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dismissing the case on the grounds that plaintiffs lacked standing when the suit was filed
Summary of this case from MSPA Claims 1, LLC v. Liberty Mut. Fire Ins. Co.Opinion
Case No. 1:17–cv–21996–UU
12-13-2017
MAO–MSO RECOVERY II, LLC, et al., Plaintiffs, v. BOEHRINGER INGELHEIM PHARMACEUTICALS, INC., et al., Defendants.
Frank Carlos Quesada, John Hasan Ruiz, MSP Recovery Law Firm, Miami, FL, Andres Rivero, Amanda Marie McGovern, Rivero Mestre LLP, Coral Gables, FL, for Plaintiffs. Cheryl Zak Lardieri, Goodell De Vries Leech & Dann LLP, Boston, MD, Michael Daniel Begey, Christian Tiblier, Lena Marguerite Mirilovic, Rumberger, Kirk & Caldwell, P.A., Orlando, FL, Robert A. Limbacher, Goodell, DeVries, Leech & Dann, LLP, Philadelphia, PA, Aaron Stenzler Weiss, Carlton Fields Jorden Burt, P.A., Miami, FL, for Defendants.
Frank Carlos Quesada, John Hasan Ruiz, MSP Recovery Law Firm, Miami, FL, Andres Rivero, Amanda Marie McGovern, Rivero Mestre LLP, Coral Gables, FL, for Plaintiffs.
Cheryl Zak Lardieri, Goodell De Vries Leech & Dann LLP, Boston, MD, Michael Daniel Begey, Christian Tiblier, Lena Marguerite Mirilovic, Rumberger, Kirk & Caldwell, P.A., Orlando, FL, Robert A. Limbacher, Goodell, DeVries, Leech & Dann, LLP, Philadelphia, PA, Aaron Stenzler Weiss, Carlton Fields Jorden Burt, P.A., Miami, FL, for Defendants.
ORDER ON RECONSIDERATION
Ursula Ungaro, UNITED STATES DISTRICT JUDGETHIS CAUSE comes before the Court upon Defendant Boehringer Ingelheim Pharmaceutical, Inc.'s Motion to Dismiss (D.E. 77) and Providio Defendants' Motion to Dismiss (D.E. 79).
THE COURT has considered the Motions, the pertinent portions of the record and is otherwise fully advised in the premises. For the reasons set forth below, the Court concludes that Plaintiffs lack standing to pursue their claims. Because standing is a jurisdictional issue, the Court does not reach Defendants' other bases for dismissal. See Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir. 2008) ("Because standing is jurisdictional, a dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).").
FACTUAL ALLEGATIONS
The following facts are taken from Plaintiffs' Second Amended Class Action Complaint (D.E. 69) (the "Amended Complaint").
I. The Parties
Plaintiffs are four companies that are assignees of various unidentified Medicare Advantage Organizations ("MAOs"). D.E. 69, ¶¶ 3–5. Plaintiffs, MAO–MSO Recovery II, LLC, MSP Recovery, LLC, and MSPA Claims 1, LLC, were named Plaintiffs in the First Amended Class Action Complaint. D.E. 40. Plaintiff, MSP Recovery Claims, Series LLC, was added to this action in the Second Amended Class Action Complaint. D.E. 69. As assignees of these MAOs, Plaintiffs have the right to recover Medicare payments made by the MAOs, and for which the MAOs have a right of recovery against third parties. Id.
Defendant, Boehringer Ingelheim Pharmaceuticals, Inc. ("Boehringer, Inc.") is a pharmaceutical company based in Connecticut. Id. ¶ 8. Defendants, Boehringer Ingelheim Pharma GMBH & Co. KG, Boehringer International GMBH, and Bidachem S.P.A., are pharmaceutical companies based in Germany and Italy. Id. ¶¶ 9–11. Together these four defendants manufactured, distributed, marketed, labeled, or sold a blood-thinning drug called Pradaxa. Id. ¶ 41. Collectively, all four of these defendants are the "Pharmaceutical Defendants." Of the Pharmaceutical Defendants, only Boehringer, Inc. is presently involved in this litigation; Plaintiffs have not served the international defendants.
Defendants, Providio Medisolution, LLC, and Providio Lien Counsel, LLC, (together the "Providio Defendants"), are administrators of a multi-district-litigation settlement fund (the "Settlement Fund"). Id. ¶ 114. The Settlement Fund was created by the Pharmaceutical Defendants to settle claims related to Pradaxa. Id. ¶¶ 113.
II. The Allegations of the Second Amended Complaint
A. An Overview
Plaintiffs allege that Defendants violated the Medicare Secondary Payer Act ("MSPA"), 42 U.S.C. § 1395y(b), which is an amendment to the Medicare Act. Id. ¶¶ 25. They allege that individuals who were injured by Pradaxa incurred medical costs treating those injuries. Id. ¶ 59. A "large volume" of those costs were paid for by MAOs. Id. ¶ 61. Pursuant to the MSPA, Defendants have an obligation to repay the MAOs for those costs. Id. ¶ 72. The MAOs assigned their rights to collect those costs to Plaintiffs. Id. ¶ 38. Accordingly, Plaintiffs allege that Defendants owe Plaintiffs—and a class of similarly situated entities—the medical-service costs incurred by individuals injured by Pradaxa. Id. ¶ 51.
B. The Legal Framework
The Medicare Act is divided into several parts; part C is relevant here. Id. ¶ 19–20. Medicare Part C permits individuals eligible for Medicare to elect to receive their benefits through enrollment in an MAO. Id. ¶ 20. The MAOs contract with the Centers for Medicare and Medicaid Services ("CMS") to administer Medicare benefits to Part–C enrollees. Id. CMS delegates to the MAOs the obligation to administer, pay, and assume all Medicare economic risk for the benefits provided to Part–C enrollees. Id.
Pursuant to the MSPA, any payment made by an MAO is "conditional" or "secondary" whenever there is a "primary plan." Id. ¶ 26. A primary plan must either pay for the enrollee's medical services or later reimburse the MAO for their secondary payments. Id. ¶ 26. A primary plan's obligation to reimburse the MAO is demonstrated by, among other things, a waiver and release of liability whether or not there is a determination or admission of liability. Id. ¶ 27. Thus, a tort settlement in favor of a Medicare enrollee triggers the tortfeasor's reimbursement obligation. Id.
MAOs have the right to charge primary plans, such as tortfeasors, to recover secondary payments. Id. ¶ 30–32. The MSPA provides a private right of action by which a secondary payer, like an MAO, can recover from a primary plan that fails to fulfill its reimbursement obligation. Id. ¶ 33. The private right of action is codified at 42 U.S.C. § 1395y(b)(3)(A) and allows a secondary payer to collect double damages. Id. A primary plan's liability under this statute can be established by a settlement agreement. Id. ¶ 34.
C. The Conduct at Issue
1) The Pharmaceutical Defendants' Conduct
The Pharmaceutical Defendants manufactured a blood-thinning drug called Pradaxa. Id. ¶ 41. Defendants introduced the drug to North American markets in 2010. Id. ¶ 42. Patients who used Pradaxa experienced an increased risk of developing life-threatening internal bleeding. Id. ¶ 46. As a result, numerous lawsuits were brought against the Pharmaceutical Defendants, and the cases were consolidated into multi-district-litigation ("MDL") proceedings in the Southern District of Illinois. Id. ¶ 52.
Plaintiffs identify one Part–C individual, by initials only, who suffered injuries from Pradaxa. Id. ¶ 50. This individual's MAO, Summacare, paid the medical bills incurred to treat the individuals' Pradaxa-related injuries. Id. Summacare assigned its reimbursement rights to Plaintiff, MSP Recovery, LLC, on May 12, 2017. Id. , Ex. A. MSP Recovery, LLC, then assigned its recovery rights to the newly added Plaintiff, MSP Recovery Claims, Series LLC, on June 12, 2017. Id. , Ex. B.
The First Amended Complaint, included five Part–C individuals and alleged that they were part of the MDL litigation against the Pharmaceutical Defendants. Conspicuously absent from the present complaint are allegations that the one Part–C individual identified here sued the Pharmaceutical Defendants and was part of the MDL.
In May, 2014, the Pharmaceutical Defendants settled the MDL proceedings. Id. ¶ 53. By virtue of the settlement, the Pharmaceutical Defendants became primary plans under the MSPA. Id. ¶ 55. Accordingly, they are obligated to reimburse MAOs for secondary payments paid on behalf of individuals to cover the costs of their Pradaxa-related injuries. Id. ¶ 56. Because Plaintiffs are the assignees of MAOs, Plaintiffs are entitled to collect the reimbursements. Id. ¶ 62.
At the time of the settlement, the Pharmaceutical Defendants were aware, or should have been aware, that they were obligated to reimburse the medical costs incurred by Medicare enrollees to treat the injuries they sustained from Pradaxa. Id. ¶ 54. Additionally, on or about June 1, 2016, Plaintiffs notified the Pharmaceutical Defendants of their reimbursement rights. Id. ¶ 58, Ex. D. Despite receiving Plaintiffs' notice, the Pharmaceutical Defendants failed to reimburse Plaintiffs. Id. ¶ 59. Accordingly, Plaintiffs allege that they are entitled to recover double damages from the Pharmaceutical Defendants under the MSPA. Id. ¶ 62.
2) The Providio Defendants' Conduct
After the Pharmaceutical Defendants settled the MDL proceedings, the MDL Court appointed the Providio Defendants to administer the Settlement Fund. Id. ¶ 57. Plaintiffs notified the Providio Defendants of their reimbursement rights and demanded that the secondary payments to which they are entitled be repaid from the Settlement Fund. Id. ¶ 58, Ex. D. Despite receiving Plaintiffs' notice, the Providio Defendants failed to reimburse Plaintiffs, claiming that the settlement proceeds had been distributed. Id. ¶ 59. Accordingly, Plaintiffs allege that they are entitled to recover double damages from the Providio Defendants under the MSPA. Id. ¶ 80. Plaintiffs also claim that, by virtue of their position as administrators of the Settlement Fund, the Providio Defendants had a fiduciary duty to pay Plaintiffs the reimbursements required by the MSPA. Id. ¶ 123. Because the Providio Defendants did not do so, Plaintiffs allege that they breached their fiduciary duty. Id.
PROCEDURAL HISTORY
Plaintiffs filed their first complaint on May 27, 2017. D.E. 1. On July 14, Boehringer, Inc. filed a motion to dismiss for lack of standing and failure to state a claim. D.E. 27. On August 3, Plaintiffs filed their Amended Complaint. D.E. 40. On August 18, Boehringer, Inc. and the Providio Defendants filed motions to dismiss the Amended Complaint for lack of standing and failure to state a claim. D.E. 46, 47. Additionally, the Providio Defendants argue that they are not subject to personal jurisdiction in Florida.
On October 10, 2017, the Court dismissed the first Amended Class Action Complaint for lack of standing. D.E. 65. As with the present motions to dismiss, Defendants made a facial challenge to standing. The Court ruled that, to establish standing, Plaintiffs had to show: "(1) that the MAOs [from whom Plaintiff's received their assignments] suffered an injury (i.e., were not reimbursed when they were entitled to be), and (2) that the MAOs assigned their reimbursement rights to Plaintiffs." Id. , p. 8. The first Amended Complaint established the first requirement. Plaintiffs alleged that the MAOs' enrollees suffered injuries from using Pradaxa, that the MAOs paid the cost of treating those injuries, and that the enrollees sued the Pharmaceutical Defendants and were part of the MDL settlement. Id. Plaintiffs did not, however, establish the second requirement; they failed to show that they had valid assignments from the MAOs. The Court gave Plaintiffs specific guidance to establish standing: Plaintiffs needed to allege "the identity of the MAOs whose reimbursement rights they claim to own, the dates of the assignments, [and] the essential terms." Id. p, 9. The Court further suggested, but did not require, that Plaintiffs attach the assignment agreements to their Second Amended Complaint. Id ., fn. 1.
LEGAL STANDARD
I. Standing
Article III standing is jurisdictional and, therefore, a threshold inquiry. Stalley ex rel. United States v. Orlando Reg'l Healthcare Sys., Inc. , 524 F.3d 1229, 1232 (11th Cir. 2008) ("Because standing is jurisdictional, a dismissal for lack of standing has the same effect as a dismissal for lack of subject matter jurisdiction under Fed. R. Civ. P. 12(b)(1).") (internal quotations omitted). To establish standing, a plaintiff must show that he suffered an "injury in fact"—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical. Id. Second, there must be a causal connection between the injury and the conduct complained of; the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court. Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. Id. at 560–61, 112 S.Ct. at 2136.
A defendant can make either a facial or factual challenge to a plaintiff's standing. "A facial attack on the complaint requires the court merely to look and see if the plaintiff has sufficiently alleged a basis of subject matter jurisdiction, and the allegations in his complaint are taken as true for the purposes of the motion." McElmurray v. Consol. Gov't of Augusta–Richmond Cnty. , 501 F.3d 1244, 1251 (11th Cir. 2007). "Factual attacks on the other hand, challenge the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits are considered." Id. (internal quotations omitted).
Here, Defendants make a facial challenge to the complaint. To survive this facial challenge to standing, the Amended Complaint must include "general factual allegations of injury resulting from the defendant's conduct. Florida Pub. Interest Research Grp. Citizen Lobby, Inc. v. E.P.A. , 386 F.3d 1070, 1083 (11th Cir. 2004) (citing Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ); see also Bischoff v. Osceola Cty., Fla. , 222 F.3d 874, 878 (11th Cir. 2000) ("Moreover, each element of standing ‘must be supported in the same way as any other matter on which plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation.’ ")(quoting Lujan , 504 U.S. at 561, 112 S.Ct. 2130 ).
ANALYSIS
Despite the Court's specific instructions in its Order Dismissing the First Amended Complaint (D.E. 66) Plaintiffs have again failed to show that they have standing. The three original Plaintiffs did not follow the Court's instruction in its first order of dismissal; they did not allege the identity of the MAOs whose reimbursement rights they claim to own, the dates of the assignments, or the essential terms. See D.E. 66 (requiring Plaintiffs to plead the essential terms of their assignment agreements and to plead that the assigning MAOs had a right to be reimbursed by the Pharmaceutical Defendants); see also Strickland v. Alexander , 772 F.3d 876, 887 (11th Cir. 2014) ("the requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)"). Accordingly, for the same reasons as before, the original three Plaintiffs lack standing.
Plaintiffs have tried to establish standing by adding to their number Plaintiff, MSP Recovery Claims, Series LLC. The Second Amended Complaint shows that this Plaintiff has an assignment, but it acquired the assignment a month after this suit commenced. See D.E. 69–1, 2, Exs. A & B (showing that Plaintiff MSP Recovery, LLC, had an assignment agreement from SummaCare, Inc., but assigned its rights under that agreement to the newly added Plaintiff, MSP Recovery Claims, Series LLC, on June 12, 2017). Defendants argue that the Court must assess standing at the time the action was commenced; that is, when the original complaint was filed. Because MSP Recovery Claims, Series LLC did not obtain its assignment until a month after the initial complaint was filed, it cannot show that it had standing when the suit was commenced. Plaintiffs respond that courts look to an amended complaint, not the original, to determine jurisdiction.
Defendants rely on Summit Office Park, Inc. v. U.S. Steel Corp. , 639 F.2d 1278 (5th Cir. 1981) for the proposition that if a Plaintiff lacks standing at the commencement of the suit, it cannot then add a new Plaintiff who does have standing. In simple terms, a Plaintiff who lacks standing to sue lacks standing to add additional Plaintiffs. Plaintiffs' counter argument relies on Rockwell Int'l Corp. v. United States , 549 U.S. 457, 127 S.Ct. 1397, 167 L.Ed.2d 190 (2007) for the proposition that "when a plaintiff files a complaint in federal court and then voluntarily amends the complaint, courts look to the amended complaint to determine jurisdiction." 549 U.S. at 473–74, 127 S.Ct. 1397.
Fifth Circuit decisions published before October 1, 1981, are binding precedent on this court. Bonner v. City of Prichard , 661 F.2d 1206 (11th Cir. 1981).
Summit Office Park is on point; Rockwell Int'l Corp is not. In Summit Office Park , the original plaintiff lost standing during the pendency of the action because of an intervening Supreme Court decision. 639 F.2d at 1282. In an effort to keep the case alive, the plaintiff sought to amend the complaint to substitute a new plaintiff who did have standing. Id. In affirming the district court's refusal to grant the amendment, the Fifth Circuit held, "where a plaintiff never had standing to assert a claim against defendants, it does not have standing to amend the complaint and control the litigation by substituting new plaintiffs, a new class, and a new cause of action." Id. Likewise here, the original Plaintiffs never had standing (see D.E. 65), and so lack standing to add additional plaintiffs.
Rockwell Int'l Corp. , by contrast, is not applicable; that case did not involve standing, but rather, interpretation of a statutory limitation on subject-matter jurisdiction. There, the Court addressed a statute that limited subject-matter jurisdiction based on the contents of, what the statute called, "the allegations." 549 U.S. at 472–73, 127 S.Ct. at 1408. The Court held that the statute did not limit the term "allegations" to the allegations of the first-filed complaint. Id. at 1409 ("The statute speaks not of the allegations in the ‘original complaint’ (or even the allegations in the ‘complaint’), but of the realtor's "allegations" simpliciter ) (emphasis in original). The Court went on to explain, "[t]he rule that subject-matter jurisdiction ‘depends on the state of things at the time of the action brought,’ does not suggest a different interpretation. The state of things and the originally alleged state of things are not synonymous; demonstration that the original allegations were false will defeat jurisdiction." Id. (citations omitted). When, however, a Plaintiff voluntarily amends the complaint to substitute allegations that are not subject to the statute, the court looks to the amended allegations. The question of standing, however, is a threshold that must be crossed before a Plaintiff has the right to amend. See, e.g. , Lujan v. Defenders of Wildlife , 504 U.S. 555, 570, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) ("[S]tanding is to be determined as of the commencement of suit."); Focus on the Family v. Pinellas Suncoast Transit Auth. , 344 F.3d 1263, 1275 (11th Cir.2003) ("Article III standing must be determined as of the time at which the plaintiff's complaint is filed."); MSPA Claims 1, LLC v. Covington Specialty Ins. Co. , 212 F.Supp.3d 1250, 1258 (S.D. Fla. 2016) (dismissing a similar claim for lack of standing where Plaintiff did not establish standing until five months after the suit was filed).
Here, the original Plaintiffs have failed to show that they have standing. Accordingly, Plaintiffs lack standing to amend the complaint to add new Plaintiffs who do have standing. Summit Office Park, Inc. , 639 F.2d at 1281 (holding that the purpose of Rule 15 was not frustrated by the district court's denial of leave to amend because "the intent of the rule is to assist the disposition of litigation on the merits of the case rather than have pleadings become ends in themselves."). Accordingly, Plaintiffs' addition of MSP Recovery Claims, Series LLC, was inappropriate. If MSP Recovery Claims, Series LLC, wishes to bring an action based on its assignment contract, it must file a new complaint. See id. ("The only proper way a claim could be made was to file a new complaint with new plaintiffs, a new class, and a new cause of action."). Finally, because the original three Plaintiffs have utterly failed to show that they have standing, despite the Court's guidance in its prior Order, the court dismisses their claims and closes the case. See MSPA Claims 1, LLC v. First Acceptance Ins. Co. , No. 16-20314-CIV, 2017 WL 3671033, at *3 (S.D. Fla. Aug. 24, 2017) (denying leave to file an amended complaint after dismissal for lack of standing where Plaintiff failed to show that amendment would remedy its lack of standing).
ORDERED AND ADJUDGED that Defendant Boehringer Ingelheim Pharmaceutical, Inc.'s Motion to Dismiss (D.E. 77) and Providio Defendants' Motion to Dismiss (D.E. 79) are GRANTED. It is further
ORDERED AND ADJUDGED that the Second Amended Class Action Complaint (D.E. 68) is DISMISSED FOR LACK OF STANDING. It is further
ORDERED AND ADJUDGED that the case is CLOSED for administrative purposes. All hearings are CANCELLED and all other motions are DENIED AS MOOT.
DONE AND ORDERED in Chambers at Miami, Florida, this 12th day of December, 2017.
ORDER on RECONSIDERATION
THIS CAUSE comes before the Court upon Plaintiffs' Motion for Reconsideration (D.E. 98).
THE COURT has considered the Motions, the pertinent portions of the record and is otherwise fully advised in the premises.
On December 13, 2017, the Court dismissed Plaintiffs' Second Amended Complaint for lack of standing. D.E. 97. Plaintiffs now seek reconsideration of that order.
BACKGROUND
Plaintiffs filed their first complaint on May 27, 2017. D.E. 1. On July 14, Boehringer, Inc. filed a motion to dismiss for lack of standing and failure to state a claim. D.E. 27. On August 3, Plaintiffs filed their Amended Complaint, which mooted the motion to dismiss. D.E. 40. On August 18, Boehringer, Inc. and the Providio Defendants filed motions to dismiss the Amended Complaint for lack of standing and failure to state a claim. D.E. 46, 47.
On October 10, 2017, the Court dismissed the first Amended Class Action Complaint for lack of standing. D.E. 65. The Court ruled that, to establish standing, Plaintiffs had to show: "(1) that the MAOs [from whom Plaintiff's received their assignments] suffered an injury (i.e., were not reimbursed when they were entitled to be), and (2) that the MAOs assigned their reimbursement rights to Plaintiffs." Id. , p. 8. The first Amended Complaint established the first requirement. Plaintiffs alleged that the MAOs' enrollees suffered injuries from using Pradaxa, that the MAOs paid the cost of treating those injuries, and that the enrollees sued the Pharmaceutical Defendants and were part of the MDL settlement. Id. Plaintiffs did not, however, establish the second requirement; they failed to show that they had valid assignments from the MAOs. The Court gave Plaintiffs specific guidance to establish standing: Plaintiffs needed to allege "the identity of the MAOs whose reimbursement rights they claim to own, the dates of the assignments, [and] the essential terms." Id. p, 9. The Court further suggested, but did not require, that Plaintiffs attach the assignment agreements to their Second Amended Complaint. Id. , fn. 1.
Plaintiffs filed their Second Amended Complaint on October 20. D.E. 69. They attached one assignment agreement between an MAO and Plaintiff, MSP Recovery, LLC. The attached agreement showed that MSP Recovery had an assignment as of May 12, 2017, about two weeks before Plaintiffs filed the first Complaint. Id. , Ex. A. No other Plaintiff was able to show that it had an assignment.
The one Plaintiff that had and assignment when the initial Complaint was filed reassigned its assignment to another entity on June 12, 2017, two weeks before Plaintiffs filed the First Amended Complaint, and therefore lost standing. That third party was not a named plaintiff in until the filing of the Second Amended Complaint on October 20, 2017. D.E. 68. Importantly, Plaintiffs' counsel did not seek leave of Court to add the new Plaintiff or to substitute the new Plaintiff for the original Plaintiffs. In any event, at the time of the filing of the Second Amended Complaint, the newly added Plaintiff was the only Plaintiff that could show it had an assignment.
To summarize: at the time of the original Complaint, one of the three original Plaintiffs had an assignment agreement. That Plaintiff, however, reassigned its agreement to a third-party two weeks before Plaintiffs filed the First Amended Complaint. Consequently, when Plaintiffs filed the First Amended Complaint, none of the Plaintiffs had an assignment agreement, and therefore none of them had standing. When Plaintiffs filed the Second Amended Complaint, they still lacked standing.
The timing of the assignments was central to the Court's dismissal of the Second Amended Complaint. Relying on binding Fifth Circuit precedent, the Court held that because the three original Plaintiffs lacked standing at the time they filed the Second Amended Complaint, they lacked standing to add Plaintiff, MSP Recovery Claims, Series LLC. See Summit Office Park, Inc. v. U.S. Steel Corp. , 639 F.2d 1278 (5th Cir. 1981).
STANDARD
A party may bring a motion for reconsideration pursuant to either Federal Rule of Civil Procedure 59(e) or 60(b). Williams v. Cruise Ships Catering & Serv. Int'l, N.V. , 320 F.Supp.2d 1347, 1357 (S.D. Fla. 2004). "Under which Rule the motion falls turns on the time at which the motion is served." Id. Rule 59(e) requires that such a motion "be filed no later than 28 days after entry of judgment." If filed after the time proscribed by Rule 59(e), then the motion falls under Rule 60(b). Williams , 320 F.Supp.2d at 1357. Here, the motion is brought within the 28–day time limit, and so the motion falls under Rule 59(e).
"While Rule 59(e) does not set forth any specific criteria, the courts have delineated three major grounds justifying reconsideration: (1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error or prevent manifest injustice." Id. at 1357–58 (internal citations omitted). In order to succeed on a Rule 59(e) motion, "the moving party must set forth facts or law of a ‘strongly convincing nature’ to induce the court to reverse its prior decision." Id. at 1358.
ANALYSIS
Plaintiffs move for reconsideration on the grounds that the Court made a manifest error of law. See Fed. R. Civ. P. 59(e), 60(b). They support their motion with two arguments: (1) that Summit Office Park was limited by a subsequent Eleventh Circuit decision and (2) that several other Circuits have considered and expressly refused to follow the rule of Summit Office Park .
The Court addresses the second argument first because it can be resolved simply. The Court is bound by Eleventh Circuit Precedent, which includes Fifth Circuit Precedent published before October 1, 1981, like Summit Office Park . See Bonner v. City of Prichard , 661 F.2d 1206 (11th Cir. 1981). The Court is not at liberty to follow the law of other Circuits if it contradicts the law of this Circuit.
Plaintiffs' other argument relies on the Eleventh Circuit's decision in Delta Coal Program v. Libman , 743 F.2d 852 (11th Cir. 1984) which stated that Summit Office Park applies only when a Plaintiff without standing adds a new party and a new cause of action. Delta Coal Program , 743 F.2d at 857, n.6. ("Here, by contrast, the operative facts and the cause of action are not changed, but only the formally named plaintiff."). Delta Coal Program , however, does not apply to the present case.
The Court considered this case in ruling on the motions to dismiss, but for the sake of giving the present Motion full consideration, will address it in more detail again.
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First, the district court there permitted the substitution of new plaintiffs, and it was within the court's discretion to do so. Delta Coal Program v. Libman , 743 F.2d 852, 856 (11th Cir. 1984) (holding that the district court has broad authority to take jurisdiction over a matter even when that matter is not brought by a real party in interest). Here, by contrast, Plaintiffs did not ask for, and the Court did not permit the substitution. Accordingly, Plaintiffs here prosecuted an action while they lacked standing to do so and without leave of the Court. See Strickland v. Alexander , 772 F.3d 876, 887 (11th Cir. 2014) ("the requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness)"); Live Entm't, Inc. v. Digex, Inc. , 300 F.Supp.2d 1273, 1279–80 (S.D.Fla.2003) ("[Plaintiff] has no standing to bring this action and no standing to make a motion to substitute the real party in interest.").
The requirement that a plaintiff without standing move to substitute a new plaintiff is necessary so that the Court may ensure that the substitution is not made to delay the action, as a result of a lack of due diligence by the plaintiffs, or for any other reason which might prejudice the defendants. See Id. (permitting substitution where the an "honest mistake" was made in naming plaintiffs); see also Live Entm't, Inc. v. Digex, Inc. , 300 F.Supp.2d at 1279–80 (S.D.Fla.2003) (denying leave to substitute a plaintiff where original plaintiff lacked standing and the court found that there was no honest or understandable mistake); James Ventures, L.P. v. Timco Aviation Serv. Inc. , No. 06-60420-CIV, 2008 WL 895714 (S.D. Fla. Apr. 2, 2008) (denying substitution of plaintiff who had been assigned right to indemnification because "a determination of the party with standing to sue was not difficult."); Park B. Smith v. CHF Indus., Inc. , 811 F.Supp.2d 766, 773–74 (S.D.N.Y.2011) (permitting substitution of true owner of patent when original plaintiff discovered it did not own it but the mistake was an honest one); In re Vivendi Universal, S.A. Secs. Litig. , 605 F.Supp.2d 570, 584 (S.D.N.Y.2009) (permitting substitution of original plaintiffs who lacked standing on the basis that a standing defect at the commencement of suit does not require dismissal of the action and would not prejudice defendants). Here, Plaintiffs' sua sponte substitution denied the Court the ability to balance these concerns, and therefore, was improper.
Second, two of the three Plaintiffs in Delta Coal had standing to bring the action and therefore to ask for the substitution. Here, none of the three original Plaintiffs had standing to file the Second Amended Complaint. Plaintiff, MSP Recovery, LLC, however, likely had standing until June 12, 2017, to move to substitute Plaintiff, MSP Recovery, Series, LLC, and it should have done so.
This decision is in line with another from this district and the Advisory Committee Notes to Rule 17. In Live Entertainment Inc ., the court relied on Summit Office Park , to hold that where a plaintiff lacked standing to bring the action, and the lack of standing was not an honest mistake, the plaintiff lacked standing to substitute a real party in interest. 300 F.Supp.2d at 1280. The Advisory Committee Notes to Rule 17 affirm that the rule is not intended to allow one plaintiff without standing to preserve an otherwise time-barred claim by standing in until a real party in interest can be found:
[This provision] does not mean, for example, that, following an airplane crash in which all aboard were killed, an action may be filed in the name of John Doe (a fictitious person), as personal representative of Richard Roe (another fictitious person), in the hope that at a later time the attorney filing the action may substitute the real name of the real personal representative of a real victim, and have the benefit of suspension of the limitation period. It does not even mean, when an action is filed by the personal representative of John Smith, of Buffalo, in the good faith belief that he was aboard the flight, that upon discovery that Smith is alive and well, having missed the fatal flight, the representative of James Brown, of San Francisco, an actual victim, can be substituted to
take advantage of the suspension of the limitation period.
Fed. R. Civ. P. 17 Advisory Committee's Notes. Accordingly, it is hereby
ORDERED AND ADJUDGED that Plaintiffs' Motion for Reconsideration (D.E. 98) is DENIED.
DONE AND ORDERED in Chambers at Miami, Florida, this 26th day of January, 2018.