Raines v. Flascher

Background

John G. Raines and Timothy McGough, trustees of the Carpenters and Joiners Welfare Fund, sued John Flascher and Robins Kaplan, LLP. The Fund is a fringe benefit plan created under the Labor Management Relations Act and administered under the Employee Retirement Income Security Act of 1974. Its plan documents provide subrogation and reimbursement rights when the Fund pays benefits for an injury for which a participant or beneficiary has a claim against a third party. The documents also provide that the Fund may have an equitable lien or constructive trust over recovery from a third party.

The trustees alleged that Justin Flascher, a dependent of John Flascher, suffered injuries connected with surgery and hospitalization from January 26, 2016, until his death on February 14, 2016. They alleged that the Fund paid $182,910.92 in medical benefits on Justin’s behalf. They further alleged that John Flascher retained Robins Kaplan to pursue claims against Allina and other third parties, that the law firm recognized the Fund’s reimbursement rights, and that Flascher later settled those claims for $1.4 million. The trustees sought a constructive trust, an equitable lien, declaratory relief, and an injunction enforcing the Fund’s alleged right to reimbursement.

Motion to Dismiss

The defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court accepted the complaint’s factual allegations as true for purposes of the motion but required enough nonconclusory facts to make the claim plausible.

The court held that the complaint lacked sufficient factual detail connecting Flascher’s settlement to the Fund’s benefit payments. It did not explain how Justin was injured, who caused the injury, or how the benefits paid by the Fund related to that injury. The court also noted that the complaint referred to claim summaries, emails, and demand letters without including their relevant information. Although the trustees said they had difficulty obtaining the settlement terms before discovery, the court found that they had failed to include other information to which they had access.

The court distinguished Mackey v. Johnson because that complaint contained substantially more detail about the injury, the responsible third party, and the connection between the injury and the fund’s payments.

Disposition

The court denied the defendants’ first motion to dismiss as moot, granted the amended motion to dismiss, and dismissed the trustees’ complaint without prejudice. “Without prejudice” means the dismissal did not bar the plaintiffs from bringing the claim again. The court did not decide whether the Fund had a valid reimbursement or subrogation right, whether the settlement included medical expenses, or whether the defendants ultimately owed the Fund money.