                                                                           FILED
                           NOT FOR PUBLICATION                              FEB 25 2010

                                                                       MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



TOM NAGRONE; DAN NAGRONE;                        No. 09-35165
DARRELL NACCURATO; PATRICK
DAHMEN; JANELLE SELLS; TERRI                     D.C. No. 9:07-cv-00004-DWM-
ORTON; WILLIAM EVANSON;                          RKS
TAMMY EVANSON; LARRY
THOMPSON; JAMIE GUICE; LAURA
SQUIBB; JEFFREY TUCKER; AMY                      MEMORANDUM *
TUCKER; BILL EVANSON; RICK
BAILLIE; LAURA STOCKTON;
LENORA DAVIS BATEMAN;
MARYBETH WETSCH; VICKI
EARHART; CAROL HEALD; JERRY
STREETER; CLARA KUHN; IVAN
KAYS; THERESA YOUNGQUIST;
BARBARA GAUSTAD; SHARON
YOUNG; DIANE MOLES; KYLE
BAILEY; MIKE BRIGGS; WILLIS
BALL; MARK RADEMAN; DREW
OLSEN; CHADNEY SAWYER; NANCY
MCDONALD; TED NUXOLL; CINDY
NUXOLL; DEAN CARLSON; BRAD
BLATTLER,

             Plaintiffs - Appellants,

 and

TIDYMAN’S MANAGEMENT


        *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
SERVICES, INC.,

          Plaintiff,

 v.

MICHAEL A. DAVIS,

          Defendant - Appellee,

JOHN MAXWELL,

          Defendant - Appellee,

and

RIC ODEGARD,

          Defendant,

TIDYMAN’S MANAGEMENT
SERVICES, INC.,

          Defendant,

TIDYMAN’S LLC; JOE CUSTER;
GEORGE REITEMEIER; CHRIS
SCHNUG,

          Defendants.



TOM NAGRONE; DAN NAGRONE;             No. 09-35182
DARRELL NACCURATO; JANELLE
SELLS; PATRICK DAHMEN; TERRI          D.C. No. 9:07-cv-00004-DWM-
ORTON; WILLIAM EVANSON;               RKS


                                  2
TAMMY EVANSON; LARRY
THOMPSON; JAMIE GUICE; LAURA
SQUIBB; JEFFREY TUCKER; AMY
TUCKER; BILL EVANSON; RICK
BAILLIE; LAURA STOCKTON;
LENORA DAVIS BATEMAN;
MARYBETH WETSCH; VICKI
EARHART; CAROL HEALD; JERRY
STREETER; CLARA KUHN; IVAN
KAYS; THERESA YOUNGQUIST;
BARBARA GAUSTAD; SHARON
YOUNG; DIANE MOLES; KYLE
BAILEY; MIKE BRIGGS; WILLIS
BALL; MARK RADEMAN; DREW
OLSEN; CHADNEY SAWYER; NANCY
MCDONALD; TED NUXOLL; CINDY
NUXOLL; DEAN CARLSON; BRAD
BLATTLER; TIDYMAN’S
MANAGEMENT SERVICES INC.,

         Plaintiffs,

 v.

MICHAEL A. DAVIS; JOHN
MAXWELL,

         Defendants - Appellees,

 v.

TIDYMAN’S MANAGEMENT
SERVICES, INC.; TIDYMAN’S LLC,

         Defendants - Appellants,

and

                                    3
RIC ODEGARD; JOE CUSTER;
GEORGE REITEMEIER; CHRIS
SCHNUG,

             Defendants.



                    Appeal from the United States District Court
                            for the District of Montana
                    Donald W. Molloy, District Judge, Presiding

                      Argued and Submitted January 13, 2010
                               Seattle, Washington

Before: KLEINFELD and TALLMAN, Circuit Judges, and SETTLE, ** District
Judge.

      This is a combined appeal. First, Plaintiffs Thomas Nagrone and other

participants in the Tidyman’s Management Services, Inc. Employee Stock

Ownership Plan and Trust (“Plaintiffs”) appeal the district court’s grant of

summary judgment in favor of Defendants Michael Davis and John Maxwell

(“Defendants”) on the issues of futility of demand and ERISA preemption.

Second, Tidyman’s Management Services, Inc. (“TMSI”) appeals the district

court’s denial of its motion for leave to amend so that it could be joined as a

Plaintiff. For the reasons discussed below, we reverse the district court’s summary




       **
            The Honorable Benjamin Hale Settle, United States District Judge for
the Western District of Washington, sitting by designation.

                                           4
judgment rulings and remand for further findings. We do not reach the appeal of

the district court’s denial of the motion for leave to amend.

A.    Futility of Demand

      In this case, it is undisputed that before filing their complaint, Plaintiffs

failed to make a demand for action on either the Employee Stock Ownership Plan

and Trust (“ESOP”) or the corporate officers. Under Washington law, a

“complaint in a proceeding brought in the right of a corporation must . . . allege

with particularity the demand made, if any, to obtain action by the board of

directors and either that the demand was refused or ignored or why a demand was

not made.” Wash. Rev. Code § 23B.07.400(2). After the district court entered its

order granting summary judgment, the Washington Supreme Court decided In Re

F5 Networks, 207 P.3d 433 (Wash. 2009), and clarified the substantive demand

requirements under Wash. Rev. Code § 23B.07.400(2). The court held that a

plaintiff’s failure to make a proper demand may be excused if the plaintiff shows

that demand would have been futile. Id. at 438–39.

      Although Plaintiffs failed to make a demand, the district court did not

consider the issue of whether such a demand would have been futile. Moreover,

the record is not sufficiently developed so that we can determine whether a demand

would have been futile. Therefore, the district court’s grant of summary judgment


                                           5
on this issue is vacated and the case is remanded for further discovery and

consideration of the substantive demand requirements as set forth in In Re F5

Networks, 207 P.3d 433 (Wash. 2009).

B.    ERISA Preemption

      Whether ERISA preempts state law is a question of subject matter

jurisdiction which we review de novo. Blue Cross of Cal. v. Anesthesia Care

Assocs. Med. Group, Inc., 187 F.3d 1045, 1049–50 (9th Cir. 1999).

      ERISA preempts “any and all State laws insofar as they may now or

hereafter relate to any employee benefit plan” that is subject to ERISA. 29 U.S.C.

§ 1144(a). We have formulated a “relationship test” to determine whether ERISA

preempts state law. Geweke Ford v. St. Joseph’s Omni Preferred Care Inc., 130

F.3d 1355, 1358 (9th Cir. 1997). Under the relationship test, ERISA preempts a

state law claim if the claim encroaches on the relationships ERISA regulates, “such

as between plan and plan member, plan and employer, and plan and trustee.” Blue

Cross of Cal., 187 F.3d at 1053; see also Rutledge v. Seyfarth, Shaw, Fairweather

& Geraldson, 201 F.3d 1212, 1219 (9th Cir. 2000).

      In this case, Plaintiffs asserted a state law claim that Defendants violated

corporate duties owed to TMSI as officers and directors of TMSI. This

relationship between TMSI and Defendants does not encroach on an ERISA


                                          6
regulated relationship because the corporate relationship involves neither the ESOP

nor the ESOP-participant Plaintiffs. In other words, the state law claim for breach

of corporate duties owed to the corporation does not encroach upon an ERISA

regulated relationship such as one between (1) a plan and a plan member, (2) a plan

and an employer, or (3) a plan and a trustee. See Abraham v. Norcal Waste Sys.,

Inc., 265 F.3d 811, 820–23 (9th Cir. 2001); see also Sommers Drug Stores Co.

Employee Profit Sharing Trust v. Corrigan Enter., Inc., 793 F.2d 1456, 1468–69

(5th Cir. 1986) (the fiduciary duties of a corporate director may be parallel to the

duties entrusted to an ERISA plan fiduciary but exist independently from the plan

itself).

           We vacate the district court’s grant of summary judgment to Defendants on

the issue of preemption because ERISA does not preempt Plaintiffs’ state law

claim.

C.         Leave to Amend

           In this case, we need not reach the issue of whether the district court

properly exercised its discretion in denying leave to amend because on remand the

question will arise anew in a different procedural posture.

           Each party shall bear its own costs on appeal.

           REVERSED and REMANDED.


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