Case 3:14-cv-01279-BR Document 79 Filed 02/06/15 Page 1 of 6 David B. Markowitz, OSB No. 742046 DavidMarkowitz@MarkowitzHerbold.com Lisa A. Kaner, OSB No. 881373 LisaKaner@MarkowitzHerbold.com Dallas S. DeLuca, OSB No. 072992 DallasDeLuca@MarkowitzHerbold.com Harry B. Wilson, OSB No. 077214 HarryWilson@MarkowitzHerbold.com MARKOWITZ HERBOLD PC Suite 3000 Pacwest Center 1211 S.W. Fifth Avenue Portland, OR 97204-3730 Tel: (503) 295-3085 Fax: (503) 323-9105 On Behalf of Oregon Attorney General Ellen Rosenblum Special Assistant Attorneys General for Defendants Oregon Health Insurance Exchange Corporation and the State of Oregon IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON PORTLAND DIVISION ORACLE AMERICA, INC., a Delaware Corporation, v. Plaintiff, THE OREGON HEALTH INSURANCE EXCHANGE CORPORATION, dba COVER OREGON, an Oregon public corporation; THE STATE OF OREGON, BY AND THROUGH THE OREGON HEALTH AUTHORITY AND THE OREGON DEPARTMENT OF HUMAN SERVICES, AND DOES 1-25, INCLUSIVE, CV No.: 3:14-cv-01279-BR Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR OTHERWISE RESPOND TO THE SECOND AMENDED COMPLAINT and SUPPORTING MEMORANDUM Rule 6(b)(1)(A) Oral Argument Requested Defendants. Page 1 - Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR
Case 3:14-cv-01279-BR Document 79 Filed 02/06/15 Page 2 of 6 LOCAL RULE 7.1 CERTIFICATION Pursuant to LR 7.1, defendants the Oregon Health Insurance Exchange Corporation, doing business as Cover Oregon, and the State of Oregon by and through the Oregon Health Authority and the Oregon Department of Human Services (collectively Defendants ) certify that they have conferred, through counsel via telephone on February 5, 2015, with plaintiff and that plaintiff opposes this motion. MOTION Pursuant to Fed. R. Civ. P. 6(b)(1)(A), defendants respectfully move to extend the time for Cover Oregon, or its successor, to respond to plaintiff s Second Amended Complaint until the legislature acts on Senate Bill 1. Senate Bill 1 will end Cover Oregon s existence and make the Department of Consumer and Business Services ( DCBS ) the successor for Cover Oregon s litigation. If Senate Bill 1 becomes law, DCBS will move for leave to substitute for Cover Oregon. If the Court grants DCBS s motion, DCBS will respond to the Second Amended Complaint. If Senate Bill 1 is not enacted, then Cover Oregon must respond to the Second Amended Complaint on the last day of the legislative session, currently scheduled for July 3, 2015. SUMMARY OF THE ARGUMENT On February 2, 2015, the Oregon Legislature introduced Senate Bill 1. That bill ends the existence of Cover Oregon. (Ex. 1 to Decl. of Greg Scott at 1, SB 1-3 2(1).) Under the proposed amendment to Senate Bill 1 ( SB 1-3 ), the bill will, upon passage, substitute DCBS for Cover Oregon in all pending litigation. (Id. at 2-3, SB 1-3 5.) 1 Once substituted, DCBS likely will assert its Eleventh Amendment immunity and move to dismiss all claims filed against it in federal court. (See id. at 3-4, SB 1-3 6(3) (bill does not waive any of DCBS s defenses and immunities).) Any motion or pleading that Cover Oregon files before then may become moot if the legislature passes Senate Bill 1. The parties and the court can easily avoid wasting resources on motions and pleadings that may become moot by postponing Cover Oregon s 1 The bill, as introduced without the amendment, will substitute DCBS for Cover Oregon on June 30, 2015. This memorandum refers to and attaches the amended version of Senate Bill 1. Page 2 - Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR
Case 3:14-cv-01279-BR Document 79 Filed 02/06/15 Page 3 of 6 response date. Further, DCBS should not be prejudiced by any acts that Cover Oregon takes prior to substitution. The Court should not require Cover Oregon to respond to the complaint until the legislature acts on Senate Bill 1. I. Senate Bill 1 will substitute DCBS into all pending litigation. It is important to wait until the Oregon Legislature acts because a corporation s existence and participation in litigation is governed by legislation. In that regard, Senate Bill 1 does at least two things immediately relevant to this action. First, as introduced, it ends the existence of Cover Oregon as of June 30, 2015. (1) The Oregon Health Insurance Exchange Corporation is abolished. (Ex. 1 at 1, SB 1-3 2(1)). If Senate Bill 1 is passed, Cover Oregon will end on June 30, 2015. (Id. at 74-75, SB 1-3 60(1).) If a corporation s existence ends, even a government corporation, then all claims by or against that corporation are abated unless and until a successor is appointed by the legislature. Oklahoma Natural Gas Co. v. Oklahoma, 273 U.S. 257, 259-60 (1927); Asociacion de Empleados del Area Canalera (ASEDAC) v. Panama Canal Comm n, 453 F.3d 1309, 1313-14 (11th Cir. 2006); Monolith Portland Midwest Co. v. Reconstruction Fin. Corp., 282 F.2d 439, 443 (9th Cir. 1960) ( basic premise that in the absence of statute an action by or against a corporation abates when the corporation goes out of existence. ); Service & Wright Lumber Co. v. Sumpter Valley Ry. Co., 81 Or. 32, 43, 152 P. 262, 265 (1915) (recognizing common-law rule abating every action and destroying all rights of recovery on behalf of a corporation the moment it became dissolved. ). Oracle may object to this motion and contend that dissolution does not affect the current litigation. That is not so. After dissolution of Cover Oregon, Oracle s claims will not continue against Cover Oregon because Cover Oregon is not a corporation organized under ORS chapter 60. Although the legislature has provided that regular corporations after corporate dissolution can continue actions in their own names, ORS 60.347(2)(f), in contrast the existing statutes about Cover Oregon do not allow Cover Oregon to continue as a party in court actions after it is terminated. See ORS chapter 741 (not providing a right to continue in litigation after dissolution). If the Oregon Legislature dissolves Cover Oregon, all litigation is abated unless the Page 3 - Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR
Case 3:14-cv-01279-BR Document 79 Filed 02/06/15 Page 4 of 6 legislature provides otherwise. See Oklahoma Natural Gas Co., 273 U.S. at 259 (stating rule); ASEDAC v. Panama Canal Comm n, 453 F.3d at 1313-14 (stating rule and quoting Oklahoma Natural Gas). Second, Senate Bill 1 provides for the substitution that the common law rule requires. Senate Bill 1 substitutes DCBS into all pending litigation. (Ex. 1 at 2-3, SB 1-3 5.) That substitution will occur immediately upon passage of Senate Bill 1. (Id. at 74-75, SB 1-3 60-61 (other sections of act have delayed operative date of June 30, 2015, but 1, 5 & 6, inter alia, are effective upon passage).) II. Bipartisan support in the legislature and the support of the Governor mean likely passage before June 30, 2015. Legislators from both parties and the Governor have publicly stated that they support legislation to end Cover Oregon s existence. Based on those public statements, and the prompt introduction of a bill to do just that, it appears some change to Cover Oregon s public corporation status will occur in this legislative session. In that case, pleadings and motions by Cover Oregon will become moot. Resolution of Cover Oregon s status will not take long; the Oregon Constitution requires the legislature to complete its session on or before Saturday, July 11, 2015. 2 Passage, or failure to pass this bill, likely will occur long before July, because Senate Bill 1 is, according to the press reports, a high priority. See Kristian Foden-Vencil, Legislators Expected to Put an End to Cover Oregon, OPB News Jan. 27, 2015 (reporting that Democrats, Republicans and Governor John Kitzbaher all agree: Cover Oregon is finished. ) available at http://www.opb.org/news/article/cover-oregon-will-end-this-legislative-session/ (attached as Ex. 2 to Decl. of Greg Scott). III. Cover Oregon should not respond to the Second Amended Complaint because DCBS will assert different defenses than Cover Oregon. Cover Oregon is a public corporation. ORS 741.001(1). DCBS is a department of the state. ORS 705.105(1). When DCBS substitutes for Cover Oregon in pending litigation, the 2 The Session began February 2, 2015. House Concurrent Resolution 15 2(a) (2015). The legislative session may not exceed 160 days. Or. Const. Art. IV, 10(1)(a); but see id. Art. IV, 10(3) (legislature may extend session by five days upon two-thirds vote of both houses). Page 4 - Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR
Case 3:14-cv-01279-BR Document 79 Filed 02/06/15 Page 5 of 6 rights and obligations that DCBS receives from Cover Oregon are subject to the limitations, defenses and immunities that DCBS has under Oregon and federal law. (Ex. 1 at 3, SB 1-3 6(3).) DCBS will substitute for Cover Oregon, but will not waive any defenses that it may have that Cover Oregon does not. (Id.) Not only does DCBS have different defenses and immunities than Cover Oregon, DCBS will make different litigation decisions than Cover Oregon would. For example, regardless of whether Cover Oregon could assert an Eleventh Amendment immunity defense, DCBS will. See Amerind Risk Mgmt. Corp. v. Malaterre, 633 F.3d 680, 686 n. 7 (8th Cir. 2011) ( A sovereign entity does not automatically waive its sovereign immunity through the mere act of succeeding a corporation that is either not entitled to sovereign immunity or that has waived such immunity. ); Maysonet Robles v. Cabrero, 323 F.3d 43, 49 50 (1st Cir. 2003) (same rule concerning Eleventh Amendment immunity); Kroll v. Board of Trustees of the Univ. of Ill., 934 F.2d 904, 909 (7th Cir. 1991) (same rule concerning Eleventh Amendment immunity); see also ASEDAC v. Panama Canal Comm n, 453 F.3d at 1314-16 (sovereign entity does not waive its sovereign immunity merely by receiving assets and interests of dissolved public corporation). Additionally, Cover Oregon s litigation conduct should not become a distraction in future briefing. It has long been established that a State s conduct in a federal lawsuit can constitute waiver[.] Maysonet-Robles, 323 F.3d at 52 (citations omitted). Here, Cover Oregon s litigation conduct does not create a waiver that would bind DCBS, see Amerind Risk Management Corp., supra, but extending Cover Oregon s time to respond to the complaint would foreclose such futile arguments and unnecessary briefing. See Maysonet-Robles, 323 F.2d at 52-53 (rejecting plaintiffs argument that actions of defendant public corporation preceding substitution by state constituted waiver by litigation conduct; noting that public corporation and state had not filed an answer). The merits of DCBS s possible defenses are not before this Court in this motion. Defendants move the Court, instead, merely for an extension of time until DCBS can file its Fed. R. Civ. P. 25(c) motion to substitute into this litigation. This will happen, if at all, no later than Page 5 - Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR
Case 3:14-cv-01279-BR Document 79 Filed 02/06/15 Page 6 of 6 July 11, 2015, and probably much sooner. After substitution, DCBS will respond to the Second Amended Complaint. CONCLUSION Defendants respectfully request that the Court extend the time for Cover Oregon, or its successor, to respond to plaintiff s second amended complaint. DATED this 6th day of February, 2015. ELLEN ROSENBLUM, ATTORNEY GENERAL FOR THE STATE OF OREGON By: /s/ Dallas S. DeLuca David B. Markowitz, OSB No. 742046 DavidMarkowitz@MarkowitzHerbold.com Lisa A. Kaner, OSB No. 881373 LisaKaner@MarkowitzHerbold.com Dallas S. DeLuca, OSB No. 072992 DallasDeLuca@MarkowitzHerbold.com Harry B. Wilson, OSB No. 077214 HarryWilson@MarkowitzHerbold.com Tel: (503) 295-3085 Fax: (503) 323-9105 On Behalf of Oregon Attorney General Ellen Rosenblum Special Assistant Attorneys General for Defendants Oregon Health Insurance Exchange Corporation and the State of Oregon Page 6 - Defendants MOTION FOR EXTENSION OF TIME TO ANSWER OR