Indigo LR LLC; Chris Eakin, on behalf of themselves and other similarly situated v. Advanced Insurance Brokerage of America Inc., also known as Advanced Insurance…

United States Court of Appeals
For the Eighth Circuit
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No. 12-3119
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Indigo LR LLC; Chris Eakin, on behalf of themselves and other similarly situated
lllllllllllllllllllll Plaintiffs - Appellants
v.
Advanced Insurance Brokerage of America Inc., also known as Advanced
Insurance Administration; Matt Lile; Employers Choice Health Plan
lllllllllllllllllllll Defendants - Appellees
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Appeal from United States District Court
for the Eastern District of Arkansas - Little Rock
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Submitted: April 9, 2013
Filed: June 21, 2013
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Before LOKEN and GRUENDER, Circuit Judges, and PHILLIPS, District Judge.1
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GRUENDER, Circuit Judge.
The Honorable Beth Phillips, United States District Judge for the Western1
District of Missouri, sitting by designation.

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Indigo LR, LLC (“Indigo”) and one of its employees, Chris Eakin, appeal the
district court’s dismissal of their claims for breach of contract, negligence,2
conspiracy, and violations of ERISA and RICO against Advanced Insurance
Brokerage of America, also known as Advanced Insurance Administration
(“Advanced”), and Matt Lile. For the reasons discussed below, we affirm the district
court’s dismissal without prejudice for lack of standing.
I. Background
Indigo operates a clothing store in Little Rock, Arkansas. During the time
period relevant to this case, Indigo provided a self-funded health insurance plan for
its employees through the Employers Choice Health Plan. The Employers Choice
Health Plan was operated by Advanced, a third-party administrator, and
Cosmopolitan Life Insurance Company (“Cosmo”), an excess insurer. Although the
relationship between Advanced and Cosmo is not clear from the record, Lile was both
an owner of Advanced and a minority shareholder of Cosmo.
Under the plan, Indigo paid an annual retention to Advanced in monthly
installments. If Indigo submitted a covered claim on behalf of an employee,
Advanced paid first on that claim from Indigo’s retention fund. To the extent any
claim exceeded the amount then residing in Indigo’s retention fund, Indigo was
required to pay the excess itself and then seek reimbursement under the Cosmo excess
policy.
Eakin, an Indigo employee, had knee surgery in July 2008. Indigo timely
submitted a claim to Advanced, but payment on the claim was not made due to
financial problems at Cosmo. In March 2009, the Arkansas Insurance Commissioner
The Honorable D.P. Marshall, Jr., United States District Judge for the Eastern2
District of Arkansas.
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obtained a state-court order placing Cosmo into receivership. The order enjoined any
claims or litigation against Cosmo or the receiver. The receiver notified Indigo that,
pursuant to the plan, Indigo would have to pay Eakin’s medical costs and then submit
the bills to the receiver for reimbursement. The receiver was cautiously optimistic
that all claims submitted under Cosmo policies could be paid in full eventually.
Accordingly, Indigo paid Eakin’s medical bills and sought reimbursement from the
receiver.
Indigo and Eakin filed suit against Advanced, Cosmo, and Lile in June 2009,
but the district court stayed the suit pending resolution of the receivership. Indigo
and Eakin were granted a voluntary dismissal of that suit without prejudice. By
December 2009, the receiver had paid half of Indigo’s submitted claim under the
Cosmo policy. Indigo and Eakin filed this lawsuit in August 2010 against Advanced
and Lile (but not Cosmo this time), alleging breach of contract, negligence,
conspiracy, and violations of ERISA and RICO on the theory that Advanced and Lile
had intentionally delayed payments on valid claims. After Advanced and Lile
removed the case to federal district court, Indigo and Eakin amended their complaint
to plead a class action. At a class certification hearing in September 2011, the
receiver testified that he anticipated Indigo’s claim under the Cosmo policy would be
reimbursed in full. At the close of the receiver’s testimony, the court asked him to
elaborate on the likelihood that all submitted claims would be paid in full. The
receiver explained that there were sufficient funds to cover all submitted claims to
date and the period for accepting additional claims was about to expire.
In March 2012, while a decision on class certification was on hold pending
settlement efforts, the receiver indeed paid the remaining half of Indigo’s submitted
claims. Indigo notified the district court of the payment and requested the
opportunity for supplemental briefing on its impact. The district court accepted
supplemental briefing from both parties, including an affidavit from the receiver
stating that all claims submitted under the Cosmo policy had been paid in full. The
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district court then dismissed the complaint without prejudice for lack of standing,
holding that Indigo’s injury had been fully redressed and that Eakin never had a
cognizable injury. On appeal, Indigo argues that, despite receiving full3
reimbursement from the receiver, it suffered an injury because a monthly retention
amount it had paid to Advanced was neither credited towards Eakin’s medical costs
nor repaid to Indigo.
II. Discussion
We review the issue of standing de novo. St. Paul Area Chamber of Commerce
v. Gaertner, 439 F.3d 481, 484 (8th Cir. 2006). To establish standing, a plaintiff must
demonstrate that it suffered “(1) an ‘injury-in-fact’ that (2) is ‘fairly ... trace[able] to
the challenged action of the defendant’ and (3) is ‘likely ... [to] be redressed by a
favorable decision’ in court.” ABF Freight Sys., Inc. v. Int’l Bhd. of Teamsters, 645
F.3d 954, 958 (8th Cir. 2011) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,
560-61 (1992)).
“Since they are not mere pleading requirements but rather an indispensable part
of the plaintiff’s case, each element [required to demonstrate standing] must be
supported in the same way as any other matter on which the plaintiff bears the burden
of proof, i.e., with the manner and degree of evidence required at the successive
stages of the litigation.” Lujan, 504 U.S. at 561. Here, the dismissal for lack of
standing occurred at an atypical stage of the litigation—after an evidentiary hearing
and supplemental briefing with additional affidavits in association with a motion for
class certification. A motion for class certification may result in the preliminary
resolution of factual disputes, see Luiken v. Domino’s Pizza, LLC, 705 F.3d 370, 372
At oral argument, counsel for Appellants conceded that Eakin did not suffer3
an injury in fact because his medical costs were covered in full. Accordingly, we
examine standing with respect only to Indigo.
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(8th Cir. 2013), and the district court’s factual determinations at this stage are
accepted unless they are clearly erroneous, Blades v. Monsanto Co., 400 F.3d 562,
566 (8th Cir. 2005).
The district court credited the receiver’s affidavit stating that Indigo was
reimbursed for the entirety of the claim it submitted to the receiver for Eakin’s
medical costs, and Indigo does not dispute this factual finding. Instead, Indigo argues
on appeal that “the Receiver . . . refused to give the plans credit for the retention they
paid to [Advanced].” In other words, Indigo asserts that (1) it paid a retention amount
to Advanced that should have been used to pay a first portion of Eakin’s medical
bills, (2) Advanced never paid that first portion or returned the retention amount to
Indigo, and (3) the receiver also did not reimburse Indigo for that first portion
(because Cosmo, an excess insurer, never was liable for that first portion).
The difficulty with Indigo’s theory of injury is that Indigo presented no
evidence to show that it was out-of-pocket for any retention amount. Indigo argues
that the following exchange with the receiver at the class certification hearing
supports its theory:
Q. But my question and the reason we’re here is, you’ve done no
analysis to determine in my hypothetical here if this plan had paid their
monthly [retention] payments . . ., you’re not taking into consideration
that payment when determining whether or not to pay -- Cosmo should
pay claims, are you?
A. I’m not, no.
Q. All right. So we had at least 64, 74 plans that were paying . . . the
retention that Cosmo wasn’t able to fund; correct?
A. It’s not Cosmopolitan’s obligation to fund that.
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Q. It was the plan’s obligation.
A. The money was paid to [Advanced], which included the retention
amount. Any retention amount held by [Advanced] should have been
used to pay claims, and then if there was any claims paid after that by
the employer, Cosmopolitan was liable under the treaty.
This testimony, however, is simply an acknowledgment by the receiver that
retention payments by Advanced to the sixty-plus plans it administered were
generally outside Cosmo’s purview, not evidence that any particular plan was denied
the benefit of its retention payments. Indigo fails to direct us to any evidence in the
record that Indigo made the relevant retention payment to Advanced or that Indigo
maintained a balance in its retention fund at Advanced that should have been
available to cover Eakin’s medical expenses. Indigo also fails to direct us to any
evidence in the record that a portion of Eakin’s medical bills corresponding to the
retention amount was omitted from its claim to the receiver. The sole relevant
evidence before the district court was the receiver’s statement that all claims had been
fully reimbursed. Based on this record, we cannot say that the district court clearly
erred in finding that the receiver’s reimbursement fully redressed any injury suffered
by Indigo. See F.T.C. v. Lundbeck, Inc., 650 F.3d 1236, 1239 (8th Cir. 2011) (“If the
district court’s fact-findings are ‘plausible in light of the record viewed in its
entirety,’ they must be affirmed . . . .” (quoting Moore v. Forrest City Sch. Dist., 524
F.3d 879, 884 (8th Cir. 2008))).4
Indigo suggests that it did not have an opportunity to introduce specific4
evidence of its uncredited retention payments. However, the receiver’s testimony at
the September 2011 hearing made clear that full reimbursement of Indigo’s submitted
claim was imminent, putting Indigo on notice that its sole claim of injury to that
point—less-than-full reimbursement from the receiver—likely would be mooted.
Yet, Indigo made no effort to submit evidence that it also was injured by uncredited
retention payments. After formal notification from the receiver in March 2012 that
Indigo’s claim was fully reimbursed, the district court ordered supplemental briefing
specifically to address the impact of full repayment, again giving Indigo an
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Indigo raises several other arguments in support of standing, but none of them
are applicable. First, Indigo argues that defendants cannot moot a putative class
action simply by paying the claims of the named plaintiffs. See Deposit Guar. Nat’l
Bank v. Roper, 445 U.S. 326, 339 (1980) (“Requiring multiple plaintiffs to bring
separate actions, which effectively could be ‘picked off’ by a defendant’s tender of
judgment before an affirmative ruling on class certification could be obtained,
obviously would frustrate the objectives of class actions . . . .”). Here, defendants
Advanced and Lile did not pay Indigo’s claim; the receiver for Cosmo, an
independent actor, did. Second, Indigo argues that it successfully pled a cause of
action under ERISA, but pleading the elements of an ERISA claim does not obviate
the need to establish Article III standing. See Braden v. Wal-Mart Stores, Inc., 588
F.3d 585, 591 (8th Cir. 2009) (noting that a plaintiff “must have both Article III
standing and a cause of action under ERISA” to survive dismissal). Third, Indigo
argues that standing is present due to the risk of harm from some prospective injury,
but Indigo switched to a new health plan in February 2009, and Advanced and Cosmo
are out of business, rendering any future harm from repeated conduct highly unlikely.
Finally, Indigo argues that a defendant’s voluntary cessation of alleged illegal
conduct does not automatically moot a case. See Friends of the Earth, Inc. v. Laidlaw
Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000). As discussed above, however,
the problem here is that Indigo has failed to show how any injury has arisen, or might
arise in the future, from the alleged conduct.
Accordingly, we agree with the district court that Indigo has failed to establish
standing.
opportunity to present evidence of any other claimed injury. Indigo chose not to
submit any affidavits, request an evidentiary hearing, or otherwise brief the details of
any uncredited retention payments.
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III. Conclusion
For the foregoing reasons, we affirm the district court’s dismissal without
prejudice for lack of standing.
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