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Case 1:14-cv-00871-RPM Document 109 Filed 09/08/15 USDC Colorado Page 1 of 35

IN THE UNITED STATES DISTRICT COURT


FOR THE DISTRICT OF COLORADO
Civil Action No. 1:14-cv-00871-RPM-MJW
CDMO, INC., and CDET, INC.,
Plaintiff/Counterclaim-Defendants,
v.
COMFORT DENTAL GROUP, INC.,
Defendant/Counterclaim-Plaintiff,
DR. CRAIG BAHR,
Counterclaim-Defendant.

RESPONSE IN OPPOSITION OF COMFORT DENTAL GROUP, INC.S MOTION TO


DISMISS PLAINTIFFS/COUNTERCLAIM DEFENDANTS FIRST AMENDED
COMPLAINT

Plaintiffs CDMO, Inc. (CDMO) and CDET, Inc. (CDET) (collectively,


Plaintiffs), by and through their undersigned counsel, hereby submit this Response in
Opposition of Comfort Dental Group, Inc.s Motion to Dismiss Plaintiffs/Counterclaim
Defendants First Amended Complaint.
I. INTRODUCTION
Comfort Dental Group, Inc. (Comfort Dental) has opportunistically seized upon
this Courts inquiry about absent subfranchisees in an effort to secure a partial dismissal
of this case, basing its entire argument on the false premise that Plaintiffs have asked
this Court to determine the Subfranchise Agreements between Plaintiffs and strangers

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to this litigation are void (Doc. #105, p. 2). Review of the First Amended Complaint
shows conclusively that Plaintiffs have sought no such determination. Comfort Dentals
argument lacks merit, and should be denied for multiple reasons.
First, the subfranchisees are not necessary (now known as required) parties
under Rule 19(a)(1)(A) because the Court can afford complete relief among the
existing parties without joining the subfranchisees. Plaintiffs have not asked the Court
to void the Subfranchise Agreements. Plaintiffs have asserted no claims under the
Subfranchise Agreements, and sought no relief against the subfranchisees.1 Plaintiffs
have sought relief only with respect to their own agreements with Comfort Dental,
including the obligation to act as Comfort Dentals middleman or contract-enforcer.
The subfranchisees are not parties to those agreements, nor are they third-party
beneficiaries. Review of the First Amended Complaint demonstrates, beyond doubt,
that Plaintiffs make no claim against the subfranchisees, seek no decision or relief
against them, allege no wrongdoing by them and seek no decision under the
Subfranchise Agreements. Accordingly, the subfranchisees are not necessary parties
under Rule 19(a)(1)(A).
Second, the subfranchisees are not necessary parties under Rule 19(a)(1)(B)
because the subfranchisees have not claim[ed] an interest in this action. While the
subfranchisees are aware fully of this litigation, most have expressly indicated that they
do not wish to be parties. Accordingly, the fundamental requirement that the absent
party claims an interest in the action is lacking. See Davis v. United States, 192 F.3d
1

Paragraph 197 of the First Amended Complaint contains a typographical error, and should read
Subfranchisor Agreement, not Subfranchise Agreement.

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951, 958-59 (10th Cir. 1999) (citing Fed. R. Civ. P. 19(a)(2)) (emphasis in original).
Further, the Tenth Circuit has made clear that where a party could have intervened or
been joined by the Defendant, they can never be an indispensable party under
Rule 19. Thunder Basin Coal Co. v. Sw. Pub. Serv. Co., 104 F.3d 1205, 1211-12 (10th
Cir. 1997). Moreover, under Rule 19, an existing party (such as Comfort Dental) may
not claim an interest on behalf of an absent party; only the absent party may claim or
assert such an interest.
Even if these fundamental requirements that subfranchisees claim an interest in
the action were to be overlooked, Comfort Dental also has made no showing that the
second part of Rule 19(a)(1)(B) has been satisfied; namely, Comfort Dental has not
shown that disposing of the action in the [subfranchisee]s absence may: (i) as a
practical matter impair or impede the [subfranchisee]s ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest.

Neither of these two

necessary elements of Rule 19(a)(1)(B) have been satisfied here. To the contrary,
Comfort Dental claims it has the right independently to enforce the Subfranchise
Agreements, thus leaving the subfranchisees with the same two choices they have
today -- namely, (1) to continue as subfranchisees of Comfort Dental or (2) to contest
the validity of Comfort Dentals actions.

Regardless of which interest the

subfranchisees are deemed to have, however, both interests are adequately


represented by the current parties to this lawsuit, which alone is sufficient to defeat a
motion to dismiss under Rule 19. Indeed, Comfort Dental has not argued, because it

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cannot credibly claim, that any interests of the absent parties would not be adequately
represented by the current parties to the lawsuit.
Finally, and perhaps most importantly, if the Court decided that the
subfranchisees were necessary parties, then, under Rule 19(a)(2), the court must order
that the [subfranchisees] be made a party. Contrary to Comfort Dentals argument,
their joinder as defendants would not destroy diversity or this Courts jurisdiction over
the action. Specifically, Plaintiffs have made no claim against subfranchisees in the
First Amended Complaint, and thus, the addition of the subfranchisees as defendants
would fall within this Courts supplemental jurisdiction under 28 U.S.C. 1367(a). Price
v. Wolford, 608 F.3d 698, 702-04 (10th Cir. 2010) (exceptions to supplemental
jurisdiction under 28 U.S.C. 1367(b) do not apply where a party is joined as a
defendant, not a plaintiff, and Plaintiffs assert no claims against it.).

Joinder is

therefore feasible and should be ordered if the Court finds the subfranchisees to be
required parties.
The Court need not even reach the question of whether the action should
proceed in the absence of the subfranchisees under Rule 19(b), but if it did, equity and
good conscience would dictate the action should proceed, in the interest of the parties
and public policy, because the Court can narrowly tailor the relief sought while
promoting Colorados public policy against enforcing fee-sharing agreements in the
dental profession. Fed. R. Civ. P. 19(b).
For these reasons, the Motion to Dismiss lacks merit and should be denied.

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II. STATEMENT OF FACTS


CDMO is a party to a Master Franchise Agreement with Comfort Dental dated
February 18, 2011 (the CDMO Agreement). (Doc. #91, 13, Ex. A.) CDET and
Comfort Dental entered into a Master Franchise Agreement dated July 1, 2011 (CDET
Agreement)

(collectively,

Subfranchisor

Agreements

or

Master

Franchise

Agreements). (Doc. #91, 14, 16, Ex. B.) Plaintiffs entered into various agreements
with subfranchisees in Missouri, Kentucky and Indiana (Subfranchise Agreements or
Subfranchisee Agreements).

(Doc. #91, 19, 20.)

The subfranchisees are not

parties to the Subfranchisor Agreements. (Doc. #91, Exs. A, B.) Comfort Dental is not
a party to any of the Subfranchise Agreements, although it is identified as a third-party
beneficiary purportedly entitled to independently enforce any provision of the
Subfranchise Agreements. (Doc. #91, Ex. C.)
Plaintiffs filed this action on March 25, 2014. (Doc. #1.) Plaintiffs advised the
subfranchisees of the action, but received no indication that any subfranchisee wished
to join the action as a party. Plaintiffs have provided periodic updates to the
subfranchisees regarding various developments in the case. (Bahr Dec. 3.)2
On June 15, 2015, Plaintiffs filed the First Amended Complaint, alleging, among
other things, [t]he Subfranchisor Agreements, as implemented, interpreted and
enforced should be declared illegal and void in their entirety. (Doc. #91, 211, 224.)
Plaintiffs further and in the alternative, alleged Comfort Dental should be permanently
enjoined from enforcing the Subfranchisor Agreements in an illegal manner, and
2

Bahr Dec. __ refers to the Declaration of Dr. Craig Bahr in Support of Response to Comfort Dental
Group, Inc.s Motion to Dismiss Plaintiffs/Counterclaim Defendants First Amended Complaint.

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specifically enjoined from mandating that Plaintiffs refer dental laboratory services to the
Comfort Dental Labs, from mandating that Plaintiffs enforce such provisions in contracts
entered into pursuant to the Subfranchisor Agreements and from mandating that
Plaintiffs market and/or sell the Gold Plan.

(Doc. #91, 212, 225.)

The First

Amended Complaint sought no relief under the Subfranchise Agreements and alleged
no wrongdoing on the part of any subfranchisee.
On or about July 17, 2015, the Court sua sponte raised the issue of whether the
subfranchisees are necessary parties to this action. To address this concern, Plaintiffs
contacted the subfranchisees regarding their interest in joining the action, but were
advised the subfranchisees, for various reasons, did not wish to assert a claim or
interest in the action. (Bahr Dec. 4.)
On August 13, 2015, Comfort Dental filed the Motion to Dismiss. (Doc. #105.)
Plaintiffs thereafter again contacted the subfranchisees regarding their interest, if any, in
the action.

(Bahr Dec. 4.)

Plaintiffs submit herewith declarations from the

subfranchisees who were willing to advise the Court of their position. (Bahr Dec. 5,
Exs. A-L.) The subfranchisees unanimously indicate that they have been aware of the
litigation, but are not parties to the action, are not parties to the Subfranchisor
Agreements, and have no interest in asserting any claim in this action. (Id.) Most of the
subfranchisees cite reasons of expense and fear of retaliation by Comfort Dental as
their primary reasons.

(Id.)

Some give no reason at all.

consulted with independent counsel.

(Id.)

Some state they have

Most feel their interests are adequately

represented by the current parties to the action. (Id.) Some subfranchisees express

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great concern with Comfort Dentals actions and look to this Court for guidance moving
forward. (Id.) No subfranchisee indicated an interest in joining the action. (Id.)3
III. ARGUMENT
A.

Standard of Review
Federal Rule of Civil Procedure 12(b)(7) allows for dismissal for failure to join a

person under Rule 19. Rule 19 requires a two-step analysis before dismissing a claim
for failure to join an indispensable person. Davis v. United States, 343 F.3d 1282, 1288
(10th Cir.2003)).

First, the court must determine whether the absent person is

necessary or, under the language in the newly revised Rule 19, required.
Fed.R.Civ.P. 19(a). A person is required to be joined under Rule 19 if:
(A)

in that persons absence, the court cannot accord complete relief


among existing parties; or

(B)

that person claims an interest relating to the subject of the action


and is so situated that disposing of the action in the persons
absence may: (i) as a practical matter impair or impede the
persons ability to protect the interest; or (ii) leave an existing party
subject to a substantial risk of incurring double, multiple, or
otherwise inconsistent obligations because of the interest.

Fed.R.Civ.P. 19(a)(1).4

The remaining dentists advised they did not want to submit anything to the Court, but each verbally
indicated their position that they were aware of the litigation, but did not want to be named as parties to
the action. Principal among the concerns expressed were legal costs and fear of retaliation by Comfort
Dental and its CEO, Rick Kushner, who had contacted many of the subfranchisees personally and had
indirectly contacted others through a Comfort Dental agent. (Bahr Dec. 6.)
4
As discussed infra, [i]n deciding whether to proceed without the required person, the court should
consider: (1) the extent to which a judgment rendered in the persons absence might prejudice that
person or the existing parties; (2) the extent to which any prejudice could be lessened or avoided by: (A)
protective provisions in the judgment; (B) shaping the relief; or (C) other measures; (3) whether a
judgment rendered in the persons absence would be adequate; and (4) whether the plaintiff would have
an adequate remedy if the action were dismissed for nonjoinder. Fed.R.Civ.P. 19(b).

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A required person must be joined as a party if joinder is feasible. Id. Only [i]f a
required person cannot be joined, need the court move to the second step,
determining whether, in equity and good conscience, the action should proceed among
the existing parties or should be dismissed. Fed.R.Civ.P. 19(b) (emphasis added).
Fed.R.Civ.P. 19(b) forbids dismissal if the necessary party could be made a party.
Symes v. Harris, 472 F.3d 754 (10th Cir. 2006). This determination should be made in
a practical and pragmatic but equitable manner. Id. (quoting Rishell v. Jane Phillips
Episcopal Memorial Medical Center, 94 F.3d 1407, 1411 (10th Cir.1996). The party
seeking dismissal for failure to join bears the burden of persuasion. Lenon v. St. Paul
Mercury Ins. Co., 136 F.3d 1365, 1372 (10th Cir.1998); see also Rishell v. Jane Phillips
Episcopal Meml Med. Ctr., 94 F.3d 1407, 1411 (10th Cir.1996), cert. dismissed, 520
U.S. 1152 (1997), and cert. denied, 520 U.S. 1166 (1997) (citing Francis Oil & Gas,
Inc. v. Exxon Corp., 661 F.2d 873, 878 (10th Cir.1981)).
B.

The Subfranchisees Are Not Persons Required To Be Joined Under


Rule19(a).
Comfort Dental argues that the subfranchisees are required parties for Plaintiffs

claims . . . under Rule 19(a). (Doc. #105, p. 4.) In support of its argument, Comfort
Dental asserts Plaintiffs claims are based on several ways in which Comfort Dental has
allegedly violated the law and public policy through its interpretation and enforcement of
. . . the Subfranchisor Agreements which could significantly affect the interest of the
absent subfranchisees. (Id. (emphasis in original).)
without merit.

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Comfort Dentals argument is

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1.

Comfort Dental Has Not Met Its Burden of Establishing that the Court
Cannot Afford Complete Relief Among Existing Parties

Rule 19(a)(1)(A) requires the joinder of parties whose absence would preclude
the Court from according complete relief among the existing parties. Comfort Dental
does not argue Rule 19(a)(1)(A) applies, because it cannot. It is obvious that the Court
can afford complete relief among existing parties, because the existing parties are the
only parties to the Subfranchisor Agreements at issue. Plaintiffs assert no claim against
the subfranchisees and do not seek relief under the Subfranchise Agreements.
A court is able to afford complete relief when a partys absence does not prevent
the plaintiffs from receiving their requested . . . relief. Sac & Fox Nation of Missouri v.
Norton, 240 F.3d 1250, 1258 (10th Cir.2001). As Moores Federal Practice explains, this
provision requires joinder when nonjoinder precludes the court from effecting relief not
in some overall sense, but between extant parties. 4 J. Moore & R. Freer, Moores
Federal Practice 19.03[2][b], at 1939 (3d ed.2009)(emphasis in original). Properly
interpreted, the Rule is not invoked simply because some absentee may cause future
litigation . . . . The fact that the absentee might later frustrate the outcome of the
litigation does not by itself make the absentee necessary for complete relief. 4 Moores
Federal Practice 19.03[2][b], at 1939 to 1941 (footnotes omitted).
Comfort Dental, at most, makes reference to the adequacy of a judgment on
pages 10 and 11 of its Motion, arguing the Subfranchisees and Comfort Dental could
be tied up in litigation for years because the judgment would not be judicially binding
on the subfranchisees. (Doc. #105, p. 11.) The possibility of future litigation between
Comfort Dental and one or more subfranchisees, however, has no place in this analysis.

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Under Rule 19(a)(1)(A), [t]he focus is on relief between the parties and not on the
speculative possibility of further litigation between a party and an absent person.
Zahourek Sys., Inc. v. Canine Rehab. Inst., Inc., No. 12-CV-00978-LTB, 2012 WL
5936540, at *1 (D. Colo. Nov. 27, 2012) (Babcock, J.). Accordingly, the subfranchisees
are not necessary parties under Rule 19(a)(1)(A).
2.

The Subfranchisees Do Not Claim An Interest in this Action

After more than 18 months of litigation, the subfranchisees have taken no action
to assert any claim related to this litigation. Comfort Dental admits no subfranchisee
has sought to join this action. (Doc. #5 p. 2.) To the contrary, the subfranchisees have
consciously avoided doing so. As will be discussed more fully below, Comfort Dental
cannot assert that the purported interest of subfranchisees on their behalf as a basis
for dismissal.
Under Rule 19(a)(1)(B), a party may be necessary if it claims an interest relating
to the subject of the action and is so situated that disposing of the action in [its] absence
may . . . as a practical matter impair or impede [its] ability to protect the interest.
Joinder is contingent upon a threshold requirement is that the absent party claims an
interest in the action. See Citizen Potawatomi Nation v. Norton, 248 F.3d 993, 997
(10th Cir.) opinion modified on rehg, 257 F.3d 1158 (10th Cir. 2001); Davis v. United
States, 192 F.3d 951, 958-59 (10th Cir. 1999) (Rule 19, by its plain language, does not
require the absent party to actually possess an interest; it only requires the movant to
show that the absent party claims an interest relating to the subject of the action.)
(emphasis in original).

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Cases meeting this threshold requirement involve some affirmative act by the
absent party to assert their interest in the action. See Ctr. for Biological Diversity v.
Pizarchik, 858 F. Supp. 2d 1221, 1225 (D. Colo. 2012) (The Nation has presented
substantial evidence supporting its claimed economic interests in this lawsuit.); Three
Stars Prod. Co., LLC v. BP Am. Prod. Co., 2012 WL 32916, at *4 (D. Colo.) (Rule 19 is
concerned with claimed interests . . . Because the Tribe asserted title to the minerals
under the subject acres in the previous action before the Tribal Court, . . . I conclude
that the Tribe has an interest in the subject mineral acres.).
Where an absent party is aware of an action and elects not to claim an interest,
that party is unnecessary for purposes of Rule 19. Thunder Basin Coal Co. v. Sw. Pub.
Serv. Co., 104 F.3d 1205, 1211-12 (10th Cir. 1997) (We specifically hold that an entity
or individual . . . entitled to intervene under Fed.R.Civ.P. 24 is never an indispensable
party under Fed.R.Civ.P. 19.) (emphasis added) (discussed further infra); see also
United States v. Bowen, 172 F.3d 682, 689 (9th Cir. 1999) (Sterilization Systems was
aware of this action and chose not to claim an interest . . . joinder was unnecessary.)
(cited with approval in Citizen Potawatomi Nation v. Norton, 248 F.3d 993, 997 (10th
Cir.) opinion modified on rehg, 257 F.3d 1158 (10th Cir. 2001)); School Dist. of City of
Pontiac v. Secretary of U.S. Dept. of Educ., 584 F.3d 253, 266 (6th Cir.2009) ([I]t would
turn Rule 19 analysis on its head to argue that the States interests are now impaired
because they declined to participate in this much-publicized case); United States v.
San Juan Bay Marina, 239 F.3d 400, 406407 (1st Cir.2001) (When a party does not
deem its own interests substantially threatened by the litigation, the court should not

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second-guess this determination); U.S. v. Sabine Shell, Inc., 239 F.3d 480, 483 (5th
Cir.1982) ([T]he property owners themselves, patently aware of this litigation, never
intervened . . . . Presumably the property owners do not believe that the disposition of
this suit will impair or impede their ability to protect their interests.).
3.

Comfort Dental May Not Assert Any Claims It Believes the


Subfranchisees Might Have

Comfort Dental attempts, with no evidentiary or factual support, to assert claims


it imagines the subfranchisees might have in this action.

Under Rule 19, however,

Comfort Dental cannot assert theoretical claims on behalf of absent parties, and its
attempt to do so must be rejected.
Comfort Dental argues that the subfranchisees should be joined in this litigation,
that it is not fair to the absent franchisees for the case to proceed without them. (Doc.
#105, p. 2.) As an initial matter it is clear that the subfranchisees have made the
conscious decision, sometimes informed by their independent counsel, not to join this
action. Comfort Dental attempts to second-guess their decision, arguing that it would
somehow be unfair not to force them into the expense and uncertainty of this litigation.
Comfort Dental offers no evidence supporting its apparent desire to countermand the
decisions these subfranchisees have already made not to assert any interest in this
litigation.
As a legal matter, Comfort Dental may not properly, under Rule 19, assert any
claims or interests on behalf of the absent subfranchisees. Under Rule 19, only the
absent party may assert its claim. A party named in the litigation cannot assert the
interest on the absent partys behalf. United States ex rel. Morongo Band of Mission

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Indians v. Rose, 34 F.3d 901, 908 (9th Cir.1994) ([I]t is inappropriate for one defendant
to attempt to champion [the] absent partys interests); Peregrine Myanmar Ltd. v.
Segal, 89 F.3d 41, 49 (2d Cir.1996) (Defendants attempt to assert on behalf of the
[third-party] its supposed concern about the dilution of its interest . . . falls outside the
language of the rule. It is the absent party that must claim an interest.); Gibbs Wire
and Steel Co. v. Johnson, 255 F.R.D. 326, 329 (D. Conn. 2009) (Only the absent party
may assert its claim. A party named in the litigation cannot assert the interest on the
absent partys behalf.). [C]ourts are reluctant to join a nonparty for the purpose of
protecting that nonpartys interests when the nonparty itself has not claimed an interest
in the outcome of a suit. HDR Engg, Inc. v. R.C.T. Engg, Inc., 2010 WL 2402908, at
*4 (S.D. Fla.).5

Consistent with the text of Rule 19, courts around the country have interpreted Rule 19 to require the
absent party to claim an interest to be deemed necessary. See also, e.g., Perkins v. Bennett, 2015 WL
1313247, at *6 (D.S.C.) (The absent parties failure to actually claim an interest is sufficient grounds to
deny the motion under Rule 19.); Richland Partners, LLC v. Cowry Enterprises, Ltd., 2014 WL 4954475,
at *7 (D. Mont.) (Richland Partners has not presented any evidence that Phillips has claimed an interest
relating to the subject of the action. . . . Accordingly, this Court is not required to join Phillips); Wicklund
v. Page, 2010 WL 5572813, at *5 (D. Idaho) report and recommendation adopted, 2011 WL 98544 (D.
Idaho) (If the absent party is aware of the action and chooses not to claim an interest, the Court does not
err in holding that joinder [is] unnecessary.); Sheevam v. Patel, 2009 WL 4430738, at *4 (E.D. Mo.)
(Despite a near-certain awareness of this suit, Yogesh has not claimed an interest in this lawsuit. Absent
such a claim, Yogesh is not a required party); Sakelaris v. Danikolas, 2007 WL 1832119, at *3 (N.D.
Ind.) (When an absent party . . . foregoes intervention, this is indicative of the fact that it does not deem
its interest to be threatened by the litigation. Under these circumstances, I am loathe to second guess the
Countys decision.); Travers v. City of Newton, MA, 2005 WL 3008660, at *2 (D. Mass.) ([I]ts decision to
forgo intervention indicates that the [HRD] does not deem its own interests substantially threatened by the
litigation, a determination that the court should not second-guess); O.M. ex rel. McWhirter v. Orange
Cnty. (N.C.) Bd. of Educ., 2013 WL 664900, at *9-10 (M.D.N.C.) report and recommendation adopted sub
nom. O.M. ex rel. McWhirter v. Orange Cnty., N.C. Bd. of Educ., 2013 WL 1212880 (M.D.N.C.) (even if
credited, the Boards proffer regarding the position of the State Parties confirms that they know about this
case, but do not wish to assert any claimed interest in it. Such circumstances also foreclose joinder
under Rule 19(a)); Anchorage v. Integrated Concepts & Research Corp., 1 F. Supp. 3d 1001, 1015 (D.
Alaska 2014) (MarAd is not a required party under Rule 19(a)(1)(B)(i) or (ii) because MarAd, which is
aware of this litigation, has not claimed an interest in the litigation.).

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Though the non-party need not actively intervene in the present litigation, it must
at least manifest some legal claim in the subject matter of the action. Varlen Corp. v.
Natl Union Fire Ins. Co. of Pittsburgh, PA, 2011 WL 3664796, at *5 (N.D. Ill.); Marina
One, Inc. v. Jones, 29 F. Supp. 3d 669, 678 (E.D. Va. 2014) ([T]he precedent that
exists . . . require[es] some sort of affirmative indication by the absent party in the court
hearing the Rule 19 matter); Kuhn Constr. Co. v. Ocean & Coastal Consultants, Inc.,
723 F.Supp.2d 676, 692 (D. Del. 2010) ([W]here there is no showing that the absent
party actually has claimed an interest relating to the subject of the action, the court may
deny a motion to dismiss.); Am. Ins. Co. v. St. Jude Med., Inc., 597 F. Supp. 2d 973,
978 (D. Minn. 2009) (Willis has claimed no interest in the pending litigation and is thus
not a required party).
This litigation has been pending for over 18 months.

Even though the

subfranchisees are aware fully of the litigation, they have taken no steps to assert or
claim an interest in this litigation.

Comfort Dental has made no showing of any

affirmative indication by the subfranchisees that they have asserted any claim or
interest.

It is improper for Comfort Dental to attempt to assert the interests of the

subfranchisees on their behalf as a basis for dismissal. Comfort Dental has failed to
demonstrate the subfranchisees are required parties under Rule 19(a)(1)(B).
Although Plaintiffs do not have the burden of proof, Plaintiffs have nonetheless
demonstrated that every subfranchisee has been made aware of this litigation. None
has elected to intervene or assert any claim or interest in the action.

Many have

consulted with independent counsel and chosen not to become involved, for reasons of

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cost, expense or fear of retaliation by Comfort Dental, and myriad other reasons. Some
have indicated that they have deep concerns about Comfort Dentals practices and look
forward to guidance from this Court, but do not consider their professional licenses or
ability to practice dentistry at issue in this lawsuit. The subfranchisees as a whole have
expressed no rights or interest in the Subfranchisor Agreements that are at issue in this
action. Most, if not all, have expressed their interests are adequately protected by the
current parties (which as set forth below, is another reason joinder is unnecessary).
Comfort Dentals attempt to self-servingly assert the purported interest of
subfranchisees on their behalf, based on supposition and without any evidentiary
support, is an inappropriate and improper basis for dismissal under Rule 19.
Accordingly, the Motion to Dismiss should be denied.
4.

This Courts Decision on the Merits Will Not Impair or Impede the
Subfranchisees Ability to Protect Their Interests

In addition to the requirement that an absent party claim an interest, Rule


19(a)(1)(B) also requires a determination that a decision in their absence may impair or
impede the [absent] partys ability to protect [its] interest. Comfort Dental argues this
requirement is satisfied because a ruling on Plaintiffs claims could significantly affect
the interest of the absent subfranchisees by voiding the contracts under which they earn
their livelihood. (Doc. #105, p. 5.) Comfort Dental is in error.
As set forth above, Plaintiffs have sought no relief under the Subfranchise
Agreements. Plaintiffs have not alleged any wrongdoing by the subfranchisees or made
any claim against them. Plaintiffs claims relate exclusively to Comfort Dentals actions
and the terms of the Subfranchisor Agreements, which enable Comfort Dental to

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engage in the unlawful corporate practice of dentistry, and through which it seeks to
contractually compel Plaintiffs (through the Subfranchisor Agreements) to interfere with
the independent judgment of its subfranchisees. More importantly, however, neither
Comfort Dental nor the subfranchises themselves have sought their joinder to this
action, which precludes dismissal under Rule 19 as a matter of law.
a.

The Subfranchisees Cannot Be Indispensable Parties Because


Comfort Dental Did Not Seek to Add Them and They Did Not Seek
to Join This Action

Comfort Dental criticizes Plaintiffs at length for not convinc[ing] their


subfranchisees to join this suit. (Doc. # 105, p. 6.) If Comfort Dental truly believed the
subfranchisees were necessary to this dispute, however, it could long ago have sought
to implead them.

Alternatively, if the subfranchisees were necessary parties, the

subfranchisees would be entitled to intervene. For this reason, under binding Tenth
Circuit precedent, they cannot be deemed indispensable parties. See Thunder Basin
Coal Co. v. Southwestern Public Service Co., 104 F.3d 1205, 1208 (10th Cir.1997) (We
specifically hold that an entity or individual subject to impleader under
Fed.R.Civ.P. 14 and entitled to intervene under Fed.R.Civ.P. 24 is never an
indispensable party under Fed.R.Civ.P. 19.) (emphasis added).
In Thunder Basin, the Tenth Circuit addressed the issue of when a party is
indispensable under Rule 19. Thunder Basin, 104 F.3d at 1210. The Plaintiff (Thunder
Basin) entered into coal supply contracts with TUCO, Inc. (Tuco). Id. at 1208. The
defendant (Southwestern) guaranteed the contracts. Id. Thunder Basin initially sued

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TUCO and Southwestern in federal court; however, Thunder Basin and TUCO were
nondiverse. Id. at 1210.
Thunder Basin dismissed TUCO and amended its complaint to assert claims that
Southwestern breached its contract of guarantee and intentionally interfered with
Thunder Basins coal purchase contracts with TUCO. Id. Southwestern moved for
dismissal claiming TUCO was an indispensable party under Rule 19. Id. The district
court denied the motion. Id.
On appeal, the Tenth Circuit affirmed.

Id. at 1212.

The Tenth Circuit held

Southwestern could have impleaded TUCO under Rule 14. Id. It further found TUCO
would have been entitled to intervene under Rule 24. Id. Under these circumstances,
the Tenth Circuit affirmed the district court, holding that TUCO could not be considered
an indispensable party:

We specifically hold that an entity or individual subject to

impleader under Fed.R.Civ.P. 14 and entitled to intervene under Fed.R.Civ.P. 24 is


never an indispensable party under Fed.R.Civ.P. 19. Id. at 1208, 121112.
In so holding, the Tenth Circuit relied upon the Seventh Circuits decision in
Pasco Intl (London) Ltd. v. Stenograph Corp., 637 F.2d 496 (7th Cir. 1980). Pasco
involved claims of breach of contract, interference with contractual relations, and
interference with prospective economic relations. Pasco, 637 F.2d at 499. The Pasco
plaintiff originally brought suit against three corporations and their agent but this first
action was dismissed for lack of diversity between the plaintiff and the defendant agent.
Id. at n.1. The plaintiff then brought a second suit against the same corporations but
chose not to name the agent, the actual person whose conduct was challenged. Id.

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The district court dismissed the suit for failure to join the agent, finding him
indispensable. Id.
In reversing the district court, the Seventh Circuit conceded the availability of
state court as an alternate forum. Id. at 501.

Nevertheless, the court held that

availability an insufficient reason to dismiss under Rule 19(b). Id. According to the
court, the plaintiff had an interest, granted by federal law, in the chosen federal forum.
Id. Thus, a competing interest of the nonparty, a party, or the judicial system was
needed in order to outweigh the plaintiffs interest in its chosen forum. Id.
As to the competing interest of the nonparty agent, the court noted that despite a
lack of diversity of citizenship, the agent could intervene under Fed.R.Civ.P. 24(a) if he
were a necessary party under Rule 19(a) and the defendants did not adequately protect
his interest. Id. at 502, n.13. As to the competing interests of the defendants, the court
held that the availability of third-party practice/impleader under Fed.R.Civ.P. 14
demonstrated the agent was not indispensable under Rule 19(b). Id. at 503.
In recounting the Pasco decision, the Tenth Circuit noted the common-sense
rationale behind the Seventh Circuits decision:
Underlying the Seventh Circuits decision is this proposition: if the
defendant is capable of bringing into the litigation a nonparty whose
presence is allegedly required to fully resolve the controversy and if
that nonparty is otherwise capable of intervening, then the nonparty
cannot be considered indispensable under Rule 19(b).
Thunder Basin, 104 F.3d at 1211.

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Expressly adopting the reasoning of Pasco, the Tenth Circuit held that the
defendant and the absent party could not be heard to complain about their own strategic
choices:
We find the reasoning of Pasco persuasive and applicable. Each of
the concerns referenced in Rule 19(b) would be resolved if TUCO
were a party to this case. TUCO was free to seek mandatory or
permissive intervention under Rule 24. It chose not to do so.
Southwestern, which at oral argument acknowledged it had a claim
against TUCO for damages awarded, could have brought TUCO
into this litigation by impleader under Rule 14(a). It too chose not to
do so.
***
Based on the way this litigation unfolded and the way it was
presented on appeal, we understand why there was no effort to
make TUCO a party. Southwestern desperately wanted this
litigation to proceed in Texas and was unwilling to take any
measures inconsistent with this desire. Accordingly, Southwestern
was not about to join TUCO as a party under circumstances where
TUCOs non-diverse citizenship was consistent with and did not
destroy the district courts jurisdiction. Foregoing its right to
implead TUCO under Rule 14, however, belies Southwesterns
claim of indispensability under Rule 19(a). Even if we did not
have Pasco upon which to rely for this proposition, we would
be willing to stand first and alone.
Thunder Basin, 104 F.3d 1212 (emphasis added).
Comfort Dental has, apparently for its own reasons, forgone its right to implead
the subfranchisees as parties, which belies its claim of indispensability under Rule 19.
Similarly, the subfranchisees were free to seek mandatory or permissive intervention
under Rule 24. They chose not to do so, believing in large part that their interests were
being protected by the current parties.

Accordingly, as a matter of law, the

subfranchisees cannot be deemed indispensable parties under Rule 19.

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b.

The Subfranchisees Are Not Required Parties Because Their


Interests Are Adequately Protected by the Current Parties to the
Action

Comfort Dental has not argued -- much less established -- that the absent
parties interests (subfranchisees) will not be adequately represented by the existing
parties to the litigation.

Because any such interests of the absent parties will be

vigorously represented by the existing litigants, Comfort Dentals Motion must be


denied.
If, as a practical matter, the interests of the absent party will be adequately
represented, by a current party to the action, their interests are not impaired under
Rule 19(a). Rishell v. Jane Phillips Episcopal Meml Med. Ctr., 94 F.3d 1407, 1413
(10th Cir.1996). Even if an absent party would be bound by a judgment (which is not
the case here), the prejudice to the relevant partys interest may be minimized if the
absent party is adequately represented in the suit. Id.; see also 3A James Moore,
Moores Federal Practice 19.07[2.1], at 19106 (2d ed. 1995) (the fact that the
absent person may be bound by the judgment does not of itself require his joinder if his
interests are fully represented by parties present).
In Rishell, the Tenth Circuit reversed a district court decision dismissing an action
due to the failure to add a necessary party who would be bound by the judgment. While
noting [i]t is true that under Oklahoma law the interest of the [absent party] is
derivative . . . , and that the [absent party] would therefore be barred in the state court
action by an adverse determination here, the Tenth Circuit found present and absent
parties rights were aligned, and therefore dismissal was improper. Id.

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Here, the subfranchisees interests are aligned with and adequately protected by
either Plaintiffs or Comfort Dental. The subfranchisees contracts are with Plaintiffs not
Comfort Dental. Plaintiffs seek to uphold the laws and standards of the profession, as
the subfranchisees presumably do as well. The declarations of various subfranchisees
demonstrate that they deem their interests adequately protected by the current parties
to this litigation. See infra, Section II. To the extent the subfranchisees wish to continue
in the Comfort Dental system, Comfort Dental would adequately protect that interest.
Comfort Dental has maintained that the subfranchisees will have the opportunity to do
so notwithstanding any judgment of this Court.6
Comfort Dentals argument that Plaintiffs have put the Subfranchisee dentists
professional licenses at risk is disingenuous, at best. Plaintiffs proposed a stipulation
that would fully protect all subfranchisees, by allowing each subfranchisee to elect
whether to remain in the Comfort Dental system if the Court invalidated the
Subfranchisor Agreements.

(Doc. #102, p. 6.)

However, Comfort Dental rejected

Plaintiffs proposal, now arguing the subfranchisees should be brought at their own
expense and against their wishes into this litigation.
The dentists licenses are not at issue in this case. If anything, Plaintiffs have
sought to protect the integrity of the dental licenses and professional standards and to
6

In a related matter on the orthodontic side, Comfort Dental characterized Plaintiffs role as subfranchisor
merely that of a middleman whose presence (or not) in Comfort Dentals network has no
consequence to the orthodontists that treat patients, or the patients themselves. Comfort Dental
went so far as to assert that [n]othing in the termination of these middleman [franchisor] contracts has
any relation to an actual orthodontist or dentist providing services to any patient. Comfort Dentals
sudden concern over the impact of this case on subfranchisees is simply contrived in an effort to gain a
dismissal of the case. (See Defendant Comfort Dental Group, Inc.s Opposition to Plaintiffs Motion for
Temporary Restraining Order Pursuant to C.R.S. 13-22-208, Smile One, Prof. LLC., et al v. Comfort
Dental Group, Inc., et al (D. Colo.) (copy submitted herewith) as Ex. 2.)

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comply with the applicable laws, and sought to enjoin enforcement of contracts similar
to those that have been invalidated by multiple judges in this District. If Comfort Dental
is, as it claims to be, acting within the bounds of the law, the alleged concerns it raises
in the Motion are unfounded. If, on the other hand, this Court finds Comfort Dental is
unlawfully interfering with the practice of dentistry, the dentists can govern themselves
accordingly. They will not, however, be bound by this Courts order, a fact that Comfort
Dental appears to acknowledge.7 It is not this lawsuit that puts dentists professional
licenses at risk. If anything puts them at risk, it is Comfort Dentals actions.
Not only have the subfranchisees claimed no interest as required under
Rule 19(a), their absence will not impair or impede their ability to protect their interest in
this action, if any, as demonstrated by their failure to intervene (and Comfort Dentals
similar failure to join them) which bars dismissal under Rule 19. Moreover, any interest
they have is adequately protected by the parties to this action. The subfranchisees are
not necessary or required parties.
At a minimum, however, if the Court believes the subfranchisees are necessary,
they can feasibly be joined as defendants because such joinder would not destroy
diversity.

(Doc. #105, pp. 8, 9, 11) (whatever conclusion is reached will practically affect them [the
subfranchisees] . . . but may not technically bind them.); ([e]ven if the Subfranchisees were not
technically bound by this Courts judgment . . . ); (it would purport to invalidate the Subfranchisees
contracts without entering a judicially binding order as to those absent parties.) (emphasis added).

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C.

The Subfranchisees May Be Joined Without Destroying This Courts


Jurisdiction.
Comfort Dental argues the court cannot force joinder of the party as a plaintiff,

and instead must force the party to join as a defendant. (Doc. #105, p. 6.) Plaintiffs
agree.
Rule 19 provides:
(2) Joinder by Court Order. If a person has not been joined as required,
the court must order that the person be made a party. A person who
refuses to join as a plaintiff may be made either a defendant or, in a
proper case, an involuntary plaintiff.
Fed. R. Civ. P. 19(a)(2) (emphasis added).
Ordinarily, the jurisdiction of the Court depends upon the state of things at the
time of the action brought, and . . . after vesting, it cannot be ousted by subsequent
events. Price v. Wolford, 608 F.3d 698, 702-04 (10th Cir. 2010) (quoting Mullan v.
Torrance, 22 U.S. (9 Wheat.) 537, 539, 6 L.Ed. 154 (1824); accord Grupo Dataflux v.
Atlas Global Group, L.P., 541 U.S. 567, 57071, 124 S.Ct. 1920, 158 L.Ed.2d 866
(2004)). Once a district court has jurisdiction, additional claims and parties can be
added under the supplemental-jurisdiction statute, 28 U.S.C. 1367(a), which confers
the district courts jurisdiction over all other claims that are so related to claims in the
action within such original jurisdiction that they form part of the same case or
controversy under Article III of the United States Constitution. Id. Section 1367(a)
explicitly states that supplemental jurisdiction shall include claims that involve the
joinder or intervention of additional parties. Id.

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Although 1367(b) sets forth exceptions to supplemental jurisdiction, they are


not applicable where additional parties are added as defendants and the plaintiff makes
no claim against them.

Price v. Wolford, 608 F.3d 698, 702-04 (10th Cir. 2010)

(exceptions to supplemental jurisdiction under 28 U.S.C. 1367(b) do not apply where


a party is joined as a defendant, not a plaintiff, and Plaintiffs assert no claims against
it.).
Section 1367(b) provides in full:
In any civil action of which the district courts have original jurisdiction
founded solely on section 1332 of this title, the district courts shall not
have supplemental jurisdiction under subsection (a) over claims by
plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of
the Federal Rules of Civil Procedure, or over claims by persons
proposed to be joined as plaintiffs under Rule 19 of such rules, or
seeking to intervene as plaintiffs under Rule 24 of such rules, when
exercising supplemental jurisdiction over such claims would be
inconsistent with the jurisdictional requirements of section 1332.
28 U.S.C. 1367(b) (emphasis added).
[T]he limitation of 1367(b) generally applies only to plaintiffs efforts to join
nondiverse parties. Denver NMR, Inc. v. Front Range Mobile Imaging, Inc., 2009 WL
1538080, at *4-5 (D. Colo.) (emphasis added); W. Bend Mut. Ins. Co. v. Schwantes,
2011 WL 5024873, at *6 (D. Colo.) (Section 1367(b) articulates exceptions to the
exercise of supplemental jurisdiction . . . None of these exceptions are present here.
American Family intervenes as a defendant, not a plaintiff, and Plaintiff asserted no
claims against American Family in the original Complaint. See Price, 608 F.3d at
703-04. Accordingly, the Court is satisfied that it may exercise subject matter jurisdiction

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over this case, inclusive of American Family as an IntervenorDefendant, pursuant to


28 U.S.C. 1367(a) and (b).).
In Price, the Intervenor-Defendant (OHCA) claim[ed] that its intervention
destroyed the requirement of complete diversity. Price, 608 F.3d at 703-04. The Tenth
Circuit rejected this argument, stating: Although we agree that if OHCA had been a
named defendant when suit was brought, the federal court would not have had diversity
jurisdiction . . . we do not agree that OHCAs intervention destroyed jurisdiction. Id.
Following a thorough analysis of the language of Section 1367, and other applicable
authorities, the Tenth Circuit concluded the exceptions to supplemental jurisdiction
under 28 U.S.C. 1367(b) do not apply where a party is joined as a defendant, not a
plaintiff, and Plaintiffs assert no claims against it. Id.
The Tenth Circuit explained:
Once a district court has jurisdiction, additional claims and parties
can be added under the supplemental-jurisdiction statute, 28
U.S.C. 1367(a), which grants the district courts jurisdiction over
all other claims that are so related to claims in the action within
such original jurisdiction that they form part of the same case or
controversy under Article III of the United States Constitution. A
claim is part of the same case or controversy if it derive[s] from a
common nucleus of operative fact. [citations omitted]. Here, there
is no question that OHCAs claim for a share of the settlement
proceeds arises out of the same facts as the underlying tort claim.
And 1367(a) explicitly states that supplemental jurisdiction shall
include claims that involve the joinder or intervention of additional
parties.
Although 1367(b) sets forth exceptions to supplemental
jurisdiction, they are not applicable here. The exceptions relating to
intervention under Fed.R.Civ.P. Rule 24 preclude supplemental
jurisdiction over (1) claims by parties seeking to intervene as
plaintiffs under Rule 24 and (2) claims by plaintiffs against
persons made parties under Rule . . . 24, if exercising

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supplemental jurisdiction over such claims would be inconsistent


with the jurisdictional requirements of section 1332. 28 U.S.C.
1367(b).
Neither exception applies here because OHCA
intervened as a defendant, not a plaintiff, and Plaintiffs assert no
claims against it.
Id.
The same analysis applies here. Joinder under Rule 19 is subject to the same
rules as intervention under Rule 24. 28 U.S.C. 1367(b) (the district courts shall not
have supplemental jurisdiction under subsection (a) over claims by plaintiffs against
persons made parties under Rule . . . 19 . . . , or over claims by persons proposed to
be joined as plaintiffs under Rule 19 . . . when exercising supplemental jurisdiction
over such claims would be inconsistent with the jurisdictional requirements of section
1332.) (emphasis added). The lack of diversity is a non-issue when the absent parties
are joined as defendants under Rule 19 and no claims are asserted against them by
plaintiffs.

Price, 608 F.3d at 70304.

Because the subfranchisees can be joined

without destroying this Courts diversity jurisdiction, if the Court finds them to be
required parties, the Court must order them to be joined and dismissal would be
improper.
D.

Plaintiffs Claims I-III, V-VII, and IX Should Not Be Dismissed Because the
Action Should Proceed in Equity and Good Conscience.
For the reasons stated above, the Court should not even reach the question,

under Rule 19(b), whether in equity and good conscience, the action should proceed
among the existing parties or should be dismissed. Fed. R. Civ. P. 19(b). Because
Comfort Dental has raised the issue, however, Plaintiffs will briefly address it.

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Comfort Dental argues that Plaintiffs claims I-III, V-VII and IX should be
dismissed because of the four factors found in Rule 19(b) . . . all four factors weigh in
favor of dismissal. (Doc. #105, p. 7.) Plaintiffs respectfully disagree.
[I]f joinder is not feasible, the court must decide whether the absent [party] is
indispensable, i.e., whether in equity and good conscience the action can continue in
[its] absence. Thiess v. Mercer, 2010 WL 2635521, at *2 (D. Colo.). The moving party
has the burden of persuasion in arguing for dismissal. Rishell v. Jane Phillips Episcopal
Meml Med. Ctr., 94 F.3d 1407, 1411 (10th Cir.1996), cert. dismissed, 520 U.S. 1152
(1997), and cert. denied, 520 U.S. 1166 (1997) (citing Francis Oil & Gas, Inc. v. Exxon
Corp., 661 F.2d 873, 878 (10th Cir.1981)) (internal quotations omitted).
The Rule 19(b) factors are neither exclusive nor dispositive. Ctr. for Biological
Diversity v. Pizarchik, 858 F. Supp. 2d 1221, 1224 (D. Colo. 2012). The design of the
Rule . . . indicates that the determination whether to proceed will turn upon factors that
are case specific, which is consistent with a Rule based on equitable considerations.
Republic of the Philippines v. Pimentel, 553 U.S. 851, 86263, 128 S. Ct. 2180, 2188,
171 L.Ed.2d 131 (2008). See also Davis v. United States, 192 F.3d 951, 961 (10th
Cir.1999) (The nature of the Rule 19(b) inquiry-a weighing of intangibles-limits the force
of precedent and casts doubt on generalizations.) (citation and internal quotation marks
omitted). Thus, a determination under Rule 19 will be based on factors varying with the
different cases, some such factors being substantive, some procedural, some
compelling by themselves, and some subject to balancing against opposing interests.
Pimentel, 128 S. Ct. at 2189 (quoting Provident Tradesmens Bank & Trust Co. v.

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Patterson, 390 U.S. 102, 119, 88 S. Ct. 733, 743, 19 L.Ed.2d 936 (1968)) (internal
quotation marks omitted).
1.

A Judgment Rendered in the Subfranchisees Absence Will Not


Prejudice Comfort Dental or the Subfranchisees

As set forth above, a judgment rendered in the subfranchisees absence will not
prejudice the subfranchisees interests.

They are not parties to the Subfranchisor

Agreements and there are no allegations or claims against them in this action.

judgment rendered in their absence will leave them with informative guidance, and the
same choice they currently face: (1) continue as direct Comfort Dental subfranchisees,
or (2) dispute Comfort Dentals actions.

As Comfort Dental admits, whatever

conclusion is reached will practically affect them [the subfranchisees] . . . but may not
technically bind them. (Doc. #105, p. 8.)
It bears noting that Comfort Dentals Motion seeks dismissal of Claims I-III, V-VII,
and IX. Only two of those claims, however, (I and II) seek a declaration the
Subfranchisor Agreements (not the Subfranchisee Agreements) are void. (Doc. #91.)
The other claims (Fraud in the Inducement, Breach of Contract, Breach of Duty of Good
Faith and Fair Dealing, and Tortious Interference), do not seek a declaration voiding
anything and therefore could not affect the subfranchisees rights even by implication.
Moreover, even Claims I and II propose alternatives that would not void any
contract, but would merely enjoin Comfort Dental from illegally enforcing certain
provisions. (Doc. #91, 212, 225.) Accordingly, these claims are not all or nothing
as Comfort Dental argues.

The subfranchisees could not even theoretically be

prejudiced by such an injunction.

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Comfort Dental argues allowing this case to proceed will be prejudicial to


Comfort Dental because a chaotic result . . . would leave Comfort Dental open to
conflicting judgments as to the validity of the same contract provisions that are central to
the framework of the Comfort Dental system. (Doc. #105, p. 8.) Comfort Dental fails to
further elaborate on this potential scenario, but it is not the type of prejudice at issue
under Rule 19. 4 Moores Federal Practice 19.03[2][b], at 1939 to 1941. This
argument that the risk that a judgment might be used in some manner by a non-party is
inherent in every franchise agreement or standard form contract any company uses.
The logical extension of Comfort Dentals argument is that every franchisee is an
indispensable party to every case in which any contract provision central to the
framework of the Comfort Dental system is at issue. That is obviously not the law.
2.

The Prejudice Can Be Lessened or Avoided

Comfort Dental argues the judgment cannot be tailored to lessen or avoid


prejudice because [t]he First Amended Complaint does not seek a middle ground, or
even suggest that one would be possible. (Doc. # 105, p. 9.) Comfort Dental claims
the nature of the interests implicated is all-or-nothing:

the contracts are either

invalidated or they are not. (Id. p. 10.) Comfort Dental is mistaken.


Comfort Dental fails to recognize that the First Amended Complaint seeks
multiple alternatives, all intended to enjoin Comfort Dentals illegal actions. Plaintiffs
expressly seek a declaration that the Subfranchisor Agreements are invalid, but [i]n the
alternative, Comfort Dental should be permanently enjoined from enforcing the
Subfranchisor Agreements in an illegal manner, and specifically enjoined from

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mandating that Plaintiffs and/or their dentists refer dental laboratory services solely to
the Budget Labs, from mandating that Plaintiffs enforce such provisions in contracts
entered into pursuant to the Subfranchisor Agreements and mandating that Plaintiffs
market and sell the Gold Plan in states where it has not been properly registered (Doc.
#91, 212, 225.)
Plaintiff further seeks an injunction preventing Comfort Dental from enforcing
certain provisions of the Subfranchisor Agreements if deemed to be invalid,
unconscionable or illegal. (Id. 229 and Wherefore paragraph pp. 73-75.) Comfort
Dental does not identify any way in which such relief could prejudice the subfranchisees
as non-parties to the Subfranchisor Agreements. In any event, the Court could simply
decide it will not render a judgment voiding the Subfranchise Agreements or
implicating wrongdoing on the part of the subfranchisees.
Comfort Dental also argues [e]ven if the subfranchisees were not technically
bound by this Courts judgment, any opinion issued by this Court based on Plaintiffs
claims could leave the subfranchisees open to regulatory, and potentially even criminal,
proceedings. (Doc. #105, p. 9.) Comfort Dentals doomsday scenario again seeks to
obscure the fact that Plaintiffs claim no wrongdoing by any subfranchisees. Plaintiffs
claims are limited to the language of the Subfranchisor Agreements and Comfort
Dentals conduct. Because Plaintiffs have alleged no wrongdoing of any kind by the
subfranchisees, no decision by this Court could open them to any such proceedings.

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3.

The Judgment Would Be Adequate in the Absence of the


Subfranchisees

Comfort Dental argues that any judgment would not be adequate because it
would purport to invalidate the subfranchisees contracts without entering a judicially
binding order as to those absent parties. (Doc. #105, p. 11 (emphasis added).)
Comfort Dental was apparently unconcerned with this issue when it drafted the
Subfranchisor Agreements (which preclude the joinder of other parties to any litigation
between Plaintiffs and Comfort Dental), and while this action was pending for the
previous 18-months. Nonetheless, as stated above, Plaintiffs seek no order invalidating
the Subfranchise Agreements.

Moreover, as acknowledged by Comfort Dental, a

judgment of this Court will not be binding on the subfranchisees. A judgment would not
directly affect their rights.

It may, however, provide useful guidance to the

subfranchisees (and potentially other subfranchisors in the Comfort Dental system) as


any legal precedent may do, including prior authority from this Court interpreting similar
contracts. This factor therefore weighs against dismissal.
4.

Plaintiffs May Have No Adequate Remedy

Comfort Dental argues that Plaintiffs will have an adequate remedy because
Plaintiffs can pursue their claims against Comfort Dental and all of the Subfranchisees
in state court. (Doc. #105, p. 11.) Plaintiffs have no claims against the subfranchisees
to pursue in state court or otherwise.

Availability of an alternative forum is an

insufficient basis to dismiss under Rule 19(b). Rishell v. Jane Phillips Episcopal Meml
Med. Ctr., 94 F.3d 1407, 1413 (10th Cir.1996) (The district court should not have given
dispositive weight to the availability of an alternative forum. [P]laintiff, has an interest

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recognized by federal law in the forum of his choice, which is not outweighed here by
the interests of the absent parties, defendants, or the judicial system. Accordingly, we
conclude the district court abused its discretion in dismissing [Plaintiff]s action under
Rule 19.)
Moreover, if this action were dismissed (in part) and the dismissed claims refiled in
state court as a class action, Comfort Dental may seek to raise the one-year statute of
limitations in its Subfranchisor Agreements as a bar to Plaintiffs claims. Faced with that
uncertainty, this factor weighs heavily against dismissal.
5.

The Public Interest Weighs Against Dismissal

While not an express factor under Rule 19(b), [t]he Supreme Court has long
recognized the inapplicability of the term indispensable party to adjudications of public,
not private rights . . . [W]hen litigation seeks the vindication of a public right, third
persons who may be adversely affected by a decision favorable to the plaintiff do not
thereby become indispensable parties. Natural Resources Defense Council, Inc. v.
Berklund, 458 F. Supp. 925, 933 (D.D.C.1978)), affd, 609 F.2d 553 (D.C.Cir.1979).8
Here, Plaintiffs claims clearly implicate important public policy interests, which
would be undermined by dismissal of this action. This Court has previously recognized
the strong public policy considerations at issue in the types of agreements involved in
this case. Mason v. Orthodontic Ctrs. of Colorado, Inc., 516 F. Supp. 2d 1205, 1216-17
(D. Colo. 2007) (Krieger, J). The public policy considerations underlying the prohibition

In Ctr. for Biological Diversity v. Pizarchik, 858 F. Supp. 2d 1221, 1230 (D. Colo. 2012), the court
refused to consider this as an exception to the indispensable party analysis, at least context of a
required partys sovereign immunity.

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of the corporate practice of medicine are (1) lay control over professional judgment;
(2) commercial exploitation of the medical practice; and (3) division of the physicians
loyalty between patient and employer. Hall v. Frankel, 190 P.3d 852, 861 (Colo. App.
2008). The public interest in, inter alia, preventing conflicts of interest between dentists
and unlicensed entities is thwarted if Comfort Dental were permitted to continue
unchecked and unabated its unlawful interference with the practice of dentistry in
Colorado and elsewhere, to the ultimate detriment of patients. Gentile v. Orthodontic
Centers of North Dakota, 2007 WL 2890199 (D. Colo. 2007). The public interest weighs
against dismissal of this action.
IV.

CONCLUSION

For the foregoing reasons, Plaintiffs respectfully request that the Court deny
Defendants Motion to Dismiss or alternatively, allow Plaintiffs leave to amend. In the
event the Court grants the Motion and determines that claims I-III, V-VII and IX of the
First Amended Complaint should be dismissed, against the weight of the legal
precedent set forth herein, Plaintiffs will seek leave to amend their complaint or to
modify their claims in a manner consistent with the Courts decision.

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Dated this 8th day of September, 2015.


Respectfully Submitted
By: /s/ Neil L. Arney
Neil L. Arney
KUTAK ROCK LLP
1901 California Street, Suite 3000
Denver, CO 80202
(303) 297-2400
Thomas J. Kenny, NE #20022
Suzanne M. Shehan-Ames, NE #20531
KUTAK ROCK LLP
The Omaha Building
1650 Farnam Street
Omaha, NE 68102-2186
(402) 346-6000
Attorneys for Plaintiffs CDMO, INC. and
CDET, INC.

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CERTIFICATE OF SERVICE
I hereby certify that on September 8th, 2015, I filed and electronically served the
foregoing on the following:

Steven M. Kelso (#29099)


LaMar F. Jost (#34706)
Kathryn A. Reilly (#37331)
Erin F. Frohardt (#47182)
Wheeler Trigg ODonnell LLP
370 Seventeenth Street, Suite 4500
Denver, CO 80202-5647
Telephone: 303.244.1800
Facsimile: 303.244.1879
kelso@wtotrial.com
jost@wtotrial.com
reilly@wtotrial.com
frohardt@wtotrial.com
Attorneys for Defendant
s/Edna Slagle

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