Opinion
Case No. 2:17-cv-00027-SU
04-05-2017
RAMONA ROGERS, Plaintiff, v. NYSSA SCHOOL DISTRICT 26, and JANINE WEEKS, an individual, Defendants.
FINDINGS AND RECOMMENDATION
:
Plaintiff Ramona Rogers filed a complaint against Nyssa School District 26 ("NSD") and Janine Weeks, former superintendent of NSD, alleging that defendants negligently failed to allow the transfer of retirement benefit funds that plaintiff accrued as a public school teacher. Notice of Removal, Ex. 1, Complaint (Docket No. 1-1) ("Compl."). Plaintiff originally commenced this action in Oregon state court on October 31, 2016. Defendants removed to this Court on January 6, 2017, based on federal question jurisdiction and diversity jurisdiction. 28 U.S.C. §§ 1331, 1332 & 1441 (Docket No. 1). Plaintiff timely moved to remand. (Docket No. 4). Defendants oppose. (Docket No. 6). For the following reasons, the Court should GRANT plaintiff's Motion to Remand.
BACKGROUND
Plaintiff is a resident of Canyon County, Idaho. Compl. ¶ 1. Defendant NSD is "organized and existing under the laws of the State of Oregon." Id. ¶ 2. Defendant Weeks resides in Oregon. Id. Plaintiff worked as a teacher for 31 years in various school districts, including NSD, from which she retired in November 2014. Id. ¶ 3. As a result of her employment, plaintiff was entitled to retirement benefits from the Oregon Public Employment Retirement System ("PERS"). Id. ¶ 4; see Or. Rev. Stat. § 238 et seq. Plaintiff alleges that to receive her full retirement benefits, she had to make a distribution of retirement funds to "buy back" waiting time; she alleges that she "properly requested the distribution and performed all actions on her part to" timely effect the buy back. Compl. ¶ 5. Plaintiff alleges that NSD "either intentionally refused or negligently failed to allow transfer of" her account funds to make the buy back, and that as a result she "has been deprived of her full retirement" benefits. Id. ¶¶ 6-7. Plaintiff alleges that she has repeatedly demanded that defendants effect the release of funds held in an account by the Vanguard Company, "the custodian of her Section 403(b)(7) account . . . ." Id. ¶ 8. She alleges that this deprivation of funds is "in violation of Article I, § 18 of the Oregon Constitution and the Fifth Amendment to the United States Constitution." Id. ¶¶ 8, 9.
Plaintiff neither cites to nor explains the process of "buy back" under PERS.
Plaintiff references violations of the Oregon and U.S. Constitutions, id. ¶ 8, cites defendants' allegedly intentional, willful, and negligent actions, id. ¶¶ 6, 10, and requests in her prayer damages only for defendants' alleged negligence, id. at 4. It is unclear from the Complaint what claims for relief plaintiff means to state.
LEGAL STANDARD
"Federal courts are courts of limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
A defendant may remove an action to federal court based on federal question jurisdiction or diversity jurisdiction. However, it is to be presumed that a cause lies outside the limited jurisdiction of the federal courts and the burden of establishing the contrary rests upon the party asserting jurisdiction. The strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper, and that the court resolves all ambiguity in favor of remand to state court.Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (alterations, citations, and quotations omitted). "In determining federal question jurisdiction, the well-pleaded complaint rule provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Id. "As for diversity jurisdiction, federal district courts have jurisdiction over suits for more than $75,000 where the citizenship of each plaintiff is different from that of each defendant." Id. at 1043. Under the "forum defendant rule," a civil action otherwise removable solely on the basis of diversity jurisdiction may not be removed if any of the defendants is a citizen of the state where the action is brought. 28 U.S.C. § 1441(b)(2); U.S. Bank Nat. Ass'n v. Larry, No. 3:13-cv-01553-AC, 2014 WL 545998, at *2 (D. Or. Feb. 10, 2014).
ANALYSIS
Defendants removed this action to this Court on the basis of both federal question and diversity jurisdiction. In determining whether to remand, the Court looks at both potential bases for jurisdiction. I. Federal Question Jurisdiction
"The presence or absence of federal-question jurisdiction is governed by the 'well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). The "mere reference" to federal law in a pleading does not convert a state law claim into a federal cause of action if the federal law is not a necessary element of the state law claim. Easton v. Crossland Mortg. Corp., 114 F.3d 979, 982 (9th Cir. 1997).
It is unclear whether plaintiff brings any claim under federal law. Plaintiff does not explicitly allege any particular claim for relief, and merely mentions violations of the Fifth Amendment to the U.S. Constitution. Such a cursory reference is typically insufficient to raise a federal question or to state a federal-law claim. Denton v. Agents of Or., No. 3:12-cv-00022-HZ, 2012 WL 6617389, at *2 (D. Or. Dec. 19, 2012) ("The factual allegations supporting Plaintiff's claims for relief, however, remain confusing and vague. In addition, the second amended complaint continues to lack sufficient facts supporting Plaintiff's conclusory constitutional violations. Plaintiff's bare citation to the Constitution and vague and conclusory allegations fail to establish the requisite subject matter jurisdiction."). Thus, plaintiff's passing reference to the U.S. Constitution among vague, confusing, and indefinite pleadings is not sufficient to state a federal claim under the well-pleaded complaint rule nor to confer federal question jurisdiction such that removal would be proper. Cf. Easton, 114 F.3d at 982 ("In order for a complaint to state a claim 'arising under' federal law, it must be clear from the face of the plaintiff's well-pleaded complaint that there is a federal question." (alteration and quotation omitted, emphasis added)).
However, assuming arguendo that plaintiff did mean to state a claim under the Fifth Amendment to the U.S. Constitution, any such claim would be fundamentally flawed and so implausible, insubstantial, and meritless that it would not suffice to support federal question jurisdiction. Any Fifth Amendment claim would presumably be under either the Fifth Amendment's Due Process Clause or Taking Clause. However, "[t]he Fifth Amendment's due process clause only applies to the federal government," Bingue v. Prunchak, 512 F.3d 1169, 1174 (9th Cir. 2008), and defendants are an Oregon State entity and state official. Any due process claim against state- or local-level officials must be brought under Section 1983 to assert a violation of the Fourteenth Amendment's Due Process Clause. Id. Thus, any due process claim under the Fifth Amendment would be frivolous.
Defendants argue that plaintiff has alleged a claim under the Fifth Amendment Takings Clause and, therefore, that the case is removable regardless of the merits of the case. However, plaintiff has not alleged a Takings Clause claim in her Complaint. First, a taking occurs when the government has seized private property, or deprived a citizen of the occupation or use of his property. See Stop the Beach Renourishment, Inc. v. Fla. Dep't of Envtl. Prot., 560 U.S. 702, 713 (2010). Here plaintiff appears to allege that NSD did not properly effect a funds transfer from the Vanguard Company, the custodian of the funds, that would have allowed plaintiff to properly manage and maximize her retirement benefits. There is no seizure of funds alleged against defendants.
"[T]hough the classic taking is a transfer of property to the State or to another private party by eminent domain, the Takings Clause applies to other state actions that achieve the same thing. Thus, when the government uses its own property in such a way that it destroys private property, it has taken that property. Similarly, our doctrine of regulatory takings aims to identify regulatory actions that are functionally equivalent to the classic taking. Thus, it is a taking when a state regulation forces a property owner to submit to a permanent physical occupation, or deprives him of all economically beneficial use of his property. Finally . . . States effect a taking if they recharacterize as public property what was previously private property." Stop the Beach Renourishment, 560 U.S. at 713 (citations and quotations omitted).
Second, any takings claim must be ripe for adjudication. In order to bring a takings claim, two requirements must be met for the claim to be ripe: "First, the government entity charged with implementing the regulations must have reached a final decision regarding the application of the regulations to the property at issue. Second, plaintiff[] must have sought compensation through the procedures provided by the State for obtaining such compensation." Dodd v. Hood River Cty., 59 F.3d 852, 858 (9th Cir. 1995) (alteration, citation, and quotation omitted). Plaintiff has neither alleged nor indicated, other than by her demand, how the PERS distribution at issue is effected. If the conditions precedent are not met, the takings claim is not ripe, the potential claim is not justiciable, and the Court lacks jurisdiction to hear such a claim. Id. Here, there is no indication that plaintiff has met the requirements for bringing a Fifth Amendment takings claim. Plaintiff has not alleged any final decision has been made regarding her account with Vanguard nor any exhaustion of state remedies for obtaining compensation. Under the well-pleaded complaint rule, any potential takings claim is not justiciable, and the Court lacks jurisdiction to hear it.
There are certain exceptions to this ripeness jurisdiction requirement, not applicable here: "[A] plaintiff may be excused from this requirement if he demonstrates that the inverse condemnation procedure is unavailable or inadequate. In addition, an exception exists where the state does not have a reasonable, certain, and adequate provision for obtaining compensation at the time of the taking, or where resorting to state remedies would be futile." Wash. Legal Found. v. Legal Found. of Wash., 271 F.3d 835, 851 (9th Cir. 2001) (alteration, citation, and quotation omitted) aff'd sub nom. Brown v. Legal Found. of Wash., 538 U.S. 216 (2003).
Defendants argue that the "[l]ikelihood of [plaintiff's] recovery under the federal claim does not determine jurisdiction," and that the Court should not consider the merits of a potential federal claim in determining whether plaintiff has stated a federal-law claim for purposes of determining federal question jurisdiction. See Defs.' Resp. at 7 (Docket No. 6). Defendants cite certain Supreme Court and Ninth Circuit authority: "Jurisdiction . . . is not defeated . . . by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover . . . . [T]he failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction," Bell v. Hood, 327 U.S. 678, 682 (1946); "Any non-frivolous assertion of a federal claim suffices to establish federal question jurisdiction, even if that claim is later dismissed on the merits under Rule 12(b)(6)," Bollard v. Cal. Province of the Soc'y of Jesus, 196 F.3d 940, 951 (9th Cir. 1999); and, a court does "not evaluate the merits or probability of success of [the federal claim] claim" in determining whether federal question jurisdiction exists, Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 574 (9th Cir. 2004).
While these statements of law are true as a general rule, they do not determine the outcome here. An exception to these rules lies where the federal-law claims "are obviously frivolous." Cook Inlet Region, Inc. v. Rude, 690 F.3d 1127, 1131 (9th Cir. 2012). (quotation omitted). Although "[i]t is hard to show frivolousness," federal question jurisdiction will not lie where the federal claim is "so insubstantial, implausible, . . . or otherwise completely devoid of merit as not to involve a federal controversy." Id. (quotation omitted). Here, any Fifth Amendment claim would indeed be frivolous. As explained, if the claim is a Due Process Clause claim, then the law bars such a claim, as defendants are not federal officials but are state officials. If the claim is a Takings Clause claim, there are no allegations demonstrating that the claim is ripe for adjudication, nor does plaintiff allege that defendants are holding her funds. The Court would not have jurisdiction over such a claim, as it would not be ripe. Thus, the cases defendants rely on do not apply for the reason that the ultimate defect with plaintiff's Fifth Amendment claim is that it is not only frivolous, but the Court lacks jurisdiction entirely. Therefore, because any Fifth Amendment claim is at best frivolous, or at worst non-justiciable, it is insufficient to confer federal question jurisdiction on this matter for purposes of removal. This is especially so given the "strong presumption" against removal jurisdiction, and the heavy burden that defendants must bear in establishing removal. Hunter, 582 F.3d at 1042. II. Diversity Jurisdiction
Defendants also invoke diversity jurisdiction in removing this action. However, as defendants acknowledge in their Response, this action may not be removed on that basis. See Defs.' Resp. at 9 (Docket No. 6). Plaintiff alleges that she is an Idaho resident, that defendant NSD is an Oregon entity, and that defendant Weeks resides in Oregon. Plaintiff alleges damages of over $600,000. While this satisfies the complete diversity and amount-in-controversy requirements, and would normally suffice to confer diversity jurisdiction, plaintiff originally brought this action in Oregon state court. A civil action otherwise removable solely on the basis of diversity jurisdiction may not be removed if any of the defendants is a citizen of the state where the action is brought. 28 U.S.C. § 1441(b)(2). Plaintiff moved to remand on the basis of this "forum defendant rule" within 30 days of defendants' filing of the notice of removal, as required under 28 U.S.C. § 1447(c). Because plaintiff timely moved to remand, diversity jurisdiction does not support removal of this action to federal court. III. Costs and Fees
Defendants removed on January 6, 2017 (Docket No. 1), and plaintiff moved to remand on February 3, 2017 (Docket No. 4). --------
"An 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). Whether to award costs and fees on a motion to remand lies within the court's discretion. Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). "[T]he standard for awarding fees should turn on the reasonableness of the removal. Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees should be denied." Id. Here, although the Court determined that the Complaint's passing reference to the U.S. Constitution did not state a federal claim, the Complaint nonetheless did mention the U.S. Constitution. Moreover, the confusing nature of the claims, if any, plaintiff meant to assert in her Complaint, and the opaque factual and legal allegations of the Complaint, are to blame for the difficulty in discerning what basis for federal question jurisdiction there would be. Plaintiff's constitutional complaints were frivolous at best. But defendants were not objectively unreasonable in attempting to remove this action. Any fault for costs and fees incurred in remanding lies equally with plaintiff as with defendants. The Court should decline to award costs and fees on plaintiff's Motion to Remand.
RECOMMENDATION
For the above reasons, this Court lacks removal jurisdiction over this matter. Thus, the Court should GRANT plaintiff's Motion to Remand (Docket No. 4) and REMAND this action to the Malheur County Circuit Court. The Court should DENY plaintiff's request for costs and fees under 28 U.S.C. § 1447(c).
SCHEDULING ORDER
The above Findings and Recommendations will be referred to a United States District Judge for review. Objections, if any, are due 4/19/2017. If objections are filed, a response to the objections is due fourteen days after the date the objections are filed and the review of the Findings and Recommendations will go under advisement on that date.
IT IS SO ORDERED.
DATED this 5th day of April, 2017.
/s/ Patricia Sullivan
PATRICIA SULLIVAN
United States Magistrate Judge