Catherine C. Blake, United States District Judge.
Plaintiffs CareFirst, Inc. ("CareFirst"), CareFirst of Maryland, Inc. ("CareFirst
GHMSI is a congressionally chartered corporation that operates as a non-profit health services plan in Maryland, Northern Virginia, and the District of Columbia.
Congress chartered GHMSI in 1939. Pub. L. 76-395, 53 Stat. 1412, 1412 (1939). The charter provided that "[t]he corporation is ... authorized and empowered to take over, carry out, and assume all contracts, obligations, assets, and liabilities of a corporation ... organized and now doing business in the District of Columbia under the name of Group Hospitalization, Inc." Pub. L. 76-395 § 9, 53 Stat. 1414. In 1993, Congress amended the charter to provide that "the District of Columbia shall be the legal domicile of the corporation" and that "[t]he corporation shall be licensed and regulated by the District of Columbia in accordance with the laws and regulations of the District of Columbia." Pub. L. 103-127 § 138, 107 Stat. 1336, 1349 (1993). In 1997, Congress again amended the charter, authorizing GHMSI to have a non-profit corporate member. Pub. L. 105-149, 111 Stat. 2684 (1997).
In order to fulfill its obligations to policyholders, subscribers, and members, GHMSI maintains an accumulated surplus. (Mot. Summary Judgment, Burrell
In December 2014, the Commissioner's predecessor issued an order concluding that GHMSI's surplus was excessive and that 21% of the calculated excess (approximately $56 million) was attributable to the District of Columbia. (Id., Ex. B at 56, 64-65, ECF No. 2-5.) In February 2015, the Maryland Commissioner entered an order providing that "GHMSI is prohibited from reducing or distributing its surplus as a result of the [Department of Insurance, Securities and Banking ("DISB")] order and is prohibited from submitting a plan to the D.C. Commissioner for dedication of its excess of 2011 surplus attributable to D.C. until submitted, reviewed and approved by the [Maryland Insurance Administration]." (Id., Ex. F at 3, ECF No. 2-9.) The Virginia Chair issued an order providing:
(Id., Ex. I at 3-4, ECF No. 2-12.) GHMSI submitted a plan in response to the order of the Commissioner's predecessor in March 2015. (Id., Ex. J, ECF No. 2-13.) The plan asserted, in part, that GHMSI "remains under directly conflicting orders from Maryland and the District [of Columbia]" and urged that "the three jurisdictions... consult, cooperate and coordinate on the matter of the Company's surplus in a consistent way." (Id. at 7.)
In December 2015, Congress amended GHMSI's charter as follows:
Pub. L. 114-113 § 747, 129 Stat. 2242, 2486 (2015).
In June 2016, Commissioner Taylor issued a decision and order rejecting GHMSI's plan and reaffirming the planned dedication of surplus. (Mot. Summary Judgment, Gunderson Aff. ¶ 4, Ex. C at 18-20, ECF No. 2-6.) The decision established a procedure for public comment. (Id., Ex. C at 19-20, ECF No. 2-6.) In July 2016, the Maryland Commissioner submitted a statement noting that "the proposed distribution ... will cause a direct conflict with the [Maryland] Consent Order" and that, "to date, no coordination has taken place between the District and the other jurisdictions." (Id., Ex. K at 3, ECF No. 2-14.) Plaintiffs filed suit in this court on July 22, 2016. (See Compl., ECF No. 1.)
The Commissioner issued his final order regarding GHMSI's proposed distribution on August 30, 2016. (Opp. to Mot. Summary Judgment, Ex. A, ECF No. 47-2.) On September 22, 2016, GHMSI filed a petition for reconsideration and motion to stay further proceedings in the administrative action. (Id., Ex. D., ECF No. 47-5.) Separately, both GHMSI and the D.C. Appleseed Center for Law and Justice, Inc. filed petitions for review with the District of Columbia Court of Appeals, naming DISB (but not its Maryland or Virginia counterpart) as defendant. (Id., Exs. C and E, ECF Nos. 47-4 and 47-6.) On December 8, 2016, the Commissioner issued a stay of "GHMSI's obligation to pay rebates to Eligible Subscribers" until February 27, 2017. (Ex. to Letter of Dec. 8, 2016, ECF No. 51-1.)
As an initial matter, the Commissioner requests that the court transfer this case to the United States District Court for the District of Columbia pursuant to 28 U.S.C. § 1406 or, in the alternative, 28 U.S.C. § 1404. He contends that venue is improper here, requiring transfer under § 1406(a), because "no substantial part of the events or omissions giving rise to plaintiffs' claims occurred in the District of Maryland," (Mot. Transfer Venue, ECF No. 20, at 1), and no substantial part of the property that is the subject of the action is situated in Maryland, (Reply Mot. Transfer Venue, ECF No. 27, at 4). See 28 U.S.C. § 1391(b)(2). Alternatively, if venue is proper in this district, the Commissioner requests that the court exercise its discretion to transfer the case pursuant to § 1404, arguing that the District of Columbia is a more convenient venue for the parties and witnesses and that transfer is in the interest of justice. For the reasons discussed below, venue is proper in this district, and the motion to transfer venue will be denied.
Section 1406(a) provides that "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." Plaintiffs' stated basis
When a defendant challenges venue under § 1391 and the court does not hold an evidentiary hearing, the plaintiff need only make a prima facie showing that venue is proper. Mitrano v. Hawes, 377 F.3d 402, 405 (4th Cir. 2004). Because "it is possible for venue to be proper in more than one judicial district," the question is not whether a given district is the best venue, but whether the events or omissions that occurred there are "sufficiently substantial." See id. The Fourth Circuit has instructed courts to look to "the entire sequence of events underlying the claim," rather than just those that are "in dispute" or that "directly led to the filing of the action." Id.
Looking to the entire sequence of events underlying the claim, venue is proper in this district. Plaintiffs' complaint identifies key events and omissions that occurred in the district of Maryland, among them the Maryland Commissioner's issuance of an order prohibiting GHMSI from reducing or distributing its surplus and the Maryland Commissioner's failure to consent to the proposed reduction and distribution. (See, e.g., Compl. ¶ 3, 6, 7, 12, 13, 17, 29, 35-38, 44, 46, 48, 50.) These events and omissions form a substantial part of the basis for Count I. (See id. ¶ 57 (alleging that the Commissioner's action is unlawful and violates the Supremacy Clause because "Maryland and Virginia have not agreed to the Commissioner's compelled reduction and distribution").) Because venue is proper on the basis of substantial events or omissions, the court need not consider whether a "substantial part of property that is the subject of the action is situated" in this district. See 28 U.S.C. § 1391(b)(2).
The Commissioner cites to pre-Mitrano case law for the proposition that "[e]vents that relate only tangentially to the claim cannot constitute a substantial part of the events or omissions giving rise to the claim." (Mem. Mot. Transfer Venue, ECF No. 20-1, at 6 (quoting MTGLQ Inv'rs, L.P. v. Guire, 286 F.Supp.2d 561, 564 (D. Md. 2003)).) He fails to acknowledge, however, that the Mitrano Court effectively narrowed the category of "tangential" events and omissions — and expanded the category of "substantial" ones — by clarifying that "a court should not focus only on those matters that ... directly led to the filing of the action." See Mitrano, 377 F.3d at 405. In an effort to minimize the Maryland Commissioner's involvement, the Commissioner frames the controversy as a bilateral dispute between GHMSI and its regulator in the District of Columbia. (See Mem. Mot. Transfer Venue, ECF No. 20-1, at 5-6.) This argument is not persuasive, as GHMSI's amended charter clearly contemplates a role for all three jurisdictions. See Pub. L. No. 114-113, 129 Stat. 2242, 2486 (2015). The Commissioner further weakens his position by asserting contradictory arguments, at some points insisting that plaintiffs have not identified any event or omission that occurred in
Because plaintiffs have established a prima facie case that a substantial part of the events or omissions giving rise to the claim occurred in this district, see 28 U.S.C. § 1391(a)(2), the Commissioner's motion to transfer venue pursuant to § 1406 will be denied.
In the alternative, if venue is proper in this district, the Commissioner requests transfer to the U.S. District Court for the District of Columbia under 28 U.S.C. § 1404. Section 1404(a) provides: "For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). "[T]he burden is on the moving party to show that transfer to another forum is proper." Lynch v. Vanderhoef Builders, 237 F.Supp.2d 615, 617 (D. Md. 2002).
In deciding whether to transfer venue under § 1404(a), courts in this circuit consider the following factors: "(1) the weight accorded to plaintiff's choice of venue; (2) witness convenience and access; (3) convenience of the parties; and (4) the interest of justice." Trustees of the Plumbers and Pipefitters Nat'l Pension Fund v. Plumbing Servs., Inc., 791 F.3d 436, 444 (4th Cir. 2015). Unless the balance of factors "is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." Collins v. Straight, Inc., 748 F.2d 916, 921 (4th Cir. 1984) (quoting Gulf Oil v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 91 S.Ct. 1055 (1947)). The decision whether to transfer venue under § 1404(a) is committed to the discretion of the district court. In re Ralston Purina Co., 726 F.2d 1002, 1005 (4th Cir. 1984) (citing Southern Ry. Co. v. Madden, 235 F.2d 198, 201 (4th Cir. 1956), cert. denied, 352 U.S. 953, 77 S.Ct. 328, 1 L.Ed.2d 244 (1956)).
Regarding the first factor, courts have recognized that the plaintiff's chosen venue is "entitled to substantial weight." See Trustees, 791 F.3d at 444. The Commissioner argues that the court should afford "little to no weight" to plaintiffs' decision to sue in this district because "the plaintiff's forum is given little weight when none of the conduct complained of occurred in the forum selected by the plaintiff and said forum has no connection with the matter in controversy." (Mem. Motion Transfer Venue, ECF No. 20-1, at 8.) The cases upon which he relies, however — Dicken v. United States, 862 F.Supp. 91 (D. Md. 1994), and Koh v. Microtek Int'l, Inc., 250 F.Supp.2d 627 (E.D. Va. 2003) — are inapposite because venue in those cases arose under provisions that did not require the plaintiff to establish that "a substantial part of the events or omissions giving rise to the claim occurred" in the district. In Dicken, the relevant provision was 28 U.S.C. § 1402(b), which states that "[a]ny civil action on a tort claim against the United States ... may be prosecuted only in the judicial district where the plaintiff resides or wherein the act or omission
The factors of witness convenience and access, convenience of the parties, and the interest of justice also weigh against transfer in this case. The Commissioner's arguments regarding witnesses and parties are similar to those rejected by this court in Dow v. Jones, 232 F.Supp.2d 491, 498-500 (D. Md. 2002). In that case, defendants argued that dismissal or a change of venue was appropriate because "defendants and their witnesses [were] located in the District of Columbia," because "many of the events that [were] the subject of th[e] litigation occurred in Washington, D.C.," and because "the District of Columbia ha[d] a greater connection to the... litigation." Id. at 499. The court determined that the defendants had not carried their burden because, in part, they "did not submit any affidavits from parties or witnesses stating that they would suffer hardship or inconvenience by having to travel from Washington, D.C. to Baltimore." Id. at 499-500; see id. at 499 (citingHelsel v. Tishman Realty & Constr. Co., 198 F.Supp.2d 710, 712 (D. Md. 2002) ("Mere assertions of inconvenience or hardship are inadequate support for a motion to dismiss or transfer pursuant to 28 U.S.C. § 1404(a).")). The Commissioner has not provided affidavits here. In their absence, there is no basis for the court to conclude that travel between Washington and Baltimore would pose an undue hardship. Regarding the interest of justice, the Commissioner argues that the U.S. District Court for the District of Columbia "is more familiar with both District of Columbia law and the complex issues raised when Congress legislates for the District." (Mem. Mot. Transfer Venue, ECF No. 20-1, at 10.) He acknowledges, however, that this court is capable of applying the relevant law. (Id.) At most, this factor is neutral for the Commissioner.
Because the Commissioner has not satisfied his burden to show that the balance of factors tips "strongly in [his] favor," Collins, 748 F.2d at 921, the motion to transfer venue pursuant to § 1404(a) will be denied.
The Commissioner has filed a motion to substitute the District of Columbia for himself as the proper defendant in this matter, contending that "Plaintiffs' suit against Commissioner Taylor in his official
Plaintiffs vigorously oppose this motion, arguing that their choice of defendant should control. They note that substitution could allow the Commissioner "to gain some advantage, or to procure some new defense," and they request that the court grant the motion to substitute only on the condition that the Commissioner and District of Columbia (1) waive any defenses the Commissioner would not have been entitled to assert and (2) commit to making the Commissioner available for discovery. (Opp. to Mot. Substitute, ECF No. 22, at 6.) In his reply, the Commissioner asserts that neither he nor the District "seek[s] to gain an advantage in the guise of substitution," but he refuses to provide the assurances that plaintiffs request. (See Reply Mot. Substitute, ECF No. 25, at 1, 3-4.)
It clearly is proper to sue a government official in his official capacity, and it can be essential to the claim where, as here, plaintiffs assert that they are entitled to declaratory and injunctive relief under Ex parte Young. The Commissioner cites to several cases, but they do not support substitution on these facts. In Jefferies v. District of Columbia, the court dismissed claims against a police chief in her official capacity because the plaintiffs also had named the District of Columbia as a defendant, rendering the claims against the official "redundant" and "inefficient." 917 F.Supp.2d at 29. The remaining cases involve distinguishable circumstances, such as the substitution of the District of Columbia for an agency that could not be sued in its own right. (See Mem. Mot. Substitute, ECF No. 19-1, at 2 (citing Blue v. District of Columbia, 850 F.Supp.2d 16, 23 (D.D.C. 2012); Waker v. Brown, 754 F.Supp.2d 62, 65 (D.D.C. 2010); Henneghan v. D.C. Pub. Schs., 597 F.Supp.2d 34, 37 (D.D.C. 2009)).) Here, the plaintiffs have sued the Commissioner in his official capacity, not DISB separately. Notably, the Commissioner has not cited any cases in which substitution was granted where the plaintiffs were proceeding under Ex parte Young.
As the case law does not support substitution, and the Commissioner's only justifications are "clarity and simplicity," (Mem. Mot. Substitute, ECF No. 19-1, at 2), the court will deny the motion to substitute.
Commissioner Taylor has moved to dismiss Count I of the complaint for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) and failure to state a claim under Rule 12(b)(6). First, the Commissioner argues that the court lacks federal question subject matter jurisdiction because GHMSI's charter is a local law of the District Columbia, rather than a federal law. Second, he contends that the complaint fails to state a valid cause of action under the Supremacy Clause, the Ex parte Young doctrine, or 28 U.S.C. § 1983. Alternatively, he requests that the court abstain from considering the case pending the determination of unsettled questions of District of Columbia law by the District of Columbia Court of Appeals. Because none of these arguments has merit, the Commissioner's motion to dismiss will be denied.
A motion pursuant to Rule 12(b)(1) should be granted "only if the material jurisdictional facts are not in dispute and the moving party is entitled to prevail as a matter of law." Evans v. B.F. Perkins Co., 166 F.3d 642, 647 (4th Cir. 1999); see also United States ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347-48 (4th Cir. 2009). The plaintiff bears the burden of proving that subject matter jurisdiction exists. Piney Run Preservation Ass'n v. Cnty. Comm'rs of Carroll Cnty., Md., 523 F.3d 453, 459 (4th Cir. 2008). Moreover, "[w]hen a defendant challenges subject matter jurisdiction via a Rule 12(b)(1) motion to dismiss, the district court may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings." Blitz v. Napolitano, 700 F.3d 733, 736 n.3 (4th Cir. 2012) (quoting Velasco v. Gov't of Indonesia, 370 F.3d 392, 398 (4th Cir. 2004)).
When ruling on a motion under Rule 12(b)(6), the court must "accept the well-pled allegations of the complaint as true," and "construe the facts and reasonable inferences derived therefrom in the light most favorable to the plaintiff." Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). "Even though the requirements for pleading a proper complaint are substantially aimed at assuring that the defendant be given adequate notice of the nature of a claim being made against him, they also provide criteria for defining issues for trial and for early disposition of inappropriate complaints." Francis v. Giacomelli, 588 F.3d 186, 192 (4th Cir. 2009). "The mere recital of elements of a cause of action, supported only by conclusory statements, is not sufficient to survive a motion made pursuant to Rule 12(b)(6)." Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). To survive a motion to dismiss, the factual allegations of a complaint "must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (internal citations omitted). "To satisfy this standard, a plaintiff need not `forecast' evidence sufficient to prove the elements of the claim. However, the complaint must allege sufficient facts to establish those elements." Walters, 684 F.3d at 439 (citation omitted). "Thus, while a plaintiff does not need to demonstrate in a complaint that the right to relief is `probable,' the complaint must advance the plaintiff's claim `across the line from conceivable to plausible.'" Id. (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955).
Plaintiffs assert that the court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331, which authorizes the federal district courts to exercise jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." A case "arises under" federal law if "a well-pleaded complaint establishes... that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). Congress has specified, however, that "laws applicable exclusively to the District of Columbia" do not constitute "laws of the United States" for purposes of § 1331 jurisdiction. 28 U.S.C. § 1366.
The Commissioner contends that the court lacks federal question subject matter jurisdiction over plaintiffs' claims because
Although Group Hospitalization & Medical Services is not binding on this court — and, as the Commissioner notes, the decision includes little discussion or analysis of GHMSI's charter — it constitutes persuasive authority that informs this court's independent analysis. That analysis begins with the definition of a District of Columbia "local law," which the D.C. Circuit has explained as follows:
District Props. Assocs. v. District of Columbia, 743 F.2d 21, 27 (D.C. Cir. 1984) (emphasis added); see also Roth v. District of Columbia Courts, 160 F.Supp.2d 104, 108 (D.D.C. 2001) (citing District Properties Associates for "[t]he standard for determining if a law is exclusively applicable to the District of Columbia"). In other words, an act of Congress is presumed to constitute federal law unless both of the following circumstances are present: first, Congress is "act[ing] as the local legislature for the District of Columbia," and, second, Congress is "enact[ing] legislation applicable only to the District of Columbia and tailored to meet specifically local needs." See District Properties Associates, 743 F.2d at 27 (emphasis added). Even then, the enactment is not treated as local law if there is evidence of contrary congressional intent. Id.
GHMSI's amended charter — which, by its plain terms, acknowledges a role for all three of GHMSI's regulators — does not satisfy this standard. The Commissioner offers conclusory assertions that Congress was acting in its capacity as the District of Columbia's local legislature when it created and amended GHMSI's charter, but he does not point to legislative history or other evidence to support his claims. (See Mem. Mot. Dismiss, ECF No. 37-1, at 11 ("Congress exercised its local legislative authority to create a District of Columbia corporation"); id. at 12 ("Here, Congress created GHMSI as a corporation domiciled in the District, and subsequently amended GHMSI's charter pursuant to Congress's ability to serve as local legislature."); id. ("GHMSI's charter is in fact a
As plaintiffs note, "[t]hat `GHMSI's charter constitutes federal law' is, if anything, more obvious now than it was when the court decided Group Hosp. and Med. Servs., Inc." in 2008. (Opp. to Mot. Dismiss, ECF No. 45, at 2.) After Judge Huvelle's decision, Congress amended the charter to add the "express agreement" provision and to state that GHMSI's surplus is "for the benefit and protection of all its certificate holders and shall be available for the satisfaction of all obligations of the corporation regardless of the jurisdiction in which such surplus originated or such obligations arise." See Pub. L. 114-113 § 747, 129 Stat. 2242, 2486 (2015). The Commissioner insists that this amendment does not change the local nature of the charter because it "is simply a regulatory change to GHMSI's ability, as a District corporation, to distribute or reduce its surplus." (Mem. Mot. Dismiss, ECF No. 37-1, at 12-13.) Even if he could prevail on this argument, however, the amended charter clearly is not "tailored to meet specifically local needs." See District Properties Associates, 743 F.2d at 27.
For the reasons discussed above, GHMSI's charter is a law of the United States, not a District of Columbia local law. The plaintiffs' right to relief "necessarily depends on resolution of a substantial question of federal law," and the court has federal question subject matter jurisdiction over plaintiffs' claims. See Franchise Tax Board, 463 U.S. at 27-28, 103 S.Ct. 2841. The Commissioner's motion to dismiss due to lack of jurisdiction therefore will be denied.
Commissioner Taylor argues that, even if this Court has federal question jurisdiction, Count I fails because plaintiffs do not state a valid cause of action under the Supremacy Clause, Ex parte Young, or § 1983. Plaintiffs respond that the complaint purports to state a "direct cause of action for violation of a federal statute, GHMSI's federal charter," rather than "`an independent cause of action' under the Supremacy Clause," and that they may proceed under either Ex parte Young or § 1983. (Opp. to Mot. Dismiss, ECF No. 45, at 12.) For the reasons discussed below, plaintiffs may proceed under the Ex parte Young doctrine. The court will not consider whether, as a matter of first impression, GHMSI's charter gives rise to a cause of action under § 1983.
Count I is captioned "Violation of Federal Law — Violation of GHMSI's Federal Charter; Violation of Supremacy Clause, U.S. Const., Art. VI, Clause 2." (Compl., ECF No. 1, at 23.) It states that "[t]he Commissioner's planned seizure of $56 million of surplus is unlawful as it violates GHMSI's federal charter which Congress
As the Commissioner points out, however, the Supremacy Clause "is not the `source of any federal rights,' ... and certainly does not create a cause of action." (Mem. Mot. Dismiss, ECF No. 37-1, at 15 (quoting Armstrong v. Exceptional Child Center, Inc., ___ U.S. ___, 135 S.Ct. 1378, 1383, 191 L.Ed.2d 471 (2015)).) Plaintiffs' case therefore depends on whether they are entitled to seek relief for a violation of GHMSI's charter under either of their two asserted causes of action: the Ex parte Young doctrine and § 1983. Plaintiffs argue that they may proceed under Ex parte Young because they seek to enjoin the enforcement of an administrative order that violates federal statutory law. Alternatively, they contend, § 1983 provides a cause of action because GHMSI's charter "creates `rights, privileges, or immunities'
Under the longstanding doctrine of Ex parte Young, federal courts may enjoin state officers sued in their official capacity from continuing violations of federal law. 209 U.S. 123, 28 S.Ct. 441, 52 S.Ct. 714 (1908); see also Armstrong, 135 S.Ct. at 1384. In general, official-capacity lawsuits constitute actions against the state and are barred by principles of sovereign immunity, but Ex parte Young carves out an exception in order to safeguard the supremacy of federal law. See Green v. Mansour, 474 U.S. 64, 68, 106 S.Ct. 423, 88 L.Ed.2d 371 (1985).
Plaintiffs claim that their lawsuit falls squarely under Verizon Maryland Inc. v. Public Service Commission of Maryland, 535 U.S. 635, 122 S.Ct. 1753, 152 L.Ed.2d 871 (2002). In that case, the Supreme Court considered whether Verizon Maryland Inc. ("Verizon") could proceed in an action requesting "that state officials be restrained from enforcing an order in contravention of controlling federal law." Id. at 645, 122 S.Ct. 1753. Verizon had alleged that an order of the Maryland Public Service Commission ("PSC"), which required it to pay reciprocal compensation to competitors for certain network traffic, violated the Telecommunications Act of 1996. Id. at 638-41, 122 S.Ct. 1753. The Supreme Court considered two issues: first, whether the courts had federal question subject matter jurisdiction under § 1331, and, second, whether the doctrine of Ex parte Young permitted Verizon to proceed against the individual commissioners in their official capacities. Id. at 648, 122 S.Ct. 1753. It answered yes to both. Id. Regarding Ex parte Young, the Court clarified that lower courts "need only conduct a straightforward inquiry into whether the complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective." Id. at 645, 122 S.Ct. 1753 (internal quotation marks omitted). The Court also noted that an analysis of the merits is not part of the "inquiry into whether suit lies under Ex parte Young." Id. at 646, 122 S.Ct. 1753.
Id. at 368-69 (internal citations and quotation marks omitted).
The same reasoning applies here. Because the resolution of plaintiffs' case "depends on the resolution of a federal question sufficiently substantial to arise under federal law within the meaning of 28 U.S.C. § 1331," it is not necessary to determine whether "[GHMSI's charter] ... explicitly or implicitly provide[s] for a cause of action." Id. Rather, so long as the court has federal question subject matter jurisdiction, the complaint — which seeks declaratory and injunctive relief to correct a state official's alleged misinterpretation of federal law — states a claim upon which relief can be granted. Id.
The Commissioner disputes that Verizon controls, arguing that plaintiffs can proceed under Ex parte Young only if they establish a cause of action under the relevant statute (here, GHMSI's charter) or § 1983. He relies primarily on the Sixth Circuit's decision in Michigan Corrections Organization v. Michigan Department of Corrections, 774 F.3d 895 (6th Cir. 2014). In that case, the court held that plaintiffs — correctional officers who had sued the Michigan Department of Corrections and its director, in his official capacity, under the Fair Labor Standards Act ("FLSA") — could not proceed because they did not have a private right of action under either the FLSA, § 1983, or Ex parte Young. Id. at 904. With respect to Ex parte Young, the court explained:
Id. at 905.
The Commissioner's reliance on Michigan Corrections is misplaced. It is important to note, first, that Michigan Corrections is not the law of this circuit. To the extent that the Fourth Circuit's application
Here, plaintiffs clearly assert a defensive action. As in Verizon, they request that the Commissioner "be restrained from enforcing an order in contravention of controlling federal law." See Verizon, 535 U.S. at 645, 122 S.Ct. 1753. Further, they allege that the Commissioner's order — which imposes an obligation upon GHMSI and, if violated, is enforceable by the Commissioner in court — is preempted by GHMSI's charter, a federal law. Thus, Michigan Corrections does not support the Commissioner's argument that plaintiffs have failed to state a claim.
The Commissioner cites a Fourth Circuit case, Constantine v. Rectors and Visitors of George Mason University, 411 F.3d 474 (4th Cir. 2005), for the proposition that "courts have recognized that an implied private right of action is a prerequisite to proceeding under Ex parte Young." (Opp. to Mot. Summary Judgment, ECF No. 47, at 17-18.) In reality, that case stands for a far narrower principle. In Constantine, the plaintiff brought an Ex parte Young action seeking declaratory and injunctive relief under § 504 of the Rehabilitation Act, alleging that defendants violated that statute "by initially failing, and then later refusing, to make reasonable accommodations for her disability." Id. at 496. Citing to the landmark case of Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996), the court considered whether Congress intended to foreclose the availability of the doctrine by "creating specific remedies for violations by state actors" in the statute. Constantine, 411 F.3d at 497. In effect, the court in Constantine recognized that the Ex parte Young doctrine may be unavailable where there is evidence of congressional intent to displace it. See id. at 496-97. The Commissioner turns this principle on its head, suggesting that plaintiffs may proceed under Ex parte Young only where they can show that Congress created an implied private right of action.
The remaining cases cited by the Commissioner do not contribute much. In Armstrong, the Supreme Court held that plaintiffs could not proceed under Ex parte Young because the Medicaid Act implicitly precluded private enforcement. 135 S.Ct. at 1385. The Court's reasoning was specific to that statute, and it does not offer guidance here. The Commissioner also cites to the dissent in Indiana Protection and Advocacy
Here, as in Verizon, plaintiffs seek prospective declaratory and injunctive relief on the basis that a state administrative order violates federal law. Their claim is a classic application of Ex parte Young. The Commissioner's motion to dismiss for failure to state a claim will be denied.
Finally, the Commissioner contends that, "because this case involves federal constitutional claims premised on unsettled questions of District of Columbia law, this Court should abstain from deciding the case pending a determination of those issues by the District of Columbia Court of Appeals." (Mot. Dismiss, ECF No. 37, at 1.) He notes that "this case arises out of a long and contentious administrative process through which DISB determined both the amount of GHMSI's excess surplus attributable to the District and how GHMSI should dedicate that surplus to community reinvestment." (Mem. Mot. Dismiss, ECF No. 37-1, at 22-23.) GHMSI's petition for review currently is pending before the District of Columbia Court of Appeals.
The Commissioner argues that this court should apply principles of Pullman abstention, a doctrine premised on the idea that, in certain cases, federal courts should "restrain their authority because of `scrupulous regard for the rightful independence of the state governments' and for the smooth working of the federal judiciary."
Plaintiffs have moved for summary judgment as to Count I, and the Commissioner has filed an opposition. For the reasons discussed below, the motion will be denied.
Federal Rule of Civil Procedure 56(a) provides that summary judgment should be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." The Supreme Court has clarified that this does not mean that any factual dispute will defeat the motion. "By its very terms, this standard provides that the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
Plaintiffs contend that the material facts are undisputed and that they are entitled to judgment as a matter of law. In support of their motion, they rely on the arguments in their memorandum; the affidavit of Chet Burrell, President and Chief Executive Officer of CareFirst, CareFirst Maryland, and GHMSI; and the affidavit of Christopher Gunderson, counsel to plaintiffs, with attached exhibits. (See ECF Nos. 2-1 to 2-14.) They assert that "the material facts here are that the Commissioner plans to `distribute [and] reduce' GHMSI's surplus and to do so `without the express agreement of ... Maryland, and Virginia,'" in violation of GHMSI's charter. (Mem. Mot. Summary Judgment, ECF No. 2-1, at 2.) The Commissioner does not dispute these facts; rather, he argues that GHMSI's charter permits the proposed reduction and distribution.
The question before the court is one of statutory construction. "We begin, as always, with the text of the statute." United States v. Serafini, 826 F.3d 146, 149 (4th Cir. 2016) (quoting Permanent Mission of India to the U.N. v. City of N.Y., 551 U.S. 193, 197, 127 S.Ct. 2352, 168 L.Ed.2d 85 (2007)). In general, the words of a statute should be given their ordinary meaning. Serafini, 826 F.3d at 149 (citing Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 62 L.Ed.2d 199 (1979)). "[W]e must first determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute ... and our inquiry must cease if the statutory language is unambiguous and the statutory scheme is coherent and consistent." United States v. Bly, 510 F.3d 453, 460 (4th Cir. 2007). Where the statutory language is unambiguous, "the sole function of the courts — at least where the disposition required by the text is not absurd — is to enforce it according to its terms." Clark v. Absolute Collection Serv., Inc., 741 F.3d 487, 490 (4th Cir. 2014) (quoting Lamie v. U.S. Tr., 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004)).
GHMSI's amended charter reads, in relevant part:
Pub. L. 114-113 § 747, 129 Stat. 2242, 2486 (2015).
Under the plain language of the charter, the Commissioner has the better argument. Subsection (b) refers to "the surplus... for any year after 2011" (emphasis added).
It is important to note that the question of how to properly calculate GHMSI's 2011 surplus is separate from the legal question of whether GHMSI's charter precludes the Commissioner's proposed reduction and distribution. Indeed, plaintiffs' evidence establishes — and the Commissioner does not dispute — the dynamic nature of surplus and the difficulty it poses for accurate calculation. (See Mot. Summary Judgment, Burrell Aff. ¶ 16-18, ECF No. 2-2.) To the extent that plaintiffs challenge the result of the administrative proceedings, however, their claims are not presently before this court.
Ordinarily, the presence of unambiguous statutory language ends the inquiry. Under rare circumstances, however, courts may go beyond the plain language of the statute. Two exceptions are relevant here. First, a court may look beyond the language if "the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242, 109 S.Ct. 1026, 103 L.Ed.2d 290 (1989). This exception is available only where the legislature clearly expressed the contrary intent. Russello v. United States, 464 U.S. 16, 20, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983). Plaintiffs do not point to any such evidence. (See Mem. Mot. Summary Judgment, ECF No. 2-1, at 18.) Second, in "exceptional circumstances," courts may go beyond the unambiguous language of a statute if its application would lead to absurd results. Plaintiffs contend that the Commissioner's interpretation of GHMSI's charter would lead to absurd results by allowing him to order a
Because the unambiguous language of GHMSI's charter does not entitle plaintiffs to judgment as a matter of law, the motion for summary judgment will be denied.
For the reasons stated above, the motion to transfer venue, motion to substitute, motion to dismiss, and motion for summary judgment will be denied. A separate order follows.
