Summary
holding that "Congress did not intend to make state law causes of action defensively preempted by the FCRA removable to federal court"
Summary of this case from Fiume Industries v. A. Express Travel Related SVCSOpinion
No. Civ.A. 00-AR-2030-J.
November 1, 2000.
Timothy Ray Wadsworth, Wadsworth Johnson, PC, Sulligent, AL, for Troy D. Watkins, an Individual, plaintiff.
Joseph A. Fawal, Fawal Spina, Birmingham, AL, Bruce S Luckman, Satzberg Trichon Kogan Wertheimer, PC, Philadelphia, PA, for Trans Union LLC, defendant.
Kenneth O. Simon, Simon Associates, Birmingham, AL, for BF Goodrich Credit Union, defendant.
MEMORANDUM OPINION
Upon defendants' removal of the above-entitled action, this court, as it has been known to do from time to time under such procedural circumstances, and as it must do when there is any doubt about the existence of subject matter jurisdiction, sua sponte raised the issue of subject matter jurisdiction. In this case, the answer rests on whether the complete preemption doctrine applies when a well-pleaded complaint in a state court contains allegations that could support a cause of action under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (1994 Supp. II 1996) ("FCRA") but when that statute is not invoked. For the reasons set forth in the following opinion, the court finds that it lacks jurisdiction and will remand this action.
Procedural History and Facts
The complaint filed in the Circuit Court of Fayette County, Alabama, by plaintiff, Troy D. Watkins ("Watkins"), contains two counts against defendants, Trans Union, LLC ("Trans Union"), a credit reporting agency, and B.F. Goodrich Credit Union ("Goodrich Credit Union"). Count I alleges that Trans Union and Goodrich Credit Union injured Watkins by causing or allowing the dissemination of inaccurate information regarding his credit history and credit worthiness. Count II alleges that defendants are responsible for publishing defamatory or libelous statements about plaintiff. As the basis for relief, plaintiff invokes no specific law — either state nor federal.
Following service of the Complaint, defendants filed separate notices of removal. In addressing the requirement in 28 U.S.C. § 1441 that the removed action originally could have been brought in federal court, both defendants rely on 28 U.S.C. § 1331, which establishes that district courts have original jurisdiction of actions arising under laws of the United States. The law of the United States under which plaintiff's action arises, defendants assert, is FCRA.
Discussion
A. Relevant doctrines: the well-pleaded complaint, artful pleading, complete preemption, and defensive preemption
The well-pleaded complaint rule determines the presence or absence of federal jurisdiction that will support removal. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). Generally, if the face of the complaint necessarily implicates a federal claim, a federal question exists. See Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 9-12, 103 S.Ct. 2841, 2846-2847, 77 L.Ed.2d 420 (1983); Louisville Nashville R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Watkins's complaint is stonily silent as to the legal basis of his claims. While this silence suggests a degree of calculation, under the rule it compels a finding of that no federal question exists from the face of the complaint.
Appropriately, Trans Union and Goodrich Credit Union do not contend that the face of the complaint establishes original federal jurisdiction. Instead, they seek to bring the complaint into this court under the corollary to the well-pleaded complaint rule, namely, the artfully pleaded complaint doctrine. If a complaint is artfully pled, a plaintiff has omitted pleading a necessary federal question. See Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118 S.Ct. 921, 925, 139 L.Ed.2d 912 (1998) (quoting Franchise Tax Bd. of Cal., 463 U.S. at 22, 103 S.Ct. at 2853). If a defendant can show the necessity of the federal element to plaintiff's cause of action despite plaintiff's omission, federal jurisdiction exists. See id. This doctrine, then, permits a defendant to remove an action when "federal law completely preempts a plaintiff's state-law claim." Id. Although application of complete preemption has been substantially limited to the context of the Labor Management Relations Act ("LMRA") and ERISA, in theory it applies anytime a federal statute's "extraordinary pre-emptive power . . . converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987). The doctrine of complete preemption must be distinguished from the similarly-named doctrine of "defensive (or ordinary) preemption." Complete preemption of state law by federal law is jurisdictional in nature; it allows a defendant to halt state adjudication of a state cause of action by removing the action to federal court. Defensive preemption of state law by federal law, on the other hand, "operates to dismiss state claims on the merits and may be invoked in either federal or state court." BLAB T.V. of Mobile, Inc. v. Comcast Cable Communications, Inc., 182 F.3d 851, 855 (11th Cir. 1999).
In support of removal, defendants invoke separately the artful pleading and complete preemption doctrines. While the Supreme Court has distinguished the two by indicating that the latter is a subset of the former, see Rivet, 522 U.S. at 475, 118 S.Ct. at 925, defendants do not provide an identifiable argument for an exception to the well-pleaded complaint rule that does not ultimately rely on the rationale for application of complete preemption. Under either label, defendants' claim for the essential federal nature of this action stems from FCRA's preemption of plaintiff's cause of action. Thus, the question becomes whether the complete preemption exception to the well-pleaded complaint rule applies where plaintiff's allegations state a claim under the FCRA.
B. Extension of the complete preemption doctrine
This question has not been addressed head-on by any authority whose decisions are binding on this court, but several district courts from other circuits have answered it in the negative. The lone exception, an unreported case, Williams v. Metropolitan Life Ins. Co., 1994 WL 529880 (S.D.N.Y.), treats as one in the same the question of whether FCRA provides a defensive preemption of state law claims and the question of whether it provides for the removal of state law claims. While the cases in the majority reveal analytical variations among the circuits, the leading case, Harper v. TRW, Inc., is typical in its heavy reliance on analysis of FCRA's jurisdictional grant, 15 U.S.C. § 1681p. See Harper, 881 F. Supp. at 299-300; see also Rule, 36 F. Supp.2d at 338-39 (discussing Harper); Swecker, 31 F. Supp.2d at 539-40 (same); Sherron, 977 F. Supp. at 808 (same).
Defendants cite Lockard v. Equifax, 163 F.3d 1259 (11th Cir. 1998) as controlling authority on the removability of FCRA claims. The court finds Lockard inapplicable. In Lockard, the Eleventh Circuit addresses the issue of the removability of an action brought in state court which alleged violations of both FCRA and state law. Under these circumstances, the analysis is much kinder to defendants: removal is only improper if Congress has expressly prohibited it. Thus, the well-pleaded complaint rule and complete preemption are not mentioned, let alone at issue, in Lockard.
Opinions concluding that complete preemption does not apply in the FCRA context are: Saia v. Universal Card Services, 2000 WL 863979 (E.D.La.); Rule v. Ford Receivables, 36 F. Supp.2d 335 (S.D.W.Va. 1999); Swecker v. Trans Union, 31 F. Supp.2d 536 (E.D.Va. 1998); Sherron v. Private Issue By Discover, 977 F. Supp. 804 (N.D.Miss. 1997); Harper v. TRW, Inc., 881 F. Supp. 294 (E.D.Mich. 1995); and Hughes v. Fidelity Bank, 709 F. Supp. 639 (E.D.Pa. 1989).
It should be noted that Lockard, in dictum, ostensibly disagrees with Harper. See Lockard, 163 F.3d at 1263-1264, nn. 5, 6. However, this disagreement appears to rely on a mischaracterization of the issue in Harper. The distinction between the analysis required in Lockard and that required in Harper, BLAB T.V., and the present action is noted supra in footnote 1 and in Rule, 36 F. Supp.2d at 338 n. 5 (acknowledging that the action in Lockard was held to be removable, but stating that the decision had no bearing on its analysis and conclusion that the complete preemption exception does not apply to a well-pleaded complaint that could support a FCRA cause of action).
Aside from these cases, and more influential if only for its precedential value, is the Eleventh Circuit's opinion in BLAB T.V. That court, relying on relevant Supreme Court cases, explicitly provided guidance, if not a test, on a broader question relevant to this court's determination: whether to extend the complete preemption doctrine to a new statutory context. See BLAB T.V., 182 F.3d at 855-59 (discussing Metropolitan Life Ins. Co., Caterpillar, Franchise Tax Bd. of Cal., and Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968), the LMRA opinion cited as originally upholding removal based on preemptive effect). Defendant in BLAB T.V. removed an action facially limited to state law claims and asserted that § 612 of the Cable Communications Policy Act of 1984 ("Cable Act") "extended federal jurisdiction over [plaintiff's] claims even though they were based on state law." Id., at 853. The court stated that accepting defendant's argument turned on whether Congress intended the Cable Act to "replicate the jurisdictional force of the LMRA and ERISA." Id., at 858. Therefore, while conscious of that court's express refusal to state a mechanical test for such a determination, see id., at 858-59, this court turns to the Eleventh Circuit's examination of the propriety of removal of the action in BLAB T.V.
BLAB T.V.'s analysis has been employed in two recent Eleventh Circuit district court opinions. See Circle Redmont, Inc. v. Mercer Transportation Co., 78 F. Supp.2d 1316 (M.D.Fla. 1999) ("Like section 612 of the Cable Act, the Carmack Amendment's language and legislative history do not manifest an intent to transform state law claims into federal claims on removal."); Penelas v. Arms Technology, Inc., 71 F. Supp.2d 1251 (S.D.Fla. 1999) (remanding, on the grounds that state law claims against defendant gun manufacturers and trade groups were not completely preempted by the Commerce Clause, the Import/Export Clause, or the Due Process Clause).
In the court's analysis of the Cable Act, and of § 612 in particular, chief among the factors cutting in favor of complete preemption was the resemblance of the language in the jurisdictional grant for § 612 to that in § 301 of LMRA, 29 U.S.C. § 185. Yet, despite the Supreme Court's finding in Metropolitan Life Ins. Co. that a similar likeness between § 502(f) of ERISA, 29 U.S.C. § 1132(f), and LMRA's § 301(a) was essential for extension of the complete preemption doctrine to ERISA, the court in BLAB T.V. found this resemblance neutralized by the absence of any expression in the legislative history that Congress intended § 612(d) to function like § 301. See BLAB T.V., at 857.
Similarly, other evidence supporting the removal of the action failed to convince the panel in BLAB T.V. Congress's intention to create access to federal courts, create a federal cause of action, establish federal standards for cable access rates, even displace inconsistent state laws indicated to the court that strong federal interests were at stake. See id., at 857-59. Nevertheless, this evidence did not compensate for the absence of a clear statutory expression that in taking these steps Congress possessed the particular requisite intent: to convert state law claims related to § 612 into claims "arising under federal law for purposes of removal jurisdiction." Id., at 857. Furthermore, the court pointed out that the congressional "signals" which defendants put forth in support of complete preemption were not uncommon. As the court noted, treating one or more of those factors as dispositive would undercut the recognized, traditional rarity of the doctrine. See id., at 859 n. 3.
In order for this court to retain jurisdiction over the present action, Trans Union and Goodrich Credit Union must show that FCRA possesses the "jurisdictional force" that the Eleventh Circuit found absent in the Cable Act. FCRA does establish federal causes of action and does establish federal standards to be applied in those actions. See, e.g., 15 U.S.C. § 1681h(e). Even more significantly, 1996 amendments to the act expanded the preemptive effect of the statute by adding to the "Relation to State Laws" provision. The language of this section had resembled that of similar provisions in other statutes (including the Cable Act):
This subchapter does not annul, alter, affect, or exempt any person subject to the provisions of this subchapter from complying with the laws of any State with respect to the collection, distribution, or use of any information on consumers, except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency.
15 U.S.C. § 1681t (1994) (amended version at 15 U.S.C. § 1681t (Supp. II 1996)).
Congress primarily amended this section by adding three subsections. See 15 U.S.C. § 1681t(b), (c), (d) (Supp. II 1996). Subsection (b) lays out exceptions to the preceding subsection where "[n]o requirement or prohibition may be imposed under the laws of any State." Subsection (c) establishes that FCRA's definition of "firm offer of credit or insurance" shall be used in any state law concerning consumer reports. Finally, subsection (d) specifies the limitations on the scope of subsections (b) and (c).
Focusing on (b) and (c), defendants assert that the "extensive nature of the 1996 amendments suggest that Congress intended to completely preempt the field." Br. in Supp. of Def. Goodrich Credit Union's Removal Pet. and in Supp. of Jurisdiction at 4. While the 1996 amendments did make 1681t more closely resemble ERISA's preemption section, 29 U.S.C. § 1144, it does not approach that section's "virtually unique" expansiveness. Franchise Tax Bd. of Cal., 463 U.S. at 24 n. 26, 103 S.Ct. at 2854. Subsection (c) of § 1681t pertains to one definition out of many that could be at issue in an action involving credit reports. Subsection (b) merely lists exceptions to the general rule that only inconsistent state laws are preempted by FCRA. The boundaries of these exceptions, by reference to individual sections or subsections of the act, to pre-existing state laws, and/or to state laws mentioned by name, are sharply drawn in subsection (b) itself, as well as in subsection (d). By their own terms, the admittedly significant, but discrete preemptions established in the 1996 FCRA amendments evidence no intent on the part of Congress to grant defendants such as Trans Union and Goodrich Credit Union the extraordinary ability to recharacterize state law claims as a federal cause of action. Defendants' assertion of such sweeping intent finds no support in the legislative history concerning the additions to § 1681t. See, e.g., S.Rep. No. 104-185, at 54-55 (1995); 141 Cong.Rec. S5450 (daily ed. Apr. 7, 1995) (statements of Sen. Bond and Sen. Bryan).
Even if the statute's preemption provisions covered so much territory as to make defensive preemption of plaintiff's claims obvious, this would hardly settle the matter. See Metropolitan Life Ins. Co., 481 U.S. at 66-67, 107 S.Ct. at 1548. What has to be obvious is not an intent to preempt state law claims, but "an intent to make preempted state law claims removable to federal court." Sherron, 977 F. Supp. at 808. The logical place to look for such obvious intent is the jurisdictional grant. Tellingly, the jurisdictional grant under 15 U.S.C. § 1681, unlike § 301 of LMRA and § 502(f) of ERISA, and even the Cable Act's § 612(d), establishes concurrent state and federal jurisdiction over FCRA actions: "An action to enforce any liability under this subchapter may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction. . . ." 15 U.S.C. § 1681p. Not only does the legislative history lack an expression of intent to affect the concurrent jurisdiction by granting defendants the ability to remove well-pleaded complaints, it indicates that Congress explicitly contemplated state courts entertaining FCRA actions.
The language of § 1681p was passed into law when the 91st Congress amended the Consumer Credit Protection Act, which had been enacted in 1968 as Pub.L. 90-321. In the second session of the 91st Congress, the House and Senate passed conflicting versions of H.R. 15073, which as passed by the House primarily addressed foreign bank secrecy. Without discussion, the Senate created one of the conflicts by adding, as Title VI of H.R. 15073, a bill, S.823, that had passed its chamber the previous session and dealt with consumer concerns regarding credit reporting. See 116 Cong.Rec. 32,638-32,644. The jurisdictional grant of S.823 was concurrent: actions could be brought "in any appropriate United States district court, or in any other court of competent jurisdiction." 116 Cong. Rec. 32641 (1970). The subsequent Conference Report on H.R. 15073 adopted the Senate's tacked-on S.823 as an addition to the Consumer Credit Protection Act. See H.R.Conf.Rep. No. 91-587 (1970), reprinted in 1970 U.S.C.C.A.N. 4411, 4414. The report only comments on the jurisdictional provision to say that it permitted "a suit in any appropriate U.S. district court without regard to the amount in controversy." H.R.Conf.Rep. No. 91-587, reprinted in 1970 U.S.C.C.A.N. at 4416. The contemplation of state courts as forums for FCRA actions is most clear in the earlier Senate Report on S.823. That report states that "actions may be brought in Federal or State courts." S.Rep. No. 91-517, at 7 (1969), U.S.C.C.A.N. 4714 (1970).
Because this court finds that Congress did not intend to make state law causes of action defensively preempted by the FCRA removable to federal court, it does not have removal jurisdiction over this action. The court need not reach the issue of whether plaintiff's claims are in fact defensively preempted. See BLAB T.V., 182 F.3d at 858. The court leaves that determination, should it arise, to the able hands of the state court from whence this action was improperly removed.
Conclusion
A separate and appropriate order will be entered.