Opinion
No. 4:01-CV-820-A
February 28, 2002
MEMORANDUM OPINION and ORDER
Came on for consideration the motions of plaintiff, Brenda Wallace Crouch, as next friend for Kevin Anthony Wallace, and defendant Homer Wallace to remand. The court has concluded that remand should be granted.
I. Background and Procedural History
A. The Removal
This action was removed to this court from the District Court of Tarrant County, Texas, 48th Judicial District, by notice of removal filed October 10, 2001, by defendant General Motors Corporation ("GM"). GM alleges that this court has subject matter jurisdiction under 28 U.S.C. § 1331, and that the action is removable to this court pursuant to the provisions of 28 U.S.C. § 1441, because plaintiff's claim against GM relates to an employee benefit plan governed by the Employee Retirement Income Security Act of 1974 ("ERISA"), with the result that it is completely preempted by ERISA. Alternatively, GM alleges that this court has subject matter jurisdiction, and the case is removable, because the health care plan in question is a collectively bargained benefit plan, and the claim of plaintiff states a cause of action under § 301(a) of the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185 (a), thus causing preemption to exist.
B. The Claim Alleged by Plaintiff Against GM in State Court
An incomplete copy of plaintiff's state court pleading accompanies GM's notice of removal as attachment 1. Page 4 of the pleading is missing from that copy. However, the court believes that it has accurately ascertained the nature of the claims made by plaintiff against GM from the contents of the remaining five pages and the allegations of the parties in the removal and remand documents. The prayer of the pleading discloses that plaintiff is not seeking any recovery under any health benefit plan, but is limiting the request for recovery to damages for relinquished benefits.
The allegations as to GM are as follows:
The claims of plaintiff against Homer Wallace are not relevant to the remand issues.
Brenda Wallace Crouch ("Brenda") and Homer Wallace ("Homer") are the biological parents of plaintiff, Kevin Anthony Wallace ("Kevin"), who suffers from severe disabilities requiring regular medical care. Homer and Brenda divorced in 1984. Brenda subsequently married Phillip Crouch ("Phillip"), an employee of GM. By virtue of his employment, Phillip was enrolled in the General Motors Health Care Program for hourly employees. Brenda had access to a health care plan through her employer, the United States Postal Service ("USPS"). In 1995, Brenda and Phillip were faced with the choice of insuring Kevin with either the GM plan or the USPS plan. Based on the assurances of GM that Kevin would be covered by the GM plan, Brenda and Phillip chose to insure Kevin under that plan. GM's assurances were materially false representations made with the intent that plaintiff act upon them; and, in reliance upon those representations Kevin, through Brenda, relinquished benefits available to him under the USPS health care plan.
In 1999, GM informed Phillip that Kevin was not eligible for coverage under the GM plan and that it would seek reimbursement for all benefits paid on his behalf. GM's actions in causing the relinquishment of benefits under the USPS plan constitute fraudulent inducement. Kevin, through his next friend, seeks to recover the value of the benefits he would have received under the USPS plan.
C. Plaintiff's Motion to Remand
Plaintiff describes the claim against GM as a fraudulent inducement claim that does not seek recovery of benefits under any benefit plan issued by GM or require the interpretation of a collective bargaining agreement under 29 U.S.C. § 185 (a). Rather, plaintiff alleges that the suit looks solely to the issue of whether GM knowingly misled plaintiff. Any recovery would be measured by the value of the benefits that Kevin would have received under the USPS plan had he been covered by it. Because the case does not require interpretation of a collective bargaining agreement or GM's benefit plan, plaintiff asserts that federal preemption does not apply and that the court lacks subject matter jurisdiction.
D. GM's Response to Plaintiff's Motion to Remand
GM asserts in its response that plaintiff's state law claim for fraudulent inducement was properly removed because the claim (1) clearly relates to an ERISA-governed benefit plan under section 514(a) of ERISA, and (2) requires reference to and interpretation of a collective bargaining agreement covered by section 301 of the LMRA.
In its response, GM notes that Phillip and Brenda filed an earlier action on August 9, 2001, wherein they alleged many of the facts alleged in the instant action, asserting that GM (1) had breached a contract under which it was obligated to provide health care coverage, (2) had violated provisions of the Texas Insurance Code and the Texas Business and Commerce Code, and (3) breached the duty of good faith and fair dealing. GM timely removed the earlier action to this court, where it is pending as cause number 4:01-CV-708-A. GM asserts that the instant suit "is a disingenuous and artful attempt by Plaintiff to recast the same cause of action [as the earlier action], that is a claim for benefits between an ERISA entity and an alleged ERISA entity, as a state claim in order to avoid the preemption and removal of the claim to federal court under ERISA." GM Resp. at 3.
E. Homer's Motion to Remand
Homer seeks remand for reasons that are largely identical to those raised by plaintiff. Neither GM nor plaintiff filed a response to Homer's motion to remand.
II. Analysis
A. GM Has the Burden of Showing Entitlement to Removal
GM, as the party invoking federal court removal jurisdiction, bears the burden of establishing that this court has subject matter jurisdiction.See Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365 (5th Cir. 1995); Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). "[B]ecause the effect of removal is to deprive the state court of an action properly before it, removal raises significant federalism concerns. . . ." Carpenter v. Wichita, 44 F.3d at 365. The court, therefore, must strictly construe the removal statute. See id. When removal is sought under 28 U.S.C. § 1441 (b), as it is here, the right of removal depends on the existence of a claim or claims within the federal question jurisdiction of the court. See id. Remand is proper when there is any doubt as to the existence of federal jurisdiction. See Delgado v. Shell Oil Co., 890 F. Supp. 1324, 1341 (S.D. Tex. 1995);Samuel v. Langham, 780 F. Supp. 424, 427 (N.D. Tex. 1992).
The existence of federal question jurisdiction is determined by applying the "well-pleaded" complaint rule. See Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983). Under the rule, the existence of jurisdiction is determined solely from what appears on the face of plaintiff's complaint. See id. at 10. "A case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Caterpillar, Inc. v. Williams, 482 U.S. 386, 393 (1987) Plaintiff's complaint in the present case does not state a federal claim on its face.
An exception to the well-pleaded complaint rule exists where the state claim is completely preempted by federal law. See id. Complete preemption, however, applies only in those extraordinary circumstances when Congress intends not only to preempt certain state law, but also to replace it with federal law. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987); Willy, 855 F.2d at 1165. Congress expressed such an intention in Section 502 of ERISA. 29 U.S.C. § 1132 (a). Controversies requiring the interpretation of collective bargaining agreements, where section 301 of the LMRA provides the grounds for preemption, constitute another area of complete preemption. See Baker v. Farmers Elec. Coop., Inc., 34 F.3d 274, 278 (5th Cir. 1994).
B. GM Has not Demonstrated that Plaintiff's Fraudulent Inducement Claim is Preempted by ERISA
State law claims are completely preempted by ERISA where "(1) the state law claim addresses an area of exclusive federal concern, such as the right to receive benefits under the terms of an ERISA plan; and (2) the claim directly affects the relationship between the traditional ERISA entities-the employer, the plan and its fiduciaries, and the participants and beneficiaries." Weaver v. Employers Underwriters, Inc., 13 F.3d 172, 176 (5th Cir. 1994) quoting Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 245 (5th Cir. 1990). "Section 502, by providing a civil enforcement cause of action, completely preempts any state cause of action seeking the same relief, regardless of how artfully pleaded as a state action." Giles v. NYLCare Health Plans, Inc., 172 F.3d 332, 337 (5th Cir. 1999). The language of section 502 of ERISA allows an ERISA plan participant to "recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan." 29 U.S.C. § 1132 (a)(1)(B).
Section 514 of ERISA provides a second type of preemption known as conflict preemption. Conflict preemption, however, does not provide a basis for removal to federal court.
GM argues that plaintiff's fraudulent inducement claim in this suit stems directly from the allegations of improper administration of the GM health care plan raised in the earlier suit, and "clearly relate to an ERISA-covered employee welfare benefit plan." Resp. at 5. Plaintiff counters that under the rule set out by the Fifth Circuit in Smith v. Texas Children's Hosp., 84 F.3d 152 (5th Cir.), state law claims for fraudulent inducement are not preempted by ERISA. See 84 F.3d at 155.
In Smith, the Fifth Circuit held that a fraudulent inducement claim, such as plaintiff asserts against GM here, is not preempted because such a claim does not depend upon the scope of the plaintiff's rights under an ERISA plan, but rather upon the question of whether the employer misled the plaintiff. Id. at 155-56. Smith further notes that a plaintiff's entitlement to benefits under an ERISA plan can be considered separate from the question of whether a fraudulent inducement occurred. See id. at 157.
The court is not persuaded that GM has carried its burden of demonstrating that plaintiff's fraudulent inducement claim can be read as a claim under section 502 of ERISA, e.g., to recover benefits, enforce existing rights, or clarify future rights and benefits. GM has failed to explain why Smith is not binding on the court. Plaintiff's claim arises from GM's alleged fraudulent inducement of plaintiff's parents to forgo health insurance under the USPS plan in favor of the GM plan. According to Smith, such a claim concerns the application of state law and does not require the court to interpret GM's ERISA plan.
C. GM Has not Demonstrated that Plaintiff's Fraudulent Inducement Claim is Preempted by the LMRA
GM states, "because Plaintiff's claims require an interpretation of the eligibility provisions of the GM Program and affect the relationship between General Motors and the UAW," plaintiff's claim arises under the LMRA and qualifies for removal. See Resp. at 19-20. GM, however, does not explain how plaintiff's claim would require interpretation of a collective bargaining agreement. The court has concluded that the claim is entirely independent of the labor agreement.
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Therefore, this court lacks jurisdiction to hear plaintiff's claims, and the case must be remanded.
III. Award of Costs and Expenses
The court finds that, pursuant to 28 U.S.C. § 1447 (c), both plaintiff and Homer are entitled to reimbursement of just costs and actual expenses, including attorney's fees, incurred as a result of the removal. Therefore, the court shall retain jurisdiction for the limited purpose of entering a supplementary or amended order on the subject of payment by GM of costs and expenses following receipt of affidavits verifying any costs and expenses incurred by plaintiff and Homer as a result of the removal.
IV. ORDER
For the reasons discussed herein,
The court ORDERS that the motions to remand be, and are hereby, granted.
The court further ORDERS that the above-captioned action be, and is hereby, remanded to the state court from which it was removed.
The court further ORDERS that if either plaintiff or Homer wishes to seek recovery from GM of costs and expenses, he file by March 8, 2002, an appropriate affidavit setting forth (1) the dates upon which work was performed, (2) the identity of the attorney performing the work, (3) the amount of time spent by each attorney, (4) a description of the work performed by each attorney on each date specified, (5) an itemization of other costs and expenses claimed, and (6) any other appropriate matters for the court to consider in awarding costs and expenses, including attorney's fees.
The court further ORDERS that by March 15, 2002, GM file any response it wishes to make to such affidavit or affidavits.