United States District Court, W.D. Kentucky, Louisville
DAVE WHALIN, District Judge.
This matter comes before the Magistrate Judge by order of the District Court to consider certain nondispositive motions filed by the parties in this action involving a claim for payment of employment-related disability benefits. Plaintiff, Jo Anderson, is a former art teacher and employee of the Jefferson County Public Schools (JCPS) who seeks to obtain payment of disability benefits under a group disability insurance policy issued by the Defendant, Standard Insurance Company (Standard), to JCPS. Anderson alleges that she became disabled in October of 2012, and that Standard thereafter wrongfully refused to pay her claim for disability income benefits.
Anderson filed suit in state court against Standard seeking to recover on claims for breach of contract, breach of the duty of good faith and fair dealing, Kentucky's Unfair Claims Settlement Practices Act, KRS 304.12-230, the Kentucky Consumer Protection Act, KRS 367.170, violation of Kentucky's medical licensing statutes, unjust enrichment and punitive damages. Standard removed Anderson's lawsuit to federal court where she unsuccessfully attempted to have it remanded to the state courts. Anderson then filed an amended complaint that removed her claim for a violation of the Kentucky medical licensing statutes. The District Court entered a memorandum opinion and order that dismissed count C of the amended complaint, the Unfair Claims Settlement Practices Act count, without prejudice. In doing so, the District Court concluded that no claim for bad faith was established by Standard's use of its own unlicensed medical professionals to evaluate Anderson's application for disability insurance benefits.
The parties then proceeded to file a series of motions that we shall now proceed to consider in the present opinion. These motions raise issues that are identical to a series of motions the Magistrate Judge recently considered in a separate lawsuit for disability insurance benefits brought against Standard by Anderson's current counsel in a pending action styled Linda Graves v. Standard Insurance Co., Civil Action No. 3:14-CV-558-DJH. Because many of the arguments and motions in the present suit have been previously considered in depth by the Magistrate Judge in the Graves lawsuit, the Court shall incorporate much of the reasoning and language relied on in Graves as support for its rulings in the current case.
The first matter that the Court takes up is Standard's motion for an order to obtain the records of the Kentucky Retirement System (KRS). Standard has issued a third-party subpoena to KRS to obtain information concerning monthly benefits, if any, received by Anderson. Such benefits under the terms of the group insurance policy issued by Standard are required to be offset against the amount of any monthly disability benefits paid or payable. KRS has objected to the production of the requested documents absent the entry of a court order. Standard now maintains that the KRS records are relevant to the amount of Anderson's claimed damages. Anderson has not filed a response to the motion.
The Magistrate Judge addressed the substance of an identical motion in the memorandum opinion entered in Graves. The reasoning of the Graves opinion applies with full force in the present case. The only question before the Court is whether the records sought from KRS by Standard are relevant within the scope of Rule 26(b)(1). No claim of privilege has been raised. As explained in the Graves memorandum opinion, the records that Standard seeks are obviously important to Anderson's alleged damages given the terms of the group disability insurance policy at issue. Standard may have a potential offset based on any KRS benefits paid to Anderson. Anderson does not argue otherwise, and in fact, has not responded to the motion to obtain records.
Accordingly, for the reasons set forth in the memorandum opinion previously entered in Graves, the motion to obtain records from the KRS is GRANTED in its entirety. A separate order to this effect shall be entered by the Court.
The second matter that the Court addresses is the motion of Anderson for leave to file a second amended complaint. Similar to Graves, Anderson now seeks to add a non-diverse defendant party, the JCPS. In her proposed second amended complaint she brings claims against JCPS for breach of contract, misrepresentation, and violation of Kentucky's wage and hour statutes, KRS Chapter 337 et seq.  Anderson supports her motion for leave to amend with the same arguments raised by the plaintiff in Graves - that the liberal policy of Rule 15(a)(2), combined with the principle that cases should be tried on their merits, which together dictate that she be granted leave to amend so Anderson reasons.
Standard has filed an opposition to the motion in which it raises arguments identical to those it raised in opposition to Graves' motion for leave to file an amended complaint to add the JCPS in that case. Standard insists that Anderson is following in the footsteps of Graves. It accuses Anderson of a transparent attempt to divest the Court of its jurisdiction by the joinder of a non-diverse defendant. As before, it argues that the factors of 28 U.S.C. §1447(e) weigh strongly against such a joinder. Standard also argues that Anderson's motion is untimely, that it raises unrelated claims against JCPS that are better pursued separately, and that to grant the motion will deny Standard its substantial interest in litigating in federal court.
All of these arguments, as noted, were raised and considered by the Magistrate Judge in the prior memorandum opinion entered in Graves. The Court's opinion of the matter has not changed in the interim. Accordingly, section III of the Graves memorandum opinion expresses the current views of the Magistrate Judge on the parties' arguments for and against the request of Anderson for leave to file a second amended complaint.
The language of 28 U.S.C. §1447(e) as before sets the appropriate standard to be considered. Lawson v. Lowe's Home Ctrs, LLC, No. 5:13-374-KKC, 2015 WL 65117 at *3 (E.D. Ky. Jan. 5, 2015)("Congress enacted Section 1447(e) to address this specific type of proposed amendment... an amendment to join additional defendants whose joinder would destroy subject matter jurisdiction."). Analysis under §1447(e) "is necessary to prevent amendments motivated simply by the plaintiff's desire to return to state court, as opposed to a desire to add a party whose presence is needed to secure a complete relief." Barnett v. MV Transportation, Inc., No. 3:14-CV-250-TBR, 2014 WL 1831151 at *2 (W.D. Ky. May 8, 2014).
Under the provisions of §1447(e) we determine if joinder would be fair and equitable by considering whether: (1) the purpose of the proposed ...