Opinion
Cause No. 1:05-CV-232.
January 13, 2006
ORDER AND OPINION
Before the Court is Plaintiff J. Michael Ray's Motion to Remand filed on October 24, 2005, (Docket # 12) and his Motion to Amend his Complaint filed on October 31, 2005. (Docket # 13.) The Defendant, Laidlaw Medical Transportation, Inc., d/b/a American Medical Response of Fort Wayne, opposes the Motion to Remand but does not oppose the Motion to Amend. (Def.'s Resp. in Opp'n to Pl.'s Mot. to Remand ¶ 6.) Because this Court did not have subject matter jurisdiction over this case when it was removed from state court, and because Ray's Motion to Amend to add a federal claim to his Complaint does not cure this jurisdictional defect, Ray's Motion to Remand will be GRANTED.
I. FACTUAL AND PROCEDURAL BACKGROUND
On May 12, 2005, Ray filed a complaint in the Allen County Superior Court, alleging that Laidlaw fired him in retaliation for Ray's filing a complaint with the Department of Labor for nonpayment of wages; he based this claim solely on Indiana Code § 22-5-3-3. (Docket #1, Compl. ¶¶ 5, 6, 7.) Laidlaw then filed a Notice of Removal on July 11, 2005, arguing that the Fair Labor Standard Act's anti-retaliation provision, 29 U.S.C. § 215(a), completely preempted Indiana law. (Notice of Removal ¶ 3.)
Indiana Code § 22-5-3-3 provides:
a) An employee of a private employer that is under public contract may report in writing the existence of:
(1) a violation of a federal law or regulation;
(2) a violation of a state law or rule;
(3) a violation of an ordinance of a political subdivision (as defined in IC 36-1-2-13); or
(4) the misuse of public resources; concerning the execution of public contract first to the private employer, unless the private employer is the person whom the employee believes is committing the violation or misuse of public resources. In that case, the employee may report the violation or misuse of public resources in writing to either the private employer or to any official or agency entitled to receive a report from the state ethics commission under IC 4-2-6-4(b)(2)(G) or IC 4-2-6-4(b)(2)(H). If a good faith effort is not made to correct the problem within a reasonable time, the employee may submit a written report of the incident to any person, agency, or organization.
(b) For having made a report under subsection (a), an employee may not:
(1) be dismissed from employment. . . .
29 U.S.C § 215(a) provides that:
[I]t shall be unlawful for any person . . .
(3) to discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this chapter. . . .
During a Preliminary Pretrial Conference held on August 30, 2005, this Court questioned whether it would have subject matter jurisdiction even if the FLSA did not preempt Indiana law. Ray's counsel responded that while he disagreed with Laidlaw's position that the FLSA preempted state law, he conceded that the FLSA could "cover these types of situations." (Def.'s Br. in Opp'n to Pl.'s Mot. to Remand, Tab A, 3.) He also expressed an intention to file a motion for leave to file an amended complaint adding a claim under FLSA § 215(a).
Before filing his Motion to Amend his Complaint on October 31, 2005, Ray filed a Motion to Remand on October 24, 2005, alleging that this Court lacked subject matter jurisdiction. (Mot. to Remand ¶ 4.) The Court then ordered both parties to brief the issue of whether adding the FLSA claim cured any alleged removal defects ( i.e., the lack of FLSA preemption), thereby giving this Court subject matter jurisdiction in any event. The matter is now fully briefed.
II. LEGAL STANDARD
A defendant in state court may remove a case to a federal district court only if the district court has original jurisdiction over the action. See 28 U.S.C. § 1441; Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). If the district court does not have jurisdiction, the case must be remanded. 28 U.S.C. § 1447(c). When ruling on a motion to remand,"[c]ourts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum," with any doubt regarding jurisdiction resolved in favor of remand. Battle v. Countrywide Home Loans, Inc., No. 05 C 3022, 2005 WL 2284250, at *1 (N.D. Ill. Sept. 15, 2005) (quoting Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993)). "The burden of establishing federal jurisdiction falls on the party seeking removal." Potter v. Janus Inv. Fund, No. 03-CV-0692-DRH, 2004 WL 1173201, at *1 (S.D. Ill. Feb. 12, 2004) (quoting Doe, 985 F.2d at 911).
III. DISCUSSION A. This Court did not have subject matter jurisdiction over Ray's cause of action at the time of removal
The district court has original subject matter jurisdiction over cases involving either diversity of citizenship or a federal question. Brewer v. State Farm Mut. Auto. Ins. Co., 101 F. Supp. 2d 737, 738 (S.D. Ind. 2000) (citing Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993)). Here, there is no dispute that this Court lacked diversity jurisdiction; therefore, Laidlaw based removal on the Court's federal question jurisdiction.
A court ascertains the presence or absence of federal question jurisdiction by examining whether a federal question appears on the face of the plaintiff's well-pleaded complaint. Nelson v. Stewart, 422 F.3d 463, 466 (7th Cir. 2005) (citing Caterpillar, 482 U.S. at 392; Bastien v. AT T Wireless Servs., Inc., 205 F.3d 983, 986 (7th Cir. 2000)). As "master of his own complaint," the plaintiff "may avoid federal jurisdiction by pleading only state-law claims." Id. Stated another way, "the plaintiff may, by eschewing claims based on federal law, choose to have the cause heard in state court." Hart v. Wal-Mart Stores, Inc. Assocs.' Health Welfare Plan, 360 F.3d 674, 678 (7th Cir. 2004) (quoting Caterpillar, 482 U.S. at 398-99).
An exception to the well-pleaded complaint rule is the doctrine of preemption. Disher v. Citigroup Global Mkts. Inc., 419 F.3d 649, 655 (7th Cir. 2005). Under this doctrine, a state law claim can be removed to federal court if federal law either expressly or completely preempts state law. Id. Express preemption occurs when "a federal statute explicitly provides that it overrides" state or local law. Boomer v. ATT Corp., 309 F.3d 404, 417 (7th Cir. 2002). Complete preemption occurs when "the preemptive force of a [federal] statute is so `extraordinary' that it `converts an ordinary state common-law complaint into one stating a federal claim. . . .'" Nelson, 422 F.3d at 466-67 (quoting Caterpillar, 482 U.S. at 393).
Here, Laidlaw makes several unsuccessful attempts at arguing that this Court has federal question jurisdiction. It first claims that Ray's cause of action under Indiana Code § 22-5-3-3 "involved substantial issues of federal law," (Def.'s Br. in Opp'n to Pl.'s Mot. to Remand 2) but never explains how Ray's well-pleaded complaint establishes that his right to relief under state law "depends on the resolution of a of a substantial question of federal law." James W. Moore, Moore's Federal Practice § 107.14[4][a] (2004). Seemingly, what Laidlaw is actually arguing is that because the events giving rise to Ray's state law cause of action might also be a violation of FLSA § 215(a), this Could should exercise its federal question jurisdiction. Ray, however, never alleged, or even referred to, FLSA § 215(a) in his complaint. Even though Ray could potentially have sued Laidlaw under the FLSA, as master of his complaint, Ray is entitled to file a state law cause of action while foregoing any right to relief under federal law.
Laidlaw next argues that FLSA § 215(a) completely preempts Indiana Code § 22-5-3-3, offering the following quote from a footnote in Abner v. Dep't of Health of the State of Indiana, 777 N.E.2d 778 (Ind.Ct.App. 2002), as the only support for his argument: "[T]he [FLSA] is the exclusive remedy for enforcing rights created under that federal statute." Id. at 785 n. 4. Laidlaw, however, leaves out a significant part of the text: " [C]laims for overtime compensation cannot be raised under the [Minimum] Wage Law and . . . the [FLSA] is the exclusive remedy for enforcing rights created under that federal statute." Id. (quoting Parker v. Schilli Transp., 686 N.E.2d 845, 851 (Ind.Ct.App. 1997)) (emphasis added). Abner recites the holding of Parker, which concluded that because the Indiana Minimum Wage Law, I.C. § 22-2-2-1 et seq., did not include provisions for the payment of overtime wages, any claims must be raised under the FLSA. Parker, 686 N.E. 2d at 851.
Here, Indiana law provides a specific anti-retaliation provision under a statute entirely separate from the Indiana Minimum Wage Law. Thus, Parker and Abner are easily distinguishable from the case at bar. As such, Laidlaw has not met its burden of demonstrating that the "preemptive force" of FLSA § 215(a) is so "extraordinary" that it converts Indiana Code § 22-5-3-3 into a federal claim. Nelson, 422 F.3d at 466-67.
Both parties agree that the FLSA does not expressly preempt state law anti-retaliation claims. In fact, Ray cites to FLSA § 216(b), claiming Congress expressly intended not to preempt state law. FLSA § 216(b) provides: "An action to recover the liability prescribed in [§ 215(a)(3)] may be maintained against any employer . . . in any Federal or State court of competent jurisdiction. . . ." 29 U.S.C. § 216(b) (emphasis added). Ray argues that this language demonstrates that Congress "unmistakably intended that state and federal courts exercise concurrent jurisdiction of retaliatory discharge claims"; (Pl.'s Motion to Remand, 4) therefore allowing "the aggrieved party to choose either a state or a federal forum for redress." (Pl.'s Supplemental Br. on Issue of Waiver of Subject Matter Jurisdiction 2.)
Laidlaw counters that § 216(b) actually support its claim for jurisdiction, citing Breuer v. Jim's Concrete of Brevard, Inc., 538 U.S. 691 (2003). In that case, the Court rejected plaintiff's argument that § 216(b) barred the removal of his FLSA claim to federal court. Id. at 694-97.
Both parties' reliance on § 216(b) is misplaced, as it applies to claims asserted under § 215(a), and Ray's complaint never asserts such a claim.
Finally, Laidlaw argues that Ray conceded in open court that this Court has federal question jurisdiction, claiming that Ray's counsel "admitted that the FLSA governs the type of wage-related retaliation claim at issue in this case." (Def.'s Resp. Br. in Opp'n to Pl.'s Mot. to Remand 3.) As a threshold matter, Ray's alleged admissions in court have little to do with whether this Court has federal question jurisdiction, as jurisdiction is determined by examining only the face of the plaintiff's well-pleaded complaint. Moore's § 107.14[3][a][iii]. Furthermore, it is difficult to ascertain whether Laidlaw is arguing that Ray conceded federal question jurisdiction under the well-pleaded complaint rule or under the preemption exception. In any event, neither argument is persuasive. Ray was merely expressing his belief that he could have asserted a cause of action under the FLSA; he specifically denied that the FLSA's anti-retaliation provision preempted Indiana law. As master of his complaint, Ray was entitled to choose not to file a federal cause of action even though he could have brought such a claim.
B. Ray's Motion to Amend his Complaint does not cure this Court's lack of subject matter jurisdiction
Ray's Motion to Amend poses the issue of whether adding a FLSA claim to his Complaint cures any alleged removal defects ( i.e., the lack of FLSA preemption), thereby giving this Court subject matter jurisdiction in any event. Several cases are instructive here.
The Seventh Circuit held in Bernstein v. Lind-Waldock Co., 738 F.2d 179 (7th Cir. 1984), that although plaintiff's motion to remand should have been granted because the district court lacked subject matter jurisdiction, the defect was cured when plaintiff "threw in the towel" and filed an amended complaint alleging a federal cause of action. Bernstein, 738 F.2d at 185. The Court explained that once the plaintiff decided "to take advantage of his involuntary presence in federal court to add a federal claim to his complaint he was bound to remain there." Id.
After Bernstein, the Supreme Court issued Caterpillar, Inc. v. Lewis, 519 U.S. 61 (1996). There, the Court found that the district court lacked diversity jurisdiction at the time of removal and that the plaintiff "did all that was required" to preserve his objection to removal by filing a motion to remand. Id. at 70, 74. Nonetheless, the Court held that the jurisdictional defect was cured because complete diversity existed at the time final judgment was entered, as the non-diverse defendant was dismissed before trial. Id. at 70-77. In so ruling, the Court found considerations of "finality, efficiency, and economy overwhelming." Id. at 75.
Since Caterpillar, other circuits have held that final judgment is required even in situations where the plaintiff has voluntarily cured the jurisdictional defect. For example, the Fifth Circuit held in Waste Control Specialists, Inc. v. Envirocare of Tex., Inc., 199 F.3d 781 (5th Cir. 2000), that even though the plaintiff amended its complaint to add a federal cause of action, the amended complaint did not cure the lack of subject matter jurisdiction at removal. Id. at 785-87. The Court ruled that "[t]o be binding despite improper removal, the plaintiff must voluntarily amend its complaint, and there must be a final judgment on the merits," concluding that because the plaintiff "diligently objected" to removal by timely filing a motion to remand, it had not waived this objection simply by filing a subsequent amendment adding a federal claim. Id. at 785, 87 (emphasis added). See also Chabner v. United of Omaha Life Ins. Co., 225 F.3d 1042, 1046 n. 3 (9th Cir. 2000) (citing Caterpillar when holding that because the plaintiff amended his complaint to add a federal cause of action, and because subject matter jurisdiction existed at the time the district court entered judgement, the case was properly in federal court).
As a threshold matter, Laidlaw argues that if indeed removal was improper, Ray waived his right to object to removal because he did not "diligently object" as contemplated by Caterpillar and Waste Control. Both courts, however, opined that a plaintiff's timely motion to remand is objection enough, focusing their attention instead on events that could potentially cure jurisdictional defects after the motion to remand. Caterpillar, 519 U.S. at 74; Waste Control, 199 F.3d at 787. Here, Ray's Motion to Remand was procedurally proper, and he additionally asserts that he did not intend, by the filing of his Motion to Amend, "to waive or prejudice in any way his Motion to Remand previously filed." (Motion for Leave to File Am. Compl. ¶ 8.) Thus, Ray's Motion to Remand is ample objection to removal, and the Court must now consider whether allowing Ray to amend his complaint would cure a lack of federal question jurisdiction.
It is clear that considerations of "finality, efficiency, and economy" are all absent here. Caterpillar, 519 U.S. at 75. Obviously, there has been no final judgment entered in this matter. Furthermore, this case has consumed relatively minimal judicial resources. Waste Control, 199 F.3d at 787. No hearing has been held, and the only time the parties have appeared in court was for a preliminary pretrial conference. The only motion practice has been in reference to Ray's Motion to Remand and Motion to Amend his Complaint. In addition, the six months this case has been in federal court are not overwhelming when compared to the three-and-one-half years of litigation and six-day jury trial in Caterpillar. Id.
Furthermore, all of the opinions discussed supra emphasize that the respective district courts should have remanded for lack of jurisdiction. Thus, by attempting to find a jurisdictional cure, the appellate courts were effectively trying to put salve on a wound they believed could have been prevented altogether. See Caterpillar, 519 U.S. at 77 (opining that plaintiff's fear that the Court's ruling would encourage defendants to improperly remove cases was unfounded because the "requirements of removal remain enforceable by the federal trial court judges. . . ."). Here, the Court will take its opportunity to prevent the jurisdictional wound by remanding the case to state court.
C. Ray is not entitled to attorney's fees, expenses, costs, or any other relief
An order remanding a case "may require payment of just costs and actual expenses, including attorney's fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). Although the court has broad discretion in awarding expenses, the Seventh Circuit has held that § 1447(c) creates a rebuttable presumption that a plaintiff is entitled to them. Hart v. Wal-Mart Stores, Inc., 360 F.3d 674, 677-78 (7th Cir. 2004). Factors the court may, but is not required to, consider when deciding whether to award expenses include whether the defendant acted in bad faith or whether the defendant had a reasonable basis for removal. See, e.g., Tenner v. Zurek, 168 F.3d 328, 330 (7th Cir. 1999); Leto v. RCA Corp., 341 F. Supp. 2d 1001, 1007 (N.D. Ill 2004). Here, there is no evidence of bad faith on the part of Laidlaw. Furthermore, its belief that this Court had jurisdiction was reasonable, especially in light of Ray's Motion to File an Amended Complaint seeking to add a federal claim. Therefore, although Ray's cause of action will be remanded, Laidlaw will not be required to pay Ray's expenses.