Opinion
1:02-CV-1454 SEB-VSS
October 22, 2003
ORDER DENYING MOTION TO REMAND
This matter is before the Court on Plaintiff's Motion To Remand. For the reasons set forth below, we find that Plaintiff's motion is not well taken and that the matter should properly remain before this Court.
Plaintiff, Raymond James Associates ("RJA"), filed a Motion and Application for an Order to Vacate Arbitration Award with the Marion County Circuit Court in Indianapolis on September 3, 2002. RJA and Defendant, First Union Securities, Inc. ("FUSI"), had been parties to an arbitration before the New York Stock Exchange ("NYSE") Arbitration Division earlier that year which resulted in an award to FUSI, and against RJA, in the amount of $2 million compensatory damages and $4 million in punitive damages. The compensatory damage award was satisfied, but RJA takes issue with the punitive damage award and the arbitration panel's "referral" of individual employees of RJA to the NYSE Enforcement Department for possible disciplinary action. Thus, those issues are the subject of RJA's effort to have the award vacated.
FUSI filed its Notice of Removal on September 20, 2002 and RJA Filed its Motion To Remand on October 21, 2002. Removal was pursued under 28 U.S.C. § 1441(a) and (b), based upon RJA seeking, in part, to vacate the punitive damage award because it allegedly violates the Eighth Amendment and the Due Process Clause of the Constitution of the United States of America. RJA asks the Court to remand the matter to the Marion Circuit Court on the grounds that the state law issues predominate over the constitutional issues.
At the time the Motion to Remand was filed, the Indiana Supreme Court's decision in Cheatham v. Pohl, 789 N.E.2d 467 (Ind. 2003) had yet to be decided. RJA mentioned the pendency of Cheatham, as well as the lower Indiana appellate court's ruling that the Indiana punitive damage allocation statute was unconstitutional, as reasons why this matter would be better decided by a state court. Cheatham has now been decided, and the constitutionality of the statute upheld. Accordingly, there seems to be no life left in this part of Plaintiff's argument.
Regardless of whether or not state law issues predominate in analyzing the propriety of the arbitration award, there is no question that RJA's constitutional challenge to the award is sufficient to allow removal under 28 U.S.C. § 1441 (a) and (b). Although grounds for removal are strictly scrutinized with an eye toward adhering to the limitations of federal jurisdiction, if jurisdiction is appropriately obtained through removal, remand can occur only if it is within the bounds of the removal statute. In re Continental Casualty Co., 29 F.3d 292 (7th Cir. 1994). To quote a sister court, "[I]n other words, the court does not have the authority to remand a case that is within its jurisdiction, unless the removal statute permits the court to do so." Schmude v. Sheahan, 198 F. Supp.2d 964, 966 (N.D. 111. 2002) (citing to In re Continental Casualty Co., 29 F.3d at 293-95; Buchner v. F.D.I.C., 981 F.2d 816, 819-20 (5th Cir. 1993); Commonwealth Edison Co. v. International Brotherhood of Elec. Workers, 961 F. Supp.2d 1154, 1164-65 (N.D. Ill. 1996)).
FUSI removed the case based on 28 U.S.C. § 1441(a) and (b). Subsection (c) of 28 U.S.C. § 1441 provides the only possible statutory basis for this court to exercise discretion to remand properly removed claims. It is apparent from RJA's motion that it seeks to have the entire case sent back to state court. However, 28 U.S.C. § 1441 does not authorize this court to make such a ruling. In its response to the Motion To Remand, FUSI cites a Third Circuit decision which to us appears to be on all fours with the case before us. Borough of West Miflin v. Lancaster, 45 F.3d 780 (3rd Cir. 1995).
In Borough of West Miflin, the plaintiffs brought claims under 42 U.S.C. § 1983 in addition to state law claims of assault, malicious prosecution and negligence — all in connection with an incident at a mall involving both private security personnel and the local police. The case was removed from state court. It was later remanded by the district court which relied upon 28 U.S.C. § 1441 (c) as providing grounds to send the entire case back because state law issues predominated. Id. at 784. The municipal defendants sought a writ of mandamus requiring the district court to retain jurisdiction of the matter. Id.
After a very thorough discussion of removal and remand under 28 U.S.C. § 1441 and the effort of Congress to bring its remand provisions into harmony with 28 U.S.C. § 137 through the 1990 amendments, the Court of Appeals found as follows:
In the present case, the district court relied upon the addition which reads "the district court may . . . remand all matters in which State law predominates" to remand the entire case, including the § 1983 claim, to state court. It did so without regard for the requirement, which Congress left unchanged when it amended § 1441(c), that the federal cause of action removed by the municipal defendants had to be "separate and independent" from the state causes of action.
Thus § 1441(c), provides for removal or remand only where the federal question claims are "separate and independent" from the state law claims with which they are joined in the complaint. However, where there is a single injury to plaintiff for which relief is sought, arising from an interrelated series of events and transactions, there is no separate or independent claim or cause of action under § 1441(c). Suits involving pendent (now "supplemental") state claims that "derive from a common nucleus of operative fact" do not fall within the scope of § 1441(c), since pendent claims are not "separate and independent".Borough of West Miflin v. Lancaster, 45 F.3d at 785-86 (citations omitted).
In this case, RJA posits various state and federal legal theories on which it hopes to prevail to obtain a reversal of portions of the arbitration award. However, all the theories are founded upon and require the Court to interpret the same nucleus of operative fact. Like Borough of West Miflin, the federal claims (violation of due process and the Eighth Amendment) are not "separate and independent" from the state law claims. Although the Seventh Circuit has not opined directly on the issue before us or the 1990 amendments to § 1441, we believe it would follow a similar analysis to that followed by the Third Circuit in Borough of West Miflin and the Fifth Circuit in Buchner v. F.D.I.C., 981 F.2d 816 (5th Cir. 1993). RJA also invites the Court to consider declining jurisdiction by invoking the abstention doctrine discussed in Quackenbush v. Allstate Insurance Co., 517 U.S. 706 (1996). However, the exceptional circumstances necessary for a court to deny a federal forum, due to the potential for disruption of significant countervailing state public policy issues, is not present here.
Therefore, the Plaintiff's Motion To Remand is DENIED. The stay of briefing on the Application for Order to Vacate and Defendant's Cross-Motion to Confirm Arbitration Award is lifted and the parties are directed to refer to and follow the briefing schedule set forth in this Court's Order of November 19, 2002.
IT IS SO ORDERED