Prescott v. Rady Children's Hospital-San Diego

Citation: 265 F. Supp. 3d 1090Docket: Case No.: 16-cv-02408-BTM-JMA

Court: District Court, S.D. California; September 27, 2017; Federal District Court

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Rady Children’s Hospital, San Diego (RCHSD) filed motions to dismiss and stay a lawsuit brought by Katharine Prescott on behalf of herself and her deceased son, Kyler Prescott. The complaint alleges RCHSD, a nonprofit healthcare organization, misrepresented its competence in treating transgender patients, specifically through its Gender Management Clinic. Kyler, assigned female at birth, began identifying as male at age ten and faced severe gender dysphoria, leading to self-harm and a social transition to living as a boy at age thirteen. He received puberty-delaying medication at age fourteen, which positively impacted his mental health but did not eliminate his depression or dysphoria. Despite RCHSD staff being informed of Kyler's male identity and the need to use male pronouns, nursing staff repeatedly misgendered him during an inpatient stay, causing him significant psychological distress. The Court addressed these issues in the context of the motions presented.

Kyler reported that during his time at RCHSD, staff began referring to him with female pronouns despite his initial identification with male pronouns. This misgendering led to Kyler also being called "she" by peers after staff's influence. Ms. Prescott, Kyler’s advocate, continually emphasized the importance of using male pronouns to the staff, warning them that misgendering was harmful. Despite her efforts, RCHSD staff blocked her phone number, preventing her from communicating about Kyler’s condition. Kyler experienced severe emotional distress due to this treatment, and despite ongoing issues with depression and suicidal ideation, he was discharged early from RCHSD on April 7, 2015. Following his discharge, he continued to struggle with anxiety and depression, ultimately leading to his suicide on May 18, 2015. Ms. Prescott is now pursuing legal action against RCHSD for violations including the Affordable Care Act, California’s Unruh Civil Rights Act, and other relevant laws. The document also outlines the standard for a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), specifying the need for a plaintiff's complaint to present a cognizable legal theory and adequate factual support for claims, with all allegations viewed favorably towards the plaintiff.

A trial court has the authority to stay an action pending the resolution of related independent proceedings, aiming for efficiency and fairness (Leyva v. Certified Grocers of Cal. Ltd.). The issues in the independent proceeding do not need to be controlling for the court to grant a stay. Key factors in deciding to stay a proceeding include potential damage from the stay, hardship for the party required to continue, and the orderly administration of justice, which encompasses the simplification of issues (CMAX, Inc. v. Hall). The burden of proof for hardship lies with the moving party (Landis v. N. Am. Co.).

In the discussion of a motion to dismiss regarding a claim under Section 1557 of the Affordable Care Act (ACA), RCHSD contends that transgender individuals were not protected at the time of the alleged discrimination due to the lack of retroactive application of the HHS regulation prohibiting such discrimination, which became effective on July 18, 2016. Ms. Prescott asserts that her claim is based on the ACA's language rather than the regulation, allowing the court to avoid the retroactivity issue. Federal courts typically reference Title VII cases when evaluating Title IX claims (Franklin v. Gwinnett Cnty. Pub. Sch.). The Ninth Circuit has recognized that "sex" encompasses both biological differences and gender identity, ruling that discrimination against transgender individuals based on gender nonconformity constitutes sex discrimination (Schwenk v. Hartford; Kastl v. Maricopa Cnty. Cmty. Coll. Dist.). Other circuits have similarly upheld protections for transgender individuals under Title IX and Title VII (e.g., Glenn v. Brumby; Smith v. City of Salem).

A label such as "transsexual" does not undermine a sex discrimination claim if discrimination arises from gender non-conformity, as established in Rosa v. Park West Bank & Trust Co. The court in Whitaker v. Kenosha Unified School District No. 1 granted a preliminary injunction, affirming that discrimination against a transgender individual is a violation of Title IX. The argument that Schwenk is limited to sex stereotyping does not invalidate the claim, as being transgender inherently involves non-conformance to sex-based stereotypes. The complaint alleges that RCHSD staff discriminated against Kyler by using female pronouns despite acknowledging his identity as a transgender boy, causing him distress, which supports a claim under the ACA. 

Regarding standing, RCHSD contends Ms. Prescott lacks the ability to assert a claim on her own behalf; however, she is bringing the claim on Kyler's behalf in a representative capacity, which is permissible. The court concurs that while Ms. Prescott cannot seek relief personally, she can represent Kyler. 

For declaratory and injunctive relief under section 1557 of the ACA, RCHSD argues again that Ms. Prescott lacks standing. The court agrees, noting that lack of standing precludes jurisdiction. A plaintiff must demonstrate standing for each type of relief sought, and to pursue injunctive relief, there must be allegations of ongoing adverse effects from the defendant's actions, rather than solely past conduct.

Ms. Prescott requests injunctive relief to ensure RCHSD provides nondiscriminatory care to all patients, asserting that without an injunction, RCHSD will continue discriminatory practices. However, she fails to demonstrate a likelihood of facing similar future harm or how an injunction would remedy Kyler’s injuries, leading to the dismissal of her requests for declaratory and injunctive relief.

Regarding pain and suffering damages, there is a dispute over whether these damages survive Kyler’s death under the Affordable Care Act (ACA). RCHSD argues that California’s survival statute bars emotional distress damages, relying on *Walsh v. Tehachapi Unified School District*, which supports this view for federal claims under section 1988(a). Conversely, Ms. Prescott cites *Lopez v. Regents of the University of California*, which argues that federal common law governs and allows for recovery of emotional distress damages under the ACA. The court agrees with Ms. Prescott, concluding that federal common law applies to her claim for emotional distress damages.

On the Unruh Civil Rights Act claim, RCHSD contends that Ms. Prescott lacks standing to assert a claim on behalf of Kyler. Citing cases that limit standing under the Unruh Act, RCHSD argues that Ms. Prescott cannot represent Kyler. However, the court finds these cases inapplicable since Ms. Prescott is acting as Kyler’s personal representative under California’s survivorship statute, which allows her to bring anti-discrimination claims on his behalf. Consequently, RCHSD’s motion to dismiss the Unruh claim is denied.

Ms. Prescott claims violations under California Government Code section 11136, asserting that RCHSD discriminated against her son Kyler based on sex and disability, denying them full access to services. Remedies for such violations are limited to civil actions for equitable relief, as established in Cal. Gov’t Code § 11139 and supported by case law. Although RCHSD does not contest standing, the court must examine jurisdictional issues on its own initiative. Ms. Prescott has not shown a threat of future harm or how an injunction would remedy her injuries, leading to the dismissal of her claim under section 11135.

Regarding the Unfair Competition Law (UCL), which prohibits unlawful, unfair, or fraudulent business practices, each category represents a distinct liability theory. RCHSD contends that Ms. Prescott lacks standing to pursue UCL claims for herself or on behalf of Kyler. The court notes that for a UCL claim, a plaintiff must demonstrate how unfair practices caused economic injury and that they relied on any misrepresentations. Under the UCL, a plaintiff can only seek restitution and injunctive relief, and they bear the burden of proving standing for each type of relief sought. UCL standing is more restrictive than federal standing requirements.

Under the Unfair Competition Law (UCL), a plaintiff must demonstrate an "injury in fact" and a loss of money or property due to unfair competition to have standing for relief. The California Supreme Court mandates that plaintiffs must establish both economic injury and a causal link between this injury and the unfair business practice. When alleging fraudulent business practices, plaintiffs must show actual reliance on the misrepresentations made by the defendant. A plaintiff does not need to prove that these misrepresentations were the sole cause of their injury, but must show that they were an immediate cause, meaning that in the absence of such misrepresentations, it's likely the plaintiff would not have engaged in the injurious conduct.

In the case at hand, Ms. Prescott alleges that RCHSD misrepresented its capability to treat transgender patients, claiming these representations were communicated through the operation of its Gender Management Clinic and related materials. She asserts that had she known the representations were false, she would not have sought medical care for her son Kyler at RCHSD. The court found that Ms. Prescott adequately demonstrated economic injury, including medical costs and other expenses, stemming from RCHSD's alleged misrepresentations.

RCHSD contends that the UCL claim is invalid because the statements on its website pertained to the Gender Management Clinic, not the CAPS unit where Kyler was admitted. However, the materiality of these statements to Ms. Prescott’s decision to seek care is a factual question for future determination. Materiality is assessed based on whether a reasonable person would consider the statements significant in their decision-making.

Additionally, RCHSD challenges Ms. Prescott's reliance on assurances from staff regarding respect for Kyler’s gender identity, stating these do not qualify as "commercial speech." In response, Ms. Prescott argues that false statements are not a prerequisite for establishing a UCL claim.

A plaintiff can allege an independent claim under the unfair or unlawful prongs of the Unfair Competition Law (UCL), but Ms. Prescott's UCL claim is based on alleged misrepresentations by RCHSD. California's consumer protection laws apply only to commercial speech, which is defined as speech proposing a commercial transaction. The court determines that RCHSD’s staff assurances do not qualify as commercial speech. However, Ms. Prescott has sufficiently alleged a UCL claim based on misrepresentations on RCHSD’s website, leading to the denial of RCHSD’s motion to dismiss.

Ms. Prescott has standing to bring a UCL claim on behalf of the decedent, Kyler, under California’s survivorship statute, provided Kyler could have initiated the suit prior to his death. Claims survive a person's death, subject to limitations, and thus the focus is on the decedent’s ability to bring suit. RCHSD’s arguments regarding class action standing and assignment rights under the UCL are deemed inapplicable. Despite the complaint failing to show Kyler's actual reliance on RCHSD’s misrepresentations, the claims under the unlawful and unfair prongs of the UCL remain viable, resulting in the denial of RCHSD’s motion to dismiss.

Regarding False Advertising Law (FAL) claims, RCHSD contests Ms. Prescott’s standing to sue on behalf of both herself and Kyler. The standing requirements for UCL and FAL are identical, and while Ms. Prescott has sufficiently alleged her claim, she has not established actual reliance for Kyler. Consequently, RCHSD’s motion to dismiss Ms. Prescott’s FAL claim is denied, while the motion for Kyler’s claim is granted.

RCHSD also seeks a stay of the action based on two reasons: a pending Supreme Court decision and a nationwide injunction from a different case. The court finds RCHSD’s first argument moot due to the Supreme Court remanding the case for further consideration. Additionally, the court denies the motion to stay based on the second reason, as the action does not hinge on the constitutionality of the HHS regulation challenged in the referenced case.

The ACA claim and the Court’s decision under the ACA are independent of the HHS regulation's enforcement or constitutionality. Unlike Rumble v. Fairview Health Servs., where the court relied on an HHS opinion letter regarding section 1557's application to gender identity discrimination, this Court solely relies on the language of section 1557. The Court agrees with Ms. Prescott that her action is unaffected by the Franciscan Alliance, Inc. injunction. RCHSD's motion to stay is denied due to its failure to demonstrate necessity. The Court partially grants and partially denies RCHSD's motion to dismiss. It dismisses Ms. Prescott's ACA injunctive and declaratory relief requests, claims under California Government Code section 11135, and Kyler’s FAL claim, while allowing Ms. Prescott to file a First Amended Complaint (FAC) regarding her section 11135 claims and Kyler's FAL claim within 15 days. Gender dysphoria is defined as a significant disparity between a person’s gender identity and their assigned gender at birth, lasting at least six months and accompanied by two other symptoms. Transition encompasses aligning one’s external identity to their gender identity, with social transition involving non-medical steps such as name and pronoun changes. HHS defines "discrimination on the basis of sex" to include "termination of pregnancy" and "gender identity" under Title IX of section 1557. The Court acknowledges that Ms. Prescott sufficiently states a claim under section 1557, negating the need to evaluate other claims. Emotional distress damages under California claims are unavailable, as specified by Cal. Civ. Proc. § 377.34. Ms. Prescott also seeks injunctive relief under the UCL and FAL but lacks standing, as there is no evidence suggesting RCHSD will likely continue unfair competitive practices or that she would face similar future harm.