Opinion
No. CV03-38-C-EJL
February 3, 2003
ORDER
Pursuant to 28 U.S.C. § 1441(b), the Defendant recently removed this action from state Court and invoked this Court's jurisdiction pursuant to 28 U.S.C. § 1331 and, in the alternative, pursuant to 28 U.S.C. § 1332. The "burden of establishing federal jurisdiction is on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction." Prize Frize, Inc. v. Matrix Inc., 167 F.3 d 1261, 1265 (9th Cir. 1999). Any doubt as to the right of removal is resolved in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
This Court always undertakes an immediate review of a newly filed case to confirm that federal jurisdiction is proper. See Wisconsin Knife Works v. National Metal Crafters, 781 F.2d 1280, 1282 (7th Cir. 1986).
Defendant first asserts that removal is appropriate pursuant to 28 U.S.C. § 1331 which instructs that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." In examining Defendant's assertion, the Court in mindful that "[o]nly actions that originally could have been filed in federal court may be removed to federal court by the defendant." Audette v. ILWU, 195 F.3d 1107, 1111 (9th Cir. 1999). Furthermore, it is well established that the "presence or absence of federal question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Id. "The plaintiff is the 'master of the claim' and may avoid federal jurisdiction by 'exclusive reliance on state law.'" Id.
Here, the Plaintiff's Complaint clearly relies solely on state law. In Count One, the Plaintiff seeks a declaratory judgment pursuant to state statute that would establish the amount, if any, owed by the Plaintiff to the Defendant under an employment contract. In Count Two, the Plaintiff alleges a state law cause of action for breach of contract. Thus, the Plaintiff's "well-pleaded complaint" does not support federal question jurisdiction. See id.
Defendant contends, however, that certain terms, conditions and consequences of the parties' employment contract are govern by federal regulations issued by the "United States Department of Labor, Employment and Training Administration." Even if true, and the record is less than clear on this point, the fact that federal law might influence the interpretation of certain contract terms or the nature of any remedy, does not mean that the state law action is converted to a federal question. The United States Supreme Court has made clear "that the presence of a claimed violation of the [federal] statute as an element of a state cause of action is insufficiently 'substantial' to confer federal-question jurisdiction." Merrell Dow Pharmaceuticals v. Thompson, 478 U.S. 804, 814 (1986); see also Utley v. Varian Assoc., 811 E, 2d 1279, 1283 (9th Cir.) (applying Merrell Dow to conclude that absent a "private cause of action under the federal statute . . a claimed violation of the [federal] statute as an element of a state cause of action is insufficiently 'substantial' to confer federal-question jurisdiction."),cert. denied, 484 U.S. 824 (1987). Accordingly, the Court lacks federal question jurisdiction over this matter. See Easton v. Crossland Mortgage Corp., 114 F.3d 979, 982 (9th Cir. 1997).
The Defendant does not contend and, in any event, there is no case law to support the notion that federal question jurisdiction is proper in this case because relevant federal statutes or regulations create a federal private right of action, Utley 811 F.2d at 1283, or completely pre-empt state law, Audette, 195 F.3d at 1111.
Defendant also invoked this Court's jurisdiction on diversity grounds under 28 U.S.C. § 1332. A federal case opened after January 19, 1997, that relies on § 1332 as a source of jurisdiction, must satisfy a jurisdictional minimum of $75,000. See Singer v. State Farm Mutual Auto. Ins. Co., 116 F.3d 373, 375 n. 1 (9th Cir. 1997). Where, as here, the complaint filed in state court specifies damages in an amount less than the required federal jurisdictional limit, the removing defendant must set forth "in the removal petition itself the underlying facts supporting its assertion that the amount in controversy exceeds [$75,000]." Gaus, 980 F.2d at 567 (emphasis in original). The removing defendant bears the burden of proving by a preponderance of evidence that the amount in controversy exceeds the jurisdictional minimum. Singer, 116 F.3d at 376.
Where, as here, Plaintiff has set forth in the Complaint a specific request for damages and attorneys' fees that on its face is an amount less than the jurisdictional minimum, some case law holds that Defendant "must prove to a legal certainty that plaintiff's claim must exceed $[75,000]." See e.g., Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994), Because the Court concludes that Defendant has not satisfied his burden by the preponderance standard, it need not decide whether the more strict standard is applicable to this type of removed action.
In this case, the Defendant has failed to make the necessary showing. In the Notice of Removal, the Defendant seeks to meet his burden by first stating that under Count One, the request for a declaratory judgment, the amount Defendant owes Plaintiff could range anywhere from $18,409 to $22,000. On this point, Defendant is correct in assuming that it is proper in a declaratory judgment action to consider the amount "either party can gain or lose." Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 405 (9th Cir. 1996). But then Defendant errs by applying a treble damages analysis to these amounts. No where in the Complaint does Plaintiff seek treble damages, for the sound reason that the Idaho provision cited by Defendant, Idaho Code § 45-615(2), is not implicated by the cause of action set forth by Plaintiff in Count One of the Complaint. See Idaho Code § 45-615 and § 45-601(6). "Because [Defendant's] calculation of the amount in controversy is entirely premised on a misinterpretation of this statute, it has failed to meet its burden of proof." Sanchez, 102 F.3d at 405 (explaining that it is not proper to consider as part of the amount in controversy a state provision which allows treble damages when it does not apply to Plaintiff's cause of action).
Furthermore, it appears from the face of the Complaint that the amount sought in Count Two would offset any amount owed Defendant under Count One, leaving the amount in controversy at approximately $15,000 to $20,000 in attorneys' fees. (Complaint at 3-5).
In sum, removal jurisdiction is not proper under either § 1331 or § 1332. Therefore, this case will be remanded to state court pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction.
ORDER
Based on the foregoing, and being fully advised in the premises, IT IS HEREBY ORDERED that the above-entitled action is remanded to the district court of the Second Judicial District in the State of Idaho In and For the County of Nez Perce, No. CV 02-02889; and the Clerk shall mail a certified copy of this Order to the Clerk of the aforesaid Idaho state court.
IT IS FURTHER ORDERED that all pending motions are rendered moot by this remand Order.