). Second, a court may take judicial notice of "matters of public record" under Federal Rule of Evidence ("Rule") 201. Id. at 688-89. However, under Rule 201, a court may not take judicial notice of a fact that is "subject to reasonable dispute." Fed. R. Evid. 201(b). If the contents of a matter of public record are in dispute, the court may take notice of the fact of the document at issue but not of the disputed information contained within. See id. at 689-90.

Young requests that the Court take judicial notice of the following twenty documents, comprised of filings and orders in Tarrant County District Court in Texas or San Diego Superior Court:

1. A true and correct copy of Tarrant County's 231st Judicial District's Court Order on September 13, 2017 which enters judgment for child support.

2. A true and correct copy of Tarrant County's 233rd Judicial District's Court Order on April 27, 2017 Regarding Capias Order.

3. A true and correct copy of Tarrant County's 233rd Judicial District's Court Order April 27, 2017 Regarding Commitment Order.

4. A true and correct copy of Tarrant County's 231st Judicial District's Court Order on April 5, 2017 Regarding Relief to Collect Outstanding Judgments.

5. A true and correct copy of Tarrant County's 233rd Judicial District's Court Order on March 4, 2015 Regarding Contempt Order.

6. A true and correct copy of Tarrant County's 231st Judicial District's Court Order on November 21, 2017 Regarding Qualified Domestic Relations Order.

7. A true and correct copy of Tarrant County's 231st Judicial District's Court Order on January 22, 2018 Regarding Domestic Relations Order.

8. A true and correct copy of February 1, 2018 Second District Court of Appeal Opinion.

9. A true and correct copy of February 26, 2018 Second District Court of Appeal Opinion.

10. A true and correct copy of June 8, 2018 Supreme Court of Texas Order.

11. A true and correct copy November 16, 2018 Supreme Court of Texas Order.

12. A true and correct copy of Plaintiff's August 8, 2018 Notice of Registration filed in San Diego Superior Court, Case No. 18FL009397C.

13. A true and correct copy of Ms. Young's declaration in support of opposition to Plaintiff's Ex Parte Application to Stay Earnings Withholdings Order, Case No. 18FL009397C, wherein Ms. Young objects to jurisdiction of California

14. A true and correct copy of San Diego Superior Court's January 8, 2019 Order denying Plaintiff's Ex Parte Application.

15. A true and correct copy Tarrant County's 231st Judicial District's Court Order on March 22, 2017 to Seal Court Records.

16. A true and correct copy Tarrant County's 233rd Judicial District's Court Order on December 3, 2013 Regarding Enforcement by Contempt.

17. A true and correct copy Tarrant County's 233rd Judicial District's Court Order on February 13, 2015 Revoking Suspension.

18. A true and correct copy Tarrant County's 233rd Judicial District's Court Order on February 17, 2016 Regarding Order for Capias.

19. A true and correct copy

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