Opinion
Civil No. 01-1173 ADM/AJB.
November 27, 2001
Peter B. Knapp, Supervising Attorney, William Mitchell Law Clinic, St. Paul, Minnesota, for Plaintiffs.
Justin H. Perl, Esq., and Michael C. McCarthy, Esq., Maslon Edelman Borman Brand, LLP, Minneapolis, Minnesota, for Defendants.
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
This matter is before the undersigned United States District Judge pursuant to the Objections of Defendant, Diversified Business Credit, Inc. ("Defendant") [Doc. No. 17] to the September 12, 2001 Report and Recommendation ("RR") of Magistrate Judge Arthur J. Boylan [Doc. No. 16]. In the RR, Judge Boylan recommends remanding the case to state court pursuant to 28 U.S.C. § 1447(c). For the reasons set forth below, Judge Boylan's RR is adopted in its entirety.
II. BACKGROUND
The factual background for this matter is adequately set forth in the RR and is incorporated by reference for the purposes of Defendant's present objections.
III. DISCUSSION
When reviewing a magistrate judge's RR, the district court must make an independent, de novo evaluation of those portions of a RR to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. See 28 U.S.C. § 636(b)(1)(C); Fed.R.Civ.P. 72(b); D. Minn. LR 72.1(c)(2). Because a grant of a motion to remand is dispositive of the case in federal court, this RR will be reviewed under the de novo standard.
Defendants removed this case from Hennepin County District Court, arguing that Plaintiffs' cause of action alleging a violation of the Hot Goods Provision of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 215(a)(1), raised a federal question. Plaintiffs moved to remand, arguing that the cause of action involving the Hot Goods Provision is a claim for negligence per se and that the federal statute merely provides the standard of care. Therefore, Plaintiffs argue that the cause of action is a state law claim that must be remanded.
A federal court can properly exercise original jurisdiction over a claim when it arises under the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. In determining whether a claim arises under federal law, the court must refer to the well-pleaded complaint rule. Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808 (1986). Although the concept of "arising under" does not have a precise definition, most cases under federal question jurisdiction are those causes of action that are created by federal law. Id. If, however, the resolution of the state law claim turns on an interpretation of federal law, the case may also arise under federal law. Id. at 808-09 (citing Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 9 (1983)).
In Merrell Dow, the plaintiffs argued that the exercise of federal question jurisdiction was proper where the violation of a federal statute was a factor in a state law claim. Merrell Dow, 478 U.S. at 813. However, the Supreme Court held that when a federal issue is merely present in the state law claim, there is not an automatic conferral of federal question jurisdiction. Id. Instead, the question of federal law involved in a state claim must be substantial in order to appropriately confer federal question jurisdiction. Id. (citing Franchise Tax Board, 463 U.S. at 13). In Merrell Dow, the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 301, did not confer a private right of action. Merrell Dow, 478 U.S. at 806-07. The Court reasoned that because Congress decided not to provide a federal remedy for a violation of the statute, it logically followed that the presence of a violation of the statute as a factor in a state law claim is not substantial enough to confer federal question jurisdiction. Id. The Court found that the federal statute was one of the criteria a jury could consider in determining negligence. Id. at 807.
Defendants argue this case is controlled by Gaming Corp. of America v. Dorsey Whitney, 88 F.3d 536, 551 (8th Cir. 1996), which distinguished Merrell Dow and found the exercise of federal question jurisdiction proper. Id. Gaming Corp held that Merrell Dow did not apply because, though the Indian Gaming Regulatory Act ("IGRA") did not provide a private right of action, the conspiracy claim (an alleged state law claim), was not an independent cause of action. Gaming Corp. 88 F.3d at 551. Instead, the conspiracy claim necessarily requires the commission of an underlying substantive tort. See id. In Gaming Corp., the Court found that the conspiracy claim relied on a violation of a federal statute. See id. In contrast, the federal statute in Merrell Dow was a factor showing negligence for jury consideration. See Merrell Dow, 478 U.S. at 807. Therefore, the exercise of federal question jurisdiction was found appropriate in Gaming Corp and inappropriate in Merrell Dow. Gaming Corp, 88 F.3d at 551; Merrell Dow, 478 U.S. at 807.
The Eighth Circuit has also addressed the issue of whether the violation of a federal statute could provide the standard of care for a state negligence claim. See Hofbauer v. Northwestern Nat'l Bank of Rochester, 700 F.2d 1197, 1201 (8th Cir. 1983). The Hofbauer case, similar to the case at bar, was originally filed in state court and removed to federal court on the basis of federal question jurisdiction arising under a federal statute. Id. Because there was no private cause of action under the federal statute, the case was remanded to state court. Id. In addressing the negligence claim, the Eighth Circuit reasoned that, while a federal statute could provide the standard of care in a negligence action, the decision whether to use the federal statute as the standard of care was best left to the state court. Id.
In the instant case, Plaintiffs initially asserted a cause of action under the Hot Goods Provision. See Am. Compl. Judge Boylan concluded that there is no private cause of action under the Hot Goods Provision and the parties do not contest that finding. See RR [Doc. No. 16]; Obj. [Doc. No. 17]. Plaintiffs assert that this cause of action is a claim for negligence per se, a state cause of action, and that the federal statute provides the standard of care. See Alderman's Inc. v. Shanks, 536 N.W.2d 4, 8 (Minn. 1995); RR [Doc. No. 16]. Defendant contends that since the Hot Goods Provision provides the sole basis for determining liability under a negligence per se claim, the cause of action arises under federal law. See Obj. [Doc. No. 17].
Defendant's reliance on Gaming Corp. is misplaced. Unlike Gaming Corp., where proof of the conspiracy claim relied upon the violation of a federal statute, here there is no federal statute similarly implicated. See Gaming Corp., 88 F.3d at 551. Plaintiffs' negligence claim is an independent cause of action, which brings it within the dictates of Merrell Dow. See Gaming Corp., 88 F.3d at 551; Alderman's Inc., 536 N.W.2d at 8. The proof of a violation of the Hot Goods Provision to establish negligence under a state cause of action is not sufficiently substantial to confer federal question jurisdiction. See Merrell Dow, 478 U.S. at 813. Were it sufficent to allow a federal court to exercise original jurisdiction based upon a violation of the Hot Goods Provision as a factor to be considered in a state cause of action, the congressional purpose in not providing a private cause of action under the statute would be circumvented. See id. The state courts may appropriately decide whether the duties established by the Hot Goods Provision of the FLSA should be applied as a standard of conduct for negligence liability. See Hofbauer, 700 F.2d at 1201. This case is remanded to Hennepin County District Court.
IV. CONCLUSION
Based upon the foregoing, and all of the files, records, and proceedings herein, IT IS HEREBY ORDERED that:
(1) Judge Boylan's RR of September 12, 2001 [Doc. No. 16] is ADOPTED in its entirety;
(2) This action is REMANDED to Hennepin County District Court.
LET JUDGMENT BE ENTERED ACCORDINGLY.