Opinion
No. 2:08-cv-01960-MCE-DAD.
November 6, 2008
MEMORANDUM AND ORDER
Plaintiffs, the Department of Personnel Administration ("DPA") and David Gilb, Director of the DPA, (collectively "Plaintiffs") filed this action against Defendants, the Office of the State Controller and John Chiang, the Controller, (collectively "Controller") in Sacramento County Superior Court. Plaintiffs sought to compel the Controller to refrain from violating state law by paying state employees in a manner inconsistent with the California Supreme Court decision in White v. Davis, 30 Cal. 4th 528 (2003), and specifically to compel the Controller to conform his conduct to the California Constitution and various California Government Code sections. A number of employee organizations intervened as Defendants and removed the case to this Court. Presently before the Court are Plaintiffs' Motion to Remand, Defendants' Motion to Dismiss, and various Intervenor-Defendants' Motions to Change Venue. On October 29, 2008, this Court heard oral argument and took these matters under submission. Because the Court concludes that it lacks jurisdiction over Plaintiffs' claims, Plaintiffs' Motion to Remand is granted. Accordingly, Defendants' Motion to Dismiss and Intervenor-Defendants' Motions to Remand are denied.
BACKGROUND
A. Factual History
The following facts are derived from Plaintiffs' Petition for Writ of Mandate and Complaint for Injunctive and Declaratory Relief ("Complaint"), which Plaintiffs originally filed in state court.
Plaintiffs allege that under the California Supreme Court decision in White v. Davis in the absence of a budget or another appropriation, the Controller is prohibited by state law from paying state employees' salaries, except as minimally required by federal law.
Plaintiffs acknowledge that "[c]onsistent with the requirements of federal law, the Controller is required, notwithstanding a budget impasse and the limitations imposed by state law, to timely pay those state employees who are subject to the minimum wage and overtime compensation provisions of the Fair Labor Standards Act ("FLSA"), [ 29 U.S.C. § 201, et seq.,] . . . the wages required by that act." Complaint, ¶ 20, citing White v. Davis at 535. Additionally, according to Plaintiffs, "except as minimally required by the FLSA, or in situations where there is a continuing appropriation, or payment is authorized by a self-executing provision of the State Constitution, the Controller is not authorized to pay state employee salaries in the absence of a budget or other available appropriation." Id., ¶ 21.
Thus, Plaintiffs maintain that by paying state employees' salaries during a budget impasse, the Controller violates various provisions of state law, specifically, Article XVI, section 7 of the California Constitution, and California Government Code §§ 1231.1, 9610, and 12440.
Pursuant to the California Constitution, the State Legislature is mandated to "pass the budget bill by midnight of June 15 of each year." Cal. Const. Art. IV, § 12. This year, as in a number of years past, the Legislature failed to meet the requisite deadline.
The budget appropriating funds for the 2007-2008 fiscal year expired on June 30, 2008, and, since the legislature was at an impasse, California was left with no budget for the 2008-2009 fiscal year.
On July 31, 2008, the Governor issued an Executive Order directing Plaintiffs to work with Defendants "to develop and implement the necessary mechanisms, including but not limited to, pay letters and computer programs, to comply with the California Supreme Court's White v. Davis opinion to pay federal minimum wage to those nonexempt FLSA employees who did not work any overtime." Id., § 31. That same day, the Controller expressly refused to comply with the Governor's Order.
On August 5, 2008, Plaintiffs issued a Pay Letter, an administrative document "triggering" the Controller's duty to pay employee salaries, instructing the Controller "to comply with state law and the requirements of White v. Davis to pay wages as minimally required by federal law." Id., § 37. Through their Pay Letter, Plaintiffs "provided the Controller with the necessary instructions to comply with state law and the requirements ofWhite v. Davis to pay wages as minimally required by federal law." Id., § 37. Among other directions, that Pay Letter also "provided the Controller with special salary payment instructions concerning state employees" and "instructed the Controller to comply with federal labor law and the California Supreme Court's decision in White v. Davis." Id., § 38.
When the Controller allegedly failed to comply with the pay Letter, Plaintiffs sought relief in state court. Plaintiffs sought "a writ of mandate . . . compelling the Controller to refrain from violating state law by paying state employees in a manner inconsistent with the California Supreme Court decision ofWhite v. Davis, and the DPA Pay Letter." Id. 11:16-18. Plaintiffs further requested "a preliminary and permanent injunction, against Defendant predicated on the claims presented herein, enjoining him . . . from paying state employees in a manner inconsistent with the California Supreme Court decision of White v. Davis, and the DPA Pay Letter." Id. at 11:19-22. Finally, Plaintiffs sought "declaratory relief that the Controller is legally required under state law to refrain from paying state employee salaries in the absence of a budget or other available appropriation, except as minimally required by the FLSA." Id., 11:23-25.
On September 23, 2008, prior to any substantive adjudication in this case, the California Legislature adopted a state budget. Motion to Dismiss, 1:12-13.
While the passage of the state budget raises the question of whether this suit is moot, because this Court disposes of this case on jurisdictional grounds, it need not address that question and Defendants' Motion to Dismiss is denied. For the same reasons, both Motions to Change Venue are denied as well.
B. Procedural History
Plaintiffs filed their Complaint in Sacramento County Superior Court on August 11, 2008.
The following entities (hereafter referred to collectively along with the Controller as "Defendants") subsequently intervened as Defendants in the State action and all Defendants then removed to this Court:
• California Correctional Peace Officers Association ("CCPOA") • California Statewide Law Enforcement Association ("CSLEA") • Stationary Engineers Local 39 International Union of Operating Engineers, AFL-CIO • California Association of Professional Scientists • Professional Engineers in California Government\ • Service Employees International Union, Local 1000 and various individuals (collectively "SEIU Local 1000") • California Attorneys, Administrative Law Judges, and Hearing Officers in State Employment ("CASE") On September 10, Plaintiffs moved to remand to state court arguing that this Court lacks subject matter jurisdiction over Plaintiffs' claims because Plaintiffs' Complaint does not raise a federal question.On September 3, 2008, CCPOA and CSLEA filed a Motion to Change Venue to the Northern District of California, specifically to the Honorable Thelton Henderson, who presides over Marciano Plata, et al. v. Arnold Schwarzenegger, et al., Case No. C01-1351 THE. Only a few days later, CASE filed its own Motion to Change Venue, also requesting a transfer to Judge Henderson in the Northern District, this time on the grounds that he presides over Madrid v. Tilton, Case No. C90-3094 THE. On October 8, 2008, the Controller filed a Memorandum Concerning Venue specifically taking no position with respect to either Motion. SEIU Local 1000 subsequently joined in both of Intervenor-Defendants' Motions.
On September 30, the CCPOA and the CSLEA moved to dismiss this case as moot. All Defendants thereafter joined in that motion.
Presently before the Court are the two Motions to Change Venue, one Motion to Dismiss, and one Motion to Remand.
STANDARD
A defendant may remove any civil action from state court to federal district court if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). Generally, district courts have original jurisdiction over civil actions in two instances: (1) where there is complete diversity between the parties, or (2) where a federal question is presented in an action arising under the Constitution, federal law, or treaty. 28 U.S.C. §§ 1331 and 1332.
The removing party bears the burden of establishing federal jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Furthermore, courts construe the removal statute strictly against removal. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citations omitted). If there is any doubt as to the right of removal in the first instance, remand must be granted. See Gaus, 980 F.2d at 566. Therefore, if it appears before final judgment that a district court lacks subject matter jurisdiction, the case shall be remanded to state court. 28 U.S.C. § 1447(c).
The district court determines whether removal is proper by first determining whether a federal question exists on the face of the plaintiff's well-pleaded complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). If a complaint alleges only state-law claims and lacks a federal question on its face, then the federal court must grant the motion to remand. See 28 U.S.C. § 1447(c); Caterpillar, 482 U.S. at 392. Nonetheless, there are rare exceptions when a well-pleaded state-law cause of action will be deemed to arise under federal law and support removal. They are ". . . (1) where federal law completely preempts state law, (2) where the claim is necessarily federal in character, or (3) where the right to relief depends on the resolution of a substantial, disputed federal question." ARCO Envtl. Remediation L.L.C. v. Dep't of Health Envtl. Quality of Mont., 213 F.3d 1108, 1114 (9th Cir. 2000) (internal citations omitted).
ANALYSIS
The extraordinary nature of this suit makes it unlikely to fit neatly within the four corners of any established precedent. In this case, two California agencies are pitted against one another over the legality under state law of the payment of salaries to state employees during a state budget impasse. One arm of the state removed to this Court, while its adversary, also a state agency, maintains that the state courts are the proper forum. It is difficult to conceive of a case more likely to invoke principles of federalism and the need for judicial restraint by the federal courts.
The apparent complexity of the questions at issue in this action lies not in its facts, which are undisputed. Rather, its potential to perplex derives from Plaintiffs' allegations that, inter alia, during a budget impasse, Defendants are prohibited from paying state salaries under state law, except as minimally required by the FLSA.
Though California had originally haled itself into its own courts in an attempt to mandate its own compliance with its own laws, Defendants view Plaintiffs' seemingly innocuous reference to federal law as a door to federal jurisdiction, arguing that Plaintiffs' claims "arise under" federal statutes. However, despite the facial difficulty in applying Defendants' arguments to a case in which the State simultaneously serves as both Plaintiff and Defendant, expressly pleads violations of only state law, and yet acknowledges the necessity of its compliance with federal law, this Court is left with but one conclusion. Plaintiffs' well-pleaded Complaint does not arise under federal law and this Court must remand this action to the Superior Court.
I. THE CALIFORNIA SUPREME COURT'S DECISION IN WHITE V. DAVIS , 30 CAL. 4TH 528 (2003)
Central to this dispute is the California Supreme Court's analysis in a 2003 taxpayer action arising out of the 1997 and 1998 state budget impasses. White v. Davis, 30 Cal. 4th 528 (2003).
Two issues were appealed to that court: "1) whether the trial court erred in granting a preliminary injunction in the underlying taxpayer action, and 2) the substantive question whether the Controller is authorized to pay state employees their full and regular salaries during a budget impasse." Id. at 534. Only the latter issue is germane to the current dispute before this Court.
The California court determined "state law contractually guarantees that state employees ultimately will receive their full salary for work performed during a budget impasse, but state law does not authorize the Controller to disburse state funds to the employees until an applicable appropriation has been enacted." Id. (emphasis in original). In making its determination, that court relied on Article XVI, section 7 of the California Constitution and California Government Code §§ 12440, 9610, 1231, and 1231.1. Id. at 568-569.
Nevertheless, that Court also determined that "by virtue of the supremacy of federal law, the state is obligated to comply with the minimum requirements of the FLSA during a budget impasse, notwithstanding the lack of an available appropriation." Id. at 579. That court also stated, "[I]n light of the requirements offederal law, the Controller is required . . . to timely pay those state employees who are subject to the minimum wage and overtime compensation provisions of the federal [FLSA] . . . the wages required by that act." Id. at 535.
Finally, that court concluded that "the state satisfies the requirements of the FLSA by paying nonexempt state employees (who do not work overtime) at the minimum wage rate for the straight-time hours (that is, nonovertime hours) worked by those employees during the pay period. For nonexempt employees who do not work overtime, the FLSA does not require the prompt payment of full salary. By contrast, under the applicable federal regulation, whenever a nonexempt employee works overtime, the FLSA requires the employer to pay the employee his or her full regular salary for the employee's straight time as well as at least one and one-half times the employee's regular salary for overtime hours worked." Id. at 577 (emphasis in original).
Accordingly, though not necessary to the application of state law, California's highest court nonetheless reasoned that "it [was] appropriate to clarify [its] understanding of what the FLSA require[d] with regard to the amount of salary payments that must be made during a budget impasse, so as not to leave the Controller without guidance on the issue." Id. at 575.
II. PLAINTIFFS' CLAIMS DO NOT "ARISE UNDER" FEDERAL LAW AS REQUIRED BY 28 U.S.C. § 1331.
In their current Complaint, Plaintiffs seek to compel Defendants' compliance with Article XVI, section 7 of the California Constitution, and California Government Code §§ 1231.1, 9610, and 12440, while at the same time acknowledging such compliance is limited by the strictures of the FLSA. Therefore, against the backdrop of White v. Davis, the question this Court must decide today is whether a federal question is implicated by Plaintiffs' state law claims since Plaintiffs specifically acknowledged that those claims are limited by the application of federal law.
"Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). "In the absence of diversity of citizenship, federal-question jurisdiction is necessary." Id.
"To bring a case within [ 28 U.S.C. § 1331], a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. A genuine and present controversy, not merely a possible or conjectural one, must exist with reference thereto, and the controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal." Gully v. First Nat. Bank in Meridian, 299 U.S. 109, 112-113 (1936).
Moreover, under the "well-pleaded complaint rule," a federal question "must be presented on the face of the plaintiff's properly pleaded complaint." Caterpillar at 392, citing Gully, 299 U.S. at 112-113.
"Thus, it is now settled law that 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." Id. at 393 (emphasis in original). "[T]he presence of a federal question . . . in a defensive argument does not overcome the paramount policies embodied in the well-pleaded complaint rule — that the plaintiff is the master of the complaint, that a federal question must appear on the face of the complaint, and that the plaintiff may, by eschewing claims based on federal law, choose to have the cause heard in state court." Id. at 398-399.
"[A] defendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law, thereby selecting the forum in which the claim shall be litigated. If a defendant could do so, the plaintiff would be master of nothing."Id. at 399 (emphasis in original). Moreover, "a federal court does not have original jurisdiction over a case in which the complaint presents a state-law cause of action, but also asserts that federal law deprives the defendant of a defense he may raise, or that a federal defense the defendant may raise is not sufficient to defeat the claim." Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 10 (1983).
Nonetheless, under the "artful pleading" doctrine, there are rare exceptions when a well-pleaded state-law cause of action will be deemed to arise under federal law and support removal. "[C]ourts have used the artful pleading doctrine in: (1) complete preemption cases, and (2) substantial federal question cases. Subsumed within this second category are those cases where the claim filed is necessarily federal in character, or where the right to relief depends on the resolution of a substantial, disputed federal question." Lippitt v. Raymond James Financial Services, Inc., 340 F.3d 1033, 1041-1042 (internal citations omitted). Nonetheless, "[t]he artful pleading doctrine does not permit defendants to . . . rewrite a plaintiff's properly pleaded claim in order to remove it to federal court." Rains v. Criterion Systems, Inc., 80 F.3d 339, 344 (9th Cir. 1996).
In light of the preceding jurisdictional doctrines, Plaintiffs argue that federal law is implicated only to the extent Defendants raise the FLSA as a defense to Plaintiffs' state law claims. Defendants, on the other hand, argue that because Plaintiffs' state law claims necessarily turn on the construction of a substantial and disputed aspect of federal law, namely the application of the FLSA to a state's expenditures during a budget impasse, those claims "arise under" federal law. The Court will address each of these arguments in turn.
A. Plaintiffs' Well-Pleaded Complaint Merely Anticipates Defendants' Federal Defense.
Plaintiffs' Complaint seeks to compel the Controller to comply with state law, except as minimally required by federal law. Regardless of the parties' individual characterizations of this case, at least that much is clear.
Nevertheless, the parties' subsequent interpretations diverge greatly. Plaintiffs argue that their Complaint merely anticipates Defendants' FLSA preemption defense and acknowledges that, exclusive of the application of state law, the Controller must comply with the FLSA. Defendants disagree and characterize Plaintiffs' reference to the FLSA as a request that this Court also mandate Defendants' compliance with federal law.
As a threshold matter, the Court notes that Plaintiffs have not pled any actual or imminent violation of the FLSA and allege only that Defendants have refused to comply with state law. If this Court were to accept Defendants' arguments, it would have to interpret Plaintiffs' Complaint to seek compliance with a law not yet violated, nor in imminent danger of being violated. Issues of justiciability abound, conjuring questions of ripeness beyond the necessary scope of the current discussion.
Defendants support their interpretation by arguing, inter alia, that because Plaintiffs seek compliance with the Pay Letter, which itself mandates that the Controller comply with state law, except to the extent preempted by federal law, and which prescribes specific wages to be paid during a budget impasse, allegedly derived from Plaintiffs' interpretation of the FLSA, Plaintiffs seek compliance with the FLSA.
That simply is not the case. Plaintiffs repeatedly seek compliance with state law, under which it is allegedly unlawful for the Controller to pay any state employee salaries during a budget impasse. The wages prescribed in the Pay Letter, rather than mandating compliance with the FLSA, are merely intended to avoid violations of the FLSA, which might occur if compliance with state law is had. A recognition, whether in a Pay Letter or in a Complaint, of a need to avoid violating federal law does not morph Plaintiffs' Complaint into one raising federal claims.
Thus, the issue to be decided with regards to the Pay Letter is not whether Plaintiffs properly interpreted the FLSA in drafting that document. The issue is whether, under state law, Defendants must comply with the Pay Letter and reduce salaries during a budget impasse. Plaintiffs seek to compel compliance with the Pay Letter only under state law and claim that Defendants' failure to comply with that letter will violate California law. Plaintiffs' interpretation of the FLSA within the Pay Letter is simply irrelevant to whether or not state law was violated.
Stated another way, compliance, or the lack of compliance, with the FLSA does not directly affect Plaintiffs' state law claims. Plaintiffs' claims are affected only indirectly via Defendants' argument that they cannot comply with state law because to do so would violate the FLSA.
It follows that Plaintiffs' references to the FLSA in the Pay Letter are simply further instances of Plaintiffs' anticipation of Defendants' federal defense to Plaintiffs' state law claims. This Court does not see a difference between Plaintiffs' anticipation of a defense on the face of the Pay Letter versus on the face of the Complaint.
Based on their interpretation of Plaintiffs' Complaint, Defendants raise numerous practical questions as to how the Controller can feasibly comply with federal law. However, such questions have no bearing on this Court's current decision. Rather, it is the State's prerogative to determine the manner in which to conform its actions to federal law, and, in this case, Defendants' questions regarding federal compliance do not arise until compliance with state law is had. Only then, does the FLSA become an issue, and only then would this Court address federal questions.
In other words, California law does not require compliance with the FLSA, nor does interpretation of the FLSA determine the correctness of California law. The FLSA is implicated in Plaintiffs' Complaint only because Plaintiffs openly acknowledge that, regardless of the application of its own laws, the State must simultaneously tailor its actions to comply with federal law. This is hardly an abstract concept, and is, instead, simply a statement of one of the bedrock principles underlying our system of government, that federal law, under the proper conditions, preempts state law.
The Supremacy Clause states, "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. Art. VI § 2. Accordingly, "[t]o secure state-court compliance with, and national uniformity of, federal law, the exercise of jurisdiction by state courts over cases encompassing issues of federal law is subject to two conditions: state courts must interpret and enforce faithfully the 'supreme Law of the Land,' and their decisions are subject to review" in the United States Supreme Court. McKesson Corp. V. Division of Alcoholic Beverages and Tobacco, Dept. Of Business Regulation of Florida, 496 U.S. 18, 28-30 (1990).
The California Supreme Court did not say in White v. Davis, nor do Plaintiffs now plead, that California law rests on an interpretation of the FLSA. Rather, California's highest court said, and again, Plaintiffs plead, that California law prohibits paying salaries to state employees during a budget impasse. Additionally, in a wholly distinct discussion, mindful of the Supremacy Clause, the California Supreme Court also attempted to provide guidance to the State Controller regarding the minimal requirements of the FLSA.
Thus, at its most basic, Plaintiffs' Complaint simply states that Defendants must comply with state law except as limited by the supremacy of federal law. Plaintiffs' statement "except as minimally required by the FLSA" is mere surplusage because it simply reiterates one of the constitutional principles underlying every case filed in every court, that, under the supremacy clause, when conditions are right, applicable federal law trumps that of the states.
The application of the supremacy clause is a fundamental principle of law, not an allegation that must be proven. Whether or not a plaintiff acknowledges in his pleading that his state law claims are subject to the limits imposed by federal law simply has no bearing on the jurisdiction of this Court. Rather, the principles embodied in the supremacy clause are inherent in every complaint, in every decision of this and every court. It follows that Plaintiffs need not, as a basis for their claims, prove that those claims are not preempted. Rather, it is the job of Defendants in putting on their defense, to show the opposite.See E. J. Gallo Winery v. Encana Energy Services, Inc., 2008 WL 2489887, *5 (E.D. Cal.) ("'[A]n affirmative defense, under the meaning of Federal Rule of Civil Procedure 8(c), is a defense that does not negate the elements of the plaintiff's claim, but instead precludes liability even if all of the elements of the plaintiff's claim are proven.'"), quoting Roberge v. Hannah Marine Corp., 1997 WL 4683330 *3 (6th Cir. 1997).
Finally, even had Plaintiffs ignored the FLSA in their Complaint, the Supremacy Clause would still be implicated, and Defendants would still have every right to plead their inability to simultaneously comply with both state and federal law. That alleged inability constitutes a defense.
Notably, if the acknowledgment of the supremacy of federal law was sufficient to open the door to federal jurisdiction, then rare would be the case that could not be brought in federal court. Any state law claim that involved state issues even arguably preempted by federal law could be viewed as raising a federal question. Thus, despite decades-old rules to the contrary, by anticipating a preemption defense, plaintiffs could hale an unwilling defendant into federal court in a multitude of inappropriate cases.
Additionally, as Defendants themselves point out in their Opposition, under the "artful pleading" exception to the "well-pleaded complaint" rule, this Court would be unable to accept the absence of such allegations as determinative of a lack of jurisdiction. See Opposition, 11 n. 3. Thus, if this Court adopted Defendants' view, that the FLSA issues are indeed central to Plaintiffs' state law claims, such would be the case in any complaint alleging state law claims that even speculatively invoked the principles of the supremacy clause.
Accordingly, by engaging in the preceding analysis, this Court has simply navigated an alternative path to reach the well-established principle that a federal defense, even if anticipated on the face of a plaintiffs' complaint, does not create federal question jurisdiction. Caterpillar, 482 U.S. at 393.
Thus, stripping this case of its cloak of complexity bares the simple fact that if this Court accepted Defendants' interpretation of Plaintiffs' Complaint, it would be forced to turn a blind eye to over a century's worth of Supreme Court precedent. That the Court will not do, and in keeping with that precedent, this Court must remand.
This Court's decision is strongly supported by the Supreme Court's decision in Franchise Tax Board, supra at 13. In that case, the California Franchise Tax Board ("Tax Board") filed suit against Construction Laborers Vacation Trust for Southern California ("CLVT"), pursuant to California Revenue and Tax Code § 18817, for failing to comply with three tax levies. Id. at 4-7. The Tax Board also sought declaratory relief under the California Declaratory Judgment Act stating, "[t]here was at the time of the levies alleged above and continues to be an actual controversy between the parties concerning their respective legal rights and duties. The Board contends that [CLVT is] obligated and required by law to pay over to the Board all amounts held . . . in favor of the Board's delinquent taxpayers. On the other hand, defendants contend that section 514 of [the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq.] preempts state law and that the trustees lack the power to honor the levies made upon them by the State of California." Id. at 6. The Tax Board alleged Defendants would continue to disregard the tax levies, and sought "a declaration . . . of the parties' respective rights . . . to fully and finally resolve this controversy." Id. at 7. Asserting federal jurisdiction, CLVT removed the case to federal court.
According to the Supreme Court, "original federal jurisdiction is unavailable unless it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims, or that one or the other claim is 'really' one of federal law." Id. at 13. "For many cases in which federal law becomes relevant only insofar as it sets bounds for the operation of state authority, the well-pleaded complaint rule makes sense as a quick rule of thumb." Id. at 11. "The rule, however, may produce awkward results, especially in cases in which neither the obligation created by state law nor the defendant's factual failure to comply are in dispute, and both parties admit that the only question for decision is raised by a federal preemption defense. Nevertheless, it has been correctly understood to apply in such situations." Id. at 12.
Applying those rules, the Supreme Court determined that it lacked jurisdiction over the Tax Board's state law claims because "California law establishes a set of conditions, without reference to federal law, under which a tax levy may be enforced; federal law becomes relevant only by way of a defense to an obligation created entirely by state law, and then only if appellant has made out a valid claim for relief under state law." Id. at 13.
The same is true here. The California Supreme Court in White v. Davis made no reference to federal law in analyzing the application of state law. Rather, that Court raised the FLSA in a distinct and separate discussion intended to provide guidance to the Controller as to the technical requirements of FLSA compliance during a budget impasse.
In the current case, Plaintiffs have pled only state law causes of action. Nothing in Plaintiffs' Complaint leads this Court to believe that Plaintiffs' state law claims turn on a construction of federal law or that the application of federal law is relevant to a determination of whether that state law has been complied with or violated. Rather, in order for this Court to reach any issues under the FLSA, Plaintiffs must first make out a valid claim under state law, specifically that California law prohibits paying state employee salaries absent an appropriation. No matter how remote the possibility, if this Court were to reject Plaintiffs' claims and to determine that state law mandates the payment of salaries during a budget impasse, application of the FLSA would be irrelevant.
Finally, Defendants do not, indeed cannot, argue that application of the FLSA is necessary to a determination of Plaintiffs' claims under state law. Defendants simply argue that, by way of their Pay Letter, Plaintiffs seek compliance with federal law. As stated above, that is not the case. Plaintiffs do not contend that compliance with the FLSA is required to avoid a violation of California law, nor do Plaintiffs contend that a violation of the FLSA will result in a violation of California law.
Plaintiffs argue only that Defendants must be compelled to comply with the Pay Letter because a failure to so comply will violate California law. This Court need not interpret the FLSA to answer that question. Rather, federal law arises only as a "defense to an obligation created entirely by state law" because Defendants claim that the FLSA prevents their
Defendants point out that, if forced to comply with state law and the Pay Letter, numerous issues concerning the technical requirements of the FLSA will arise. Defendants are surely correct. A multitude of unanswered questions abound as to how the FLSA should be applied to state expenditures during a budget impasse. Again, however, "since 1887 it has been settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties admit that the defense is the only question truly at issue." Id. at 14. Thus, despite the existence of unanswered questions raised by the application of the FLSA to state expenditures during a budget impasse, because those questions are not implicated on the face of Plaintiffs' Well-Pleaded Complaint, this Court lacks jurisdiction over Plaintiffs' claims.
Additionally, even more indicative of the strength of the well-pleaded complaint doctrine is the Supreme Court's disposition of the Tax Board's declaratory relief claim. That Court stated, "[w]hereas the question of federal preemption is relevant to appellant's first cause of action only as a potential defense, it is a necessary element of the declaratory judgment claim." Id.
Under their second cause of action, those plaintiffs sought a declaration of the parties' respective rights and duties, and the only question actually in dispute concerned "the rights and duties of CLVT and its trustees under ERISA." Id. The Supreme Court noted that "[n]ot only does appellant's request for a declaratory judgment under California law clearly encompass questions governed by ERISA, but appellant's complaint identifies no other questions as a subject of controversy between the parties." Id. Therefore, that Court acknowledged that "it [was] clear on the face of its well-pleaded complaint that appellant may not obtain the relief it seeks in its second cause of action . . . without a construction of ERISA and/or an adjudication of its preemptive effect and constitutionality — all questions of federal law." Id.
Nevertheless, the Court proceeded to rely on its prior decision in Skelly Oil Co. v. Phillips Petroleum Co., 399 U.S. 667 (1950), which "has come to stand for the proposition that 'if, but for the availability of the declaratory judgment procedure, the federal claim would arise only as a defense to a state created action, jurisdiction is lacking.'" Id. at 16. The Court extended that analysis to cases where, as here, a plaintiff raises a declaratory relief action under state law. Id. at 16, 18-19.
The Court then asked, "If CLVT could have sought an injunction under ERISA against application to it of state regulations that require acts inconsistent with ERISA, does a declaratory judgment suit by the State 'arise under' federal law?" Id. at 20.
Despite the fact that the Tax Board had requested a declaration of both parties' rights, and despite the fact that the only disputed issue arose under federal law, that Court answered in the negative. Id. The Court reasoned:
There are good reasons why the federal courts should not entertain suits by the States to declare the validity of their regulations despite possibly conflicting federal law. States are not significantly prejudiced by an inability to come to federal court for a declaratory judgment in advance of a possible injunctive suit by a person subject to federal regulation. They have a variety of means by which they can enforce their own laws in their own courts, and they do not suffer if the preemption questions such enforcement may raise are tested there. The express grant of federal jurisdiction in ERISA is limited to suits brought by certain parties . . . as to whom Congress presumably determined that a right to enter federal court was necessary to further the statute's purposes. It did not go so far as to provide that any suit against such parties must also be brought in federal court when they themselves did not choose to sue. The situation presented by a State's suit for a declaration of the validity of state law is sufficiently removed from the spirit of necessity and careful limitation of district court jurisdiction that informed our statutory interpretation in Skelly Oil and Gully to convince us that, until Congress informs us otherwise, such a suit is not within the original jurisdiction of the United States district courts. Accordingly, the same suit brought originally in state court is not removable either.
Id. at 21-22.
The same logic applies here to dispose of Plaintiffs' declaratory relief claims. The question in this case is, "[i]f Defendants could have sought an injunction under the FLSA against application to it of state regulations that require acts inconsistent with the FLSA, does a declaratory judgment suit by the State arise under federal law?"
In keeping with Franchise Tax Board, despite Plaintiffs' request for a declaration "that the Controller is legally required under state law to refrain from paying state employee salaries in the absence of a budget or other available appropriation, except as minimally required by the FLSA," and despite the fact that application of the FLSA quite possibly presents the only disputed issue in this case, the answer here must be "No."
The Supreme Court decision in Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987), further supports this Court's position. Defendants disagree stating that "unlike the situation inCaterpillar, the DPA's complaint on its face seeks compliance with the FLSA, thus directly requiring resolution of the meaning and interpretation of federal law in order to justify the relief requested." Opposition, 12:4-6.
In Caterpillar, the plaintiffs filed state court claims for breach of employment contracts against the defendant, Caterpillar, in state court. Id. at 390. Caterpillar removed to federal court and argued that federal jurisdiction was proper "because any individual employment contracts made with [defendants] 'were, as a matter of federal substantive labor law, merged into and superseded by the . . . collective bargaining agreements,'" which were governed exclusively by federal law. Id.
Thus, the parties' dispute in that case arose from an exception to the well-pleaded complaint rule, known as the "complete pre-emption" doctrine. Id. at 393.
"On occasion, the Court has concluded that the pre-emptive force of a statute is so 'extraordinary' that it 'converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.' Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Id., quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987). Accordingly, the Supreme Court has determined that when "'[t]he heart of the [state-law] complaint [is] a . . . clause in the collective bargaining agreement,' that complaint arises under federal law." Id. at 394, quoting Avco Corp. v. Machinists, 390 U.S. 557, 558 (1968).
Pursuant to the preceding rules, Caterpillar argued that the plaintiffs' claims were completely preempted by § 301, thereby conferring federal question jurisdiction over the case.Caterpillar further asserted "that § 301 pre-empts a state-law claim even when the employer raises only a defense that requires a court to interpret or apply a collective-bargaining agreement."Id. at 398.
The Supreme Court disagreed because the plaintiffs had challenged only the individual employment contracts alleged to have arisen prior to any coverage under the bargaining agreements, and because, while plaintiffs could have brought actions under § 301 based on their rights as they existed under the later bargaining agreements, they did not. Id. at 394.
Moreover, that Court stated "[i]t is true that when a defense to a state claim is based on the terms of a collective-bargaining agreement, the state court will have to interpret that agreement to decide whether the state claim survives. But the presence of a federal question, even a § 301 question, in a defensive argument does not overcome the paramount policies embodied in the well-pleaded complaint rule — that the plaintiff is the master of the complaint, that a federal question must appear on the face of the cause heard in state court. When a plaintiff invokes a right created by a collective-bargaining agreement, the plaintiff has chosen to plead what we have held must be regarded as a federal claim, and removal is at the defendants option. But adefendant cannot, merely by injecting a federal question into an action that asserts what is plainly a state-law claim, transform the action into one arising under federal law." Id. at 398-399 (emphasis in original). Therefore, despite the fact that the defense asserted to plaintiffs' state law claims was based on § 301, an area of the law that "completely pre-empted" state law claims, such defense was still insufficient to raise federal question jurisdiction.
The Caterpillar Court's refusal to find a federal question when federal law was implicated as a defense, even when the applicable body of federal law "completely preempted" state law evidences the strength of the well-pleaded complaint doctrine. The case before this Court is not so strong.
Defendants here do not argue that the FLSA completely preempts state law. Defendants merely argue that the FLSA allegations do not constitute a defense because, on the face of their Complaint, Plaintiffs seek to compel Defendants' compliance with the federal law. The fallacy in this argument, as discussed above, is that Plaintiffs raise only state law claims in their pleading. The FLSA is implicated only because Plaintiffs acknowledged the supremacy of federal law and limited their state claims to the extent minimally required by the FLSA. Though this Court may ultimately have to interpret federal law in order to determine whether Plaintiffs' state claims survive, on the face of their Complaint, Plaintiffs simply anticipated that the Controller would raise a federal preemption defense to those well-pleaded state claims. Because a federal defense, even if anticipated in the Complaint, is insufficient to raise a federal question within the meaning of 28 U.S.C. § 1331, this Court lacks jurisdiction over this case and must remand.
B. Plaintiffs' Right to Relief Does Not Depend on the Resolution of a Substantial, Disputed Federal Question
While artful pleading can be found in other circumstances, such as complete preemption and federal claim preclusion, the only question before this Court is whether Plaintiffs' state law claims turn on the requisite construction of federal law.
Defendants argue that Plaintiffs' claims turn on a construction of federal law. The crux of Defendants' argument is, again, that Plaintiffs have allegedly sought to compel compliance with federal law.
Defendants allege that Plaintiffs' Complaint "explicitly references the FLSA and the federal minimum wage throughout and seeks to compel the Controller 'to comply with federal labor law' and to cut State employee salary payments to the minimum level required by the FLSA.'" Opposition, 9:13-16. Even if that were the case, the Court's above discussion disposes of the viability of that argument. Nevertheless, the magnitude of the interests at stake in this case warrant further discussion.
The Supreme Court has held that "a case 'arose under' federal law where the vindication of a right under state law necessarily turned on some construction of federal law." Franchise Tax Board, 463 U.S. at 9, citing Smith v. Kansas City Title Trust Co., 255 U.S. 180 (1921); Hopkins v. Walker, 244 U.S. 486 (1917). In dicta that Court elaborated stating, "Leading commentators have suggested that for purposes of § 1331 an action 'arises under' federal law 'if in order for the plaintiff to secure the relief sought he will be obliged to establish both the correctness and the applicability to his case of a proposition of federal law.'" Id., citing P. Bator, P. Mishkin, D. Shapiro H. Wechsler, Hart Wechsler's The Federal Courts and the Federal System 889 (2d ed. 1973); T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 1964). Ultimately, as stated above, "original federal jurisdiction is unavailable unless it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims, or that . . . the . . . claim is 'really' one of federal law." Id. at 13.
Defendants argue that "resolution of issues of federal law are necessary in order to provide [Plaintiffs] with the relief they seek." Defendants also point out that "although it is not a necessary condition for federal question jurisdiction, [Plaintiffs'] complaint explicitly refers to the [FLSA] as delineating part of the law with which . . . the Controller must comply." Opposition, 2:21-24.
Furthermore, Defendants state that "entitlement to the relief sought in its complaint turns on a determination of (1) which state employees are subject to the FLSA and which are not, and (2) the amount, timing, and manner of payment that the State of California must under federal law make to those employees subject to the FLSA. [Plaintiffs'] attempts to characterize [their] claims as wholly state-law claims constitute[s] a transparent effort to avoid the obvious — namely, that interpretation of the FLSA is required in order to determine [Plaintiffs'] right to relief in this case." Opposition, 6:24-7:3.
Defendants premise their argument in part on the Pay Letter, which provided detailed instructions to the Controller regarding the necessary steps to comply with state law, while simultaneously avoiding a violation of federal law. Defendants go on to state, "[A] straightforward reading of [Plaintiffs'] complaint, along with . . . the Executive Order and the other documents on which it is based, shows that the relief requested by [Plaintiffs] necessarily would be based on the construction and application of the FLSA.
Specifically, a determination as to whether the Controller should comply with the . . . Pay Letter 08-23, which categorizes State employees according to whether they are subject to the FLSA and then orders that those employees' paid compensation be cut to the minimum level allegedly permitted by the FLSA, clearly turns on the interpretation and application of federal law."
Defendants further contend that the FLSA issues raised are "actually disputed and substantial." Defendants are especially concerned as to "whether the state would violate the FLSA by failing to pay full regular straight-time wages at the end of each pay period to non-exempt employees who worked unanticipated overtime during that pay period." Opposition, 10:19-11:2.
Nevertheless, these issues, while undoubtedly substantial and disputed, are not implicated on the face of Plaintiffs' Complaint. Plaintiffs allege only that Defendants have not complied with California law and seek to compel that compliance. Plaintiffs make none of the same claims with respect to federal law. In fact, it appears undisputed that Defendants have not violated the FLSA and that such a violation is merely conjectural until Defendants have complied, or made some effort to comply, with state law. Until such time, the FLSA raises speculative issues implicated only in defense of Defendants' alleged failure to comply with state law and, consequently, there is no "federal question."
Moreover, Plaintiffs' state law claims are wholly independent of federal law. While the State of California may choose to interpret the FLSA in determining which of its employees are entitled to be paid and by how much, nothing in Plaintiffs' Complaint shows that Plaintiffs' relief under their state law causes of action turns on the application of those federal rules.
Thus, Defendants' argument that this Court must determine that the Pay Letter is valid under the FLSA in order for Plaintiffs to obtain the relief sought cannot stand. Except by way of a defense, this Court need not determine whether the FLSA was properly applied in that letter in order for Plaintiffs to show whether Defendants, under state law, must comply with that document. Again, California law does not require compliance with the FLSA. The need to comply with federal law is instead derived from the supremacy clause.
Likewise, the White v. Davis Court did not discuss the FLSA in determining whether state constitutional and statutory law was violated when the Controller paid state employees' salaries absent an appropriation. Rather, that court interpreted federal law, not in its resolution of California law, but to provide guidance to the Controller as to how to comply with that separate body of law. Accordingly, this Court lacks jurisdiction over Plaintiffs' claims, and while this Court's lack of jurisdiction may be the result of "more history than logic," it is still the proper result based on over one-hundred years of precedent.Franchise Tax Board, 463 U.S. at 4.
Nevertheless, Defendants contend that "federal question jurisdiction exists here a fortiori" under Grable Sons Metal Products, Inc., v. Darue Engineering Manufacturing, 545 U.S. 308 (2005). Opposition, 13:11. According to Defendants, jurisdiction derives from the fact that Plaintiffs' "[C]omplaint actually discloses on its face the federal issue at the heart of this case — i.e., the issues of what wages and benefits are due to various employees of the State of California under the FLSA during the State budget impasse." Id. at 13:11-14. As previously discussed, the fact that a federal issue is implicated is not necessarily sufficient to raise a federal question, and Grable is not as helpful to Defendants' argument as they appear to believe.
In Grable, the Supreme Court determined that federal question jurisdiction was proper over the plaintiff's state law quiet title action. 545 U.S. at 310. In that case, the plaintiff argued that the defendant's title was invalid because, prior to seizing the plaintiff's property for sale to the defendant, the Internal Revenue Service ("IRS") had failed to provide the plaintiff with proper notice under 26 U.S.C. § 6335(a). Id. at 311.
The Grable Court stated "the question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Id. at 314. That Court first determined that the breach of federal law was an essential element of the plaintiff's quiet title action. Id. at 315.
Such a conclusion is logical because that plaintiff alleged the violation of a federal statute as the basis for his state law claim.
Nevertheless, despite plaintiff's allegation that federal law was violated, that Court found that "even when the state action discloses a contested and substantial federal question, the exercise of federal jurisdiction is subject to a possible veto. For the federal issue will ultimately qualify for a federal forum only if federal jurisdiction is consistent with congressional judgment about the sound division of labor between state and federal courts governing the application of § 1331 . . . Because arising-under jurisdiction to hear a state-law claim always raises the possibility of upsetting the state-federal line drawn (or at least assumed) by Congress, the presence of a disputed federal issue and the ostensible importance of a federal forum are never necessarily dispositive; there must always be an assessment of any disruptive portent in exercising jurisdiction."Id. at 313-314.
The Grable Court concluded that "[t]he meaning of the federal tax provision is an important issue of federal law that sensibly belongs in a federal court. The Government has a strong interest in the prompt and certain collection of delinquent taxes, and the ability of the IRS to satisfy its claims from the property of delinquents requires clear terms of notice to allow buyers . . . to satisfy themselves that the Service has touched the bases necessary for good title.
The Government thus has a direct interest in the availability of a federal forum to vindicate its own administrative action, and buyers . . . may find it valuable to come before judges used to federal tax matters. Finally, because it will be the rare state title action that raises a contested matter of federal law, federal jurisdiction to resolve genuine disagreement over federal tax title provisions will portend only a microscopic effect on the federal-state division of labor." Id. at 315 (internal citations and quotations omitted).
The case before this Court is inherently different from Grable because none of Plaintiffs' state law claims turn on a violation, or even an application, of federal law. Most notably lacking in the current case is any alleged violation of a federal law. While the Grable plaintiff's state-claims were premised on such a violation, no violation is remotely alleged to have occurred in the current case. To the contrary, whether Defendants violated, or will violate, the FLSA is not "an essential element" of Plaintiffs' state law claims, and is merely conjectural until compliance with state law is had.
Moreover, the success of Plaintiffs' state law claims does not rise or fall based on an interpretation of federal law. Rather, the FLSA is implicated only to the extent that Plaintiffs acknowledged the supremacy of federal law and to the extent that Defendants argue they are unable to simultaneously comply with both bodies of law. As discussed above, Defendants' argument is a defense. Thus, Plaintiffs' current claims do not fit within the parameters of Grable and this Court lacks jurisdiction over this case.
Finally, even if this Court agreed with Defendants, if ever jurisdiction should be vetoed, it would be here. First and foremost, this Court does not take lightly the fact that in this case a state is seeking resolution of what is essentially an internal dispute in federal court. Furthermore, if this Court determines that Plaintiffs' state law claims warrant federal jurisdiction because, under the supremacy clause, Plaintiffs' allegedly seek compliance with a federal law superseding those claims, the floodgates surely will open. A plaintiff will be free to file in federal court any suit raising purely state law claims as long as the plaintiff seeks compliance with a federal body of law that may or may not preempt those state claims. Moreover, in light of the artful pleading doctrine, a defendant would be able to remove those same claims to federal court even where, as here, federal issues are only implicated in defense of the state claims. Such an outcome runs contrary to over one century of precedent, and forecloses a finding of jurisdiction in this Court.
Further supporting this Court's decision is the 2006 Supreme Court case, Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006). That case originated when the administrator of an estate filed a state-court tort action to recover for injuries that allegedly led to the death of the decedent, a federal employee. Id. at 687. Empire administered the plan that provided medical care to federal employees. Id. at 687.
Such plans fell within the purview of the Federal Employees Health Benefits Act of 1959 (FEHBA), 5 U.S.C § 8901 et seq., which established "a comprehensive program of health insurance for federal employees," contained a "preemption clause . . . displacing state law on issues relating to 'coverage or benefits', but contained "no provision addressing . . . reimbursement rights of carriers." Id. at 682.
Upon learning the administrator had settled her state action, Empire filed suit in federal court for reimbursement of funds it had previously paid for the decedent's medical care. Id. at 687-688. Despite the fact that the FEHBA provided for federal jurisdiction only over actions in which the United States was a defendant, relying on Grable, Empire alleged, inter alia, that, federal law was "a necessary element of [its] claim" for reimbursement. Id. at 699. The Supreme Court disagreed.
The Empire Court interpreted Grable as extending jurisdiction to a "special and small category" of cases. Id. at 699. That Court distinguished Grable on the grounds that the prior case "centered on the action of a federal agency (IRS) and its compatibility with a federal statute, the question qualified as 'substantial,' and its resolution was both dispositive of the case and would be controlling in numerous other cases." Id. at 700, citing Grable, 545 U.S. at 313. Moreover, according to theEmpire Court, "Grable presented a nearly pure issue of law, one that could be settled once and for all and thereafter would govern numerous tax sale cases." Id. (internal quotations and citations omitted).
The Empire case, to the contrary, involved a dispute arising out of the settlement of a state court personal injury action and involved the resolution of "fact-bound and situation-specific" issues, such as whether "there were overcharges or duplicative charges by care providers" and "whether particular services were properly attributed to the injuries" caused by the accident underlying the state court litigation. Id. at 700-701.
Here, too, Plaintiffs have no federal cause of action against Defendants for an FLSA violation because none has occurred or will potentially occur until compliance with state law is had. Furthermore, in this case, as in Empire, none of Plaintiffs' allegations turn on the action or inaction of a federal agency. Quite the opposite, this Court is presented with a controversy arising out of an internal conflict between two state agencies. Additionally, the application of the FLSA to the payment of state employee salaries during a budget impasse clearly involves factual questions of great breadth and depth, as is evidenced by the variety of issues Defendants raise in support of their argument for jurisdiction. Thus, even if this Court were inclined to agree with Defendants' argument that the FLSA presents an issue imbedded in Plaintiff's Complaint, this Court does not have jurisdiction under Grable or Empire.
Finally, though a bit anti-climactic, this Court will address Plaintiffs' argument that their claims belong in state court based on the Supreme Court opinion in Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804 (1986).
In that case, in two separate state actions later consolidated, plaintiffs sought remedies under state law for birth defects suffered by children as a result of their mothers' ingestion during pregnancy of a drug manufactured by the defendant. Id. at 805. In furtherance of their tort claims, plaintiffs alleged, inter alia, that the drug was "misbranded," which constituted a violation of the Federal Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 301 et seq. Id. at 805-806.
Despite the fact that no private federal remedy existed for the FDCA violations underlying Plaintiffs' state claims, the defendant removed to federal court on the basis of federal question jurisdiction. Id. at 805-806, 810-811. Defendant argued, inter alia, that, regardless of the lack of a federal cause of action, under Franchise Tax Board, the Court had jurisdiction because "it appear[ed] that some substantial, disputed question of federal law [was] a necessary element of one of the well-pleaded state claims." Id. at 813, quoting Franchise Tax Board, 463 U.S. at 13.
The Supreme Court rejected defendant's argument stating, "Far from creating some kind of automatic test, Franchise Tax Board thus candidly recognized the need for careful judgments about the exercise of federal judicial power in an area of uncertain jurisdiction. Given the significance of the assumed congressional determination to preclude federal private remedies, the presence of the federal issue as an element of the state tort is not the kind of adjudication for which jurisdiction would serve congressional purposes and the federal system . . .
We simply conclude that the congressional determination that there should be no federal remedy for the violation of this federal statute is tantamount to a congressional conclusion that the presence of a claimed violation of the statute as an element of a state cause of action is insufficiently 'substantial'" to confer federal-question jurisdiction." Id. at 814.
This case differs from Merrell Dow, and the potential for jurisdiction is even more remote here, because an FLSA violation is simply not alleged in furtherance of Plaintiffs' state law claims. An interpretation of the FLSA is not necessary to any element of Plaintiffs' state causes of action, which are premised on the California Constitution and state statutes. Accordingly, this Court concludes that Plaintiffs' well-pleaded complaint does not state claims "arising under" federal law as required under § 1331. This Court lacks jurisdiction over Plaintiffs' causes of action and must remand to the Superior Court.
III. DEFENDANTS' JUDICIAL ECONOMY ARGUMENTS ARE IRRELEVANT TO WHETHER THIS COURT HAS JURISDICTION
In an appeal to this Court's interest in judicial economy, it was pointed out during oral argument that, should this case be remanded to, and decided unfavorably in, state court, Intervenors will, after much delay, return to this Court raising the same arguments. Ignoring the fact that this Court has no jurisdiction over an appeal from a state court, this Court's opinion regarding the efficiency of such a scenario is irrelevant.
Under Defendants' argument, the parties in the future litigation would be reversed, Defendants would be proceeding as Plaintiffs, and Defendants' Complaint would determine the appropriateness of their chosen forum. Defendants' threat of some hypothetical future litigation is not sufficient to bestow jurisdiction on this Court, and despite their efforts, Defendants cannot escape the fact that Plaintiffs are the masters of their own Complaint.
In light of this argument, a final practical point bears mentioning as well. As stated, this case presents the unusual set of facts in which one arm of a state has sued a sister arm of the same state, and the defendant agency has then joined in removal to federal court. Though, by all accounts this action constitutes a suit against a state, because this Court lacks jurisdiction over Plaintiffs' claims, it need not address whether the State of California is immune from suit in federal court. Such a determination would be necessary under Defendants' predicted scenario.
Assuming without deciding that sovereign immunity applies to litigation against a state initiated by another arm of the same state, it is an open question whether removal to federal court by the defendant agency constitutes a waiver of that immunity. See Lapides v. Board of Regents of the University System of Georgia, 535 U.S. 613, 619 (2002) (observing that the state had not "pointed to any special feature, either of removal or of [that] case, that would justify taking the case out from under the general rule" that removal constitutes a waiver of immunity). This Court is cognizant of the White v. Davis court's reliance on the Ninth Circuit opinion in Biggs v. Wilson, 1 F.3d 1537 (9th Cir. 1993), in which the federal court addressed FLSA issues in an action against California's Controller. Such a judgment would appear to support the conclusion that sovereign immunity did not apply.
However, Biggs was decided prior to the Supreme Court's decision in Seminole Tribe of Florida v. Florida, 517 U.S. 44 (1996), which overruled its prior decision in Pennsylvania v. Union Gas Company, 491 U.S. 1 (1989), and obviated the ability of Congress to abrogate state immunity pursuant to the Commerce Clause. The Ninth Circuit has since stated, "Like the statute at issue in Union Gas, the FLSA was passed pursuant to the Commerce Clause. Therefore, in the absence of a waiver by [the State] of its Eleventh Amendment immunity, federal courts lack jurisdiction to review the claims by the Appellants." Quillin v. State of Oregon, 127 F.3d 1136, 1138 (1997) (internal citation omitted); see also Thompson v. Regents of University of California, 206 Fed. Appx. 714, 715 (9th Cir. 2006) (not published in the Federal Reporter).
The Court need not decide whether such a waiver occurred here. It notes, however, that though "a state that voluntarily brings suit as a plaintiff in state court cannot invoke the Eleventh Amendment when the defendant seeks removal to a federal court of competent jurisdiction," and though the Supreme Court has found removal by a state defendant sufficient to waive sovereign immunity, it remains unclear whether an arm of a State can hale an unwilling arm of the same state into federal court simply by removing a state action. California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 848 (9th Cir. 2004); Lapides, 535 U.S. at 624 (2002) (limiting its holding to "state-law claims, in respect to which the State has explicitly waived immunity from state-court proceedings"). Since a state's waiver of immunity must be unequivocally expressed, it is entirely possible that the state-Plaintiffs' Motion to Remand in this case could preclude a finding that the state-Defendants have so waived their immunity. See PennhuPst State School Hospital v. Halderman, 465 U.S. 89, 99 (1984); see also Lapides, 535 U.S. at 621. Nevertheless, despite its import, this is a question for another day.
CONCLUSION
Accordingly, Plaintiffs' Motion to Remand is GRANTED. Consequently, both Motions to Change Venue and the Motion to Dismiss are DENIED as moot. The Clerk of the Court is directed to close the file.IT IS SO ORDERED.