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K.A. v. Children's Mercy Hospital

United States District Court, W.D. Missouri, Western Division

May 16, 2019

K.A., BY AND THROUGH HER NEXT FRIEND B.W. INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED; Plaintiff,
v.
CHILDREN'S MERCY HOSPITAL, Defendant.

          ORDER

          ROSEANN A. KETCHMARK, UNITED STATES DISTRICT COURT.

         Plaintiff K.A., a minor, by her next friend and mother, B.W., brings this putative class action for damages against Defendant Children's Mercy Hospital. Before the Court is a motion for judgment on the pleadings filed by Defendant. (Doc. 15.) The motion is fully briefed. (Docs. 16, 22, 23.) Supplemental briefing has been filed and oral argument held on the issue of Article III standing. (Docs. 29, 30.) For the reasons below, the motion is GRANTED in part. The Court concludes that Plaintiff's Complaint fails to state a claim for breach of contract in Count III. Plaintiff may file a motion for leave to amend the Complaint that complies with Local Rule 15.1 within thirty days from the date of this Order. (Doc. 27.) If Plaintiff cannot cure the deficiencies in Count III by an amended complaint, Counts III will be dismissed.

         Background

         Defendant is a health care provider that offers healthcare and medical treatment services. As a health care provider, Defendant generates and stores medical records, including Plaintiff's medical records, which include sensitive information concerning patients' treatment and identification. Defendant posts a notice on its website regarding its privacy practices.[1] In March 2017, an employee of Defendant created an unauthorized website that contained patients' private treatment and identification information (the “Website”). Two months later, Defendant sent Plaintiff a letter notifying her of the Website. Plaintiff then filed suit in Missouri state court on behalf of a putative class asserting the following claims against Defendant: violation of Missouri's Merchandising Practices Act (“MMPA”) (Count I), breach of fiduciary duty (Count II), breach of contract (Count III), negligent training, hiring, and supervision (Count IV), and negligence (Count V). Defendant removed the case pursuant to this Court's diversity jurisdiction under the Class Action Fairness Act, 28 U.S.C. § 1332(d), answered the allegations and now moves this Court for judgment on the pleadings under Federal Rule of Civil Procedure 12(c).

         Discussion

          The Court begins by addressing the issue of standing because standing is jurisdictional and required to open the door to federal court. See Doe v. Chao, 540 U.S. 614, 624-25 (2004). Then, the Court turns to instant motion in which Defendant challenges the factual and legal sufficiency of Plaintiff's state law claims. It is undisputed that Plaintiff's claims are governed by Missouri substantive law. See Shady Grove Orthopedic Assocs., P.A. v. Allstate Ins. Co., 559 U.S. 393, 417 (2010) (“[F]ederal courts sitting in diversity apply state substantive law and federal procedural law.”) (citation and internal quotations omitted).

         I. Standing

         Although both parties assert that Plaintiff has standing, the Court is “under an independent obligation to examine [its] own jurisdiction, and standing is perhaps the most important of the jurisdictional doctrines.” Nolles v. State Comm. for the Reorganization of Sch. Dists, 524 F.3d 892, 897 (8th Cir. 2008); see Carlsen v. GameStop, Inc., 833 F.3d 903, 908 (8th Cir. 2016) (“[I]f a plaintiff lacks standing to sue, the district court has no subject-matter jurisdiction.”). “Federal courts are courts of limited jurisdiction, cabined by the authority granted to them by Article III of the United States Constitution.” Nolles, 524 F.3d at 897. Article III limits federal courts' jurisdiction to deciding cases and controversies. U.S. Const. art III, § 2. “One of the controlling elements in the definition of a case or controversy under Article III is standing.” Id. at 897-98. (citations and internal quotations omitted). “Constitutional standing requires a showing of: (1) an injury in fact, which is an invasion of a legally protected interest that is concrete, particularized, and either actual or imminent; (2) causation; and (3) redressability.” Curry v. Regents of the Univ., 167 F.3d 420, 422 (8th Cir. 1999).

         In this case, the issue implicated by the parties' briefs is whether Plaintiff suffered an injury in fact. “A plaintiff who has ‘produced facts indicating it was a party to a breached contract' has a judicially cognizable interest for standing purposes, regardless of the merits of the breach alleged.” Carlsen, 833 F.3d at 909 (citation omitted). Here, in accordance with Eighth Circuit case law, Plaintiff's allegations are sufficient to confer Article III standing regarding her breach of contract claim. Plaintiff alleged that Defendant's notice constitutes an agreement with its patients. Plaintiff alleged that Defendant breached its agreement with Plaintiff when it failed to implement security measures to fulfill its agreement, which resulted in Plaintiff suffering the diminished value of her bargain. Although the allegations contained in the Complaint are broad and conclusory, facts establishing the legal conclusion of a valid, enforceable contract are not required to assert standing in a breach-of-contract claim. Carlsen, 833 F.3d at 909. Further, the Court is bound by the Eighth Circuit's admonishment that “[i]t is crucial . . . not to conflate Article III's requirement of injury in fact with a plaintiff's potential causes of action, for the concepts are not coextensive.”[2]Id.; see Kuhns v. Scottrade, Inc., 868 F.3d 711, 715-716 (8th Cir. 2017) (analyzing standing for breach of contract claims in data breach case) (Carlsen is controlling).

         The Court further concludes that Plaintiff has standing to bring her other claims. As to the claim brought under the MMPA, the statute “provides a private right of action to any person who sustains ascertainable loss in connection with the purchase or lease of merchandise as a result of certain practices declared unlawful.” Kuhns v. Scottrade, Inc., 868 F.3d 711, 719 (8th Cir. 2017) (citing RSMo. § 407.025(1)). Here, Plaintiff alleges she overpaid for health care services from Defendant due to the inadequate protection of her medical records, and she therefore has standing to bring her claim under the MMPA. (Doc. 1-2 at ¶ 35.) See Carlsen, 833 F.3d at 910 (finding standing to bring Minnesota consumer protection claim based on similar allegations). Additionally, for each of her claims, Plaintiff alleges she was injured due to inadequate protection of her medical records because she thereby lost the benefit of her bargain. See Kuhns, 868 F.3d at 716 (finding standing for breach of contract claims as well as statutory consumer protection claim after determining that plaintiff had standing regarding his breach of contract claims).[3] The Court now turns to the instant motion for judgment on the pleadings.

         II. Motion for Judgment on the Pleadings

         A. Legal Standard

          “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). “A defense of failure to state a claim may be raised in such a motion, see Fed. R. Civ. P. 12(h), and we employ the same standard that we would have employed had the motion been brought under Rule 12(b)(6).” St. Paul Ramsey Cty. Med. Ctr. v. Pennington Cty., 857 F.2d 1185, 1187 (8th Cir. 1988). To survive a motion to dismiss under Rule 12(b)(6), a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible if “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Court “accept[s] the well-pled allegations in the complaint as true and draw[s] all reasonable inferences in the plaintiff's favor.” Meiners v. Wells Fargo & Co., 898 F.3d 820, 821 (8th Cir. 2018). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Iqbal, 556 U.S. at 679; Twombly, 550 U.S. at 570 (factual allegations must “cross the line from conceivable to plausible”).

         B. Breach of Contract Claim (Count III)

         “A breach of contract action includes the following essential elements: (1) the existence and terms of a contract; (2) that plaintiff performed or tendered performance pursuant to the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff.” Keveney v. Mo. Military Acad., 304 S.W.3d 98, 104 (Mo. banc. 2010). “The elements required to form a valid contract in Missouri are ‘offer, acceptance, and bargained for consideration.'” Whitworth v. McBride & ...


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