Opinion
1:03CV492
August 5, 2003
RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
This matter is before the court on Plaintiff's motions for this court to remand the case to state court and for costs and attorneys' fees incurred in bringing the motion to remand (docket nos. 7, 9). Defendants have responded to Plaintiff's motions, and the matter is ripe for disposition. The parties have not consented to the authority of a magistrate judge. Therefore, I must deal with the motions to remand and for costs and attorneys' fees by way of recommendation.
Background
On April 15, 2003, Plaintiff Steven Lindsey filed a complaint against his former employer United Parcel Service, Inc. (also named as United Parcel Service, Co.) in Forsyth County Superior Court, alleging (1) wrongful discharge in violation of North Carolina public policy and common law, and (2) retaliatory discharge in violation of the North Carolina Retaliatory Employment Discrimination Act (hereinafter "REDA"). N.C. GEN. STAT. §§ 95-240 to-249 (2001). On May 22, 2003, Defendants removed the case to this court on the basis of federal question jurisdiction under 28 U.S.C. § 1131. Defendants sought removal on the theory that Plaintiff's claims implicate his employer's welfare benefit plan and are therefore preempted by the Employee Retirement Income Security Act of 1974, as amended (hereinafter "ERISA"), 29 U.S.C. § 1001-1461.
The North Carolina REDA was enacted in 1992 and prohibits employers from discriminating against employees for filing workers' compensation claims. See Salter v. E J Healthcare, Inc., 575 S.E.2d 46, 50 (N.C.Ct.App. 2003).
Defendants assert that they also sought removal of Plaintiff's non-statutory wrongful discharge claim based on diversity jurisdiction. See 28 U.S.C. § 1332 (jurisdiction based on diversity of citizenship). Defendants do not argue here that they had a colorable basis for removal based on diversity of citizenship. Indeed, it appears that the parties are not diverse. I need not address the issue of diversity jurisdiction, however, since Defendants' opposition to Plaintiff's motion for attorneys' fees regards removal based on federal question only.
On June 9, 2003, Plaintiff filed a motion to remand the case to state court. As part of the motion to remand, Plaintiff also filed a motion for an award of costs and reasonable attorneys' fees incurred in the removal. On June 17, 2003, this court issued a written order finding that Plaintiff's motions for remand and for costs and attorneys' fees were deficient because the motions were not set out in separate pleadings and they were not accompanied by supporting briefs as required under Local Rule 7.3. Plaintiff's motions were stricken without prejudice to refile in accordance with Local Rule 7.3 on or before June 30, 2003.
On June 19, 2003, Defendants' counsel contacted Plaintiff's counsel to inform counsel that Defendants would consent to remand the case to state court. Defendants' counsel suggested that the parties file a joint motion to remand. Plaintiff's counsel declined. On June 24, 2003, Defendants filed a Withdrawal of Notice of Removal and Request for Court to Remand. On the same day, Plaintiff filed, in accordance with Local Rule 7.3, a motion to remand and a motion for costs and attorneys' fees upon remand.
Discussion
First, as to Plaintiff's motion to remand, since both parties consent to remand I recommend that the court grant Plaintiff's motion to remand.
As to Plaintiff's motion for costs and attorneys' fees, Plaintiff contends that Defendants frivolously removed the case to this court and therefore costs and attorneys' fees are appropriate. Pl.'s Br. Supp. Mot. Attorneys' Fees ¶ 8. Under section 1447 of Title 28, "[a]n order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c) (emphasis added). As the statute's permissive language indicates, the decision whether to award fees and costs under 28 U.S.C. § 1447(c) is discretionary. Watson v. Charleston Hous. Auth.83, F. Supp.2d 709, 712 (S.D. W. Va. 2000); see also Kluksdahl v. Muro Pharm., Inc., 886 F. Supp. 535, 540 (E.D. Va. 1995). Bad faith is not a prerequisite to an award of attorneys' fees under the statute, In re Lowe, 102 F.3d 731, 733 n. 2 (4th Cir. 1996), and courts often "award attorney fees without reference to a particular state of mind or improper purpose." Gibson v. Tinkey, 822 F. Supp. 347, 349 (S.D.W. Va. 1993). Nevertheless, a court may consider lack of bad faith in determining whether to award attorneys' fees. Lowe, 102 F.3d at 733 n. 2; see also Parker v. Johnny Tart Enters., Inc., 104 F. Supp.2d 581, 585 (M.D.N.C. 1999) (stating that recovery of costs and attorneys' fees was inappropriate where the defendants' rationale for removal jurisdiction, while "novel and supported by a limited basis of authority," was "at least colorable").
The facts in this case show that on June 1, 2001, Plaintiff suffered a workplace injury and as a result he applied for and began receiving workers' compensation benefits. Plaintiff received workers' compensation benefits through July 2002. On July 26, 2002, Defendants informed Plaintiff that he was terminated for being absent from work for more than 12 months. Plaintiff contends that his termination was directly related to his workers' compensation claim and the exercise of his rights under the Workers' Compensation Act, Chapter 97 of the North Carolina General Statutes. Plaintiff asserts that since his claims arise under North Carolina's workers' compensation laws they are thus not removable to federal court, pursuant to 28 U.S.C. § 1445(c), which states that "[a] civil action in any State court arising under the workmen's compensation laws of such State may not be removed to any district court of the United States." Plaintiff argues that since removal jurisdiction does not exist in this case, an award of costs and attorneys' fees is appropriate.
Plaintiff further argues that an award of costs and attorneys' fees is appropriate because this court has clearly held that a REDA claim based on retaliation for filing for workers' compensation is so "integrally related to the North Carolina Workers' Compensation [A]ct that it `arises under' the act for removal purposes to Section 1445(c)." Wiley v. United Parcel Service, Inc., 227 F. Supp.2d 480, 488 (M.D.N.C. 2002). In Wiley, the employee-plaintiff filed a claim in state court against his former employer-defendant under the REDA, alleging that the employer, in retaliation for the employee's filing of a workers' compensation claim, would not let the employee return to work. The employer removed the case to this court, and the employee filed a motion to remand. This court granted the remand, holding that the employee-plaintiff's claim was an action "arising under" the North Carolina Workers' Compensation Act, and removal was therefore precluded under 28 U.S.C. § 1445(c). Plaintiff contends that Wiley clearly disposes of the removal issue, that Defendants should have known that removal jurisdiction was lacking, and that Defendants therefore frivolously removed the case to this court.
The Wiley court also summarily denied the plaintiff's motion for costs and attorneys' fees incurred in bringing the remand motion.
Defendants argue that Wiley is distinguishable. According to Defendants, Defendants' Income Protection Plan is an employee benefit plan governed by ERISA, which expressly states that the federal statute preempts "all state laws insofar as they may now or hereafter relate to an employee benefit plan." 29 U.S.C. § 1144(a). See Complaint ¶ 15. Defendants note that Plaintiff was terminated under the terms of the Plan, which allows continued benefits to an employee who cannot work but provides for administrative termination of an employee who is absent from regular employment for more than 12 months. Defendants argue, therefore, that removal based on federal question jurisdiction was proper because "deciding the merits of Plaintiff's wrongful discharge claim arguably requires the interpretation of the administrative termination provision in Defendants' Income Protection Plan," which may implicate ERISA. Starnes v. General Elec. Co., 201 F. Supp.2d 549, 562 (M.D.N.C. 2002). Defendants contend that the Wiley holding is not necessarily dispositive to this case because the issue in Wiley was whether a retaliatory discharge claim under the REDA arose under the North Carolina Workers' Compensation Act for purposes of 28 U.S.C. § 1445(c), whereas in this case the issue is whether a wrongful discharge claim is preempted by ERISA when the employer's stated reason for terminating the employee was its application of a welfare benefit plan. Defendants concede, however, that whether ERISA preemption applies to Plaintiff's claims is "arguable" and that is why Defendants have consented to a remand.
I find that an award of costs and attorneys' fees is not appropriate in this case. Here, Defendants' stated basis for removal — ERISA preemption — was at least "colorable" and was apparently made in good faith. Furthermore, as noted above, Defendants' counsel expressed to Plaintiff's counsel her willingness to consent to remand the case to state court before Plaintiff filed her second motion to remand to comply with Local Rule 7.3 as instructed by this court. Defendants' conduct does not warrant sanctioning Defendants by ordering Defendants to pay Plaintiff's costs and attorneys' fees. See Parker, 104 F. Supp.2d at 585 (citing Griffin v. Holmes, 843 F. Supp. 81, 88 (E.D.N.C. 1993) (finding an award of attorneys' fees inappropriate because the defendant "acted in apparent good faith on a colorable claim of removal")). Therefore, it is recommended that Plaintiff's request for costs and attorneys' fees be denied.
Conclusion
Based on the foregoing reasons, it is recommended that the court GRANT Plaintiff's motion to remand the case to state court and DENY Plaintiff's motion for costs and attorneys' fees upon remand.