Opinion
CV 21-05611-MWF (RAOx)
01-14-2022
Xiaowen Yang v. TravelSky Technology USA Ltd. et al
Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge
CIVIL MINUTES-GENERAL
Proceedings (In Chambers): ORDER DENYING AS MOOT DEFENDANT'S MOTION TO DISMISS [11]; ORDER GRANTING PLAINTIFF'S MOTION TO REMAND [13]
Before the Court are two motions:
The first is Defendant TravelSky Technology USA Ltd.'s Motion to Dismiss, filed on July 16, 2021. (Docket No. 11). Plaintiff Xiaowen Yang filed an Opposition on August 2, 2021. (Docket No. 12). Defendant filed a Reply on August 8, 2021. (Docket No. 16).
The second is Plaintiff's Motion to Remand (the "Remand Motion"), filed on August 6, 2021. (Docket No. 13). Defendant filed an Opposition on August 30, 2021. (Docket No. 18). Plaintiff filed a Reply on August 31, 2021 (Docket No. 19), and at the Court's direction, Plaintiff filed a Supplemental Reply on the merits of its preemption argument on September 14, 2021. (Docket Nos. 20, 21).
The Motion was noticed to be heard on September 13, 2021. The Court read and considered the papers on the Motion and deemed the matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78(b); Local Rule 7-15. The hearing was therefore VACATED and removed from the Court's calendar. Vacating the hearing is also consistent with General Order 21-08, arising from the COVID-19 pandemic.
For the reasons set forth below, the Court rules as follows:
• The Remand Motion is GRANTED. Defendant fails to establish that Plaintiffs claims are completely preempted by federal law, which is required to support Defendant's theory of removal. Conflict preemption, as alleged by Defendant, is an insufficient basis to establish federal subject matter jurisdiction.
• Defendant's Motion to Dismiss is DENIED as moot.
I. BACKGROUND
On April 1, 2021, Plaintiff Xiaowen Yang filed a complaint in the Superior Court of California for the County of Los Angeles. (Notice of Removal (Docket No. 1) at 1); (Compl. (Docket No. 1-3)). On July 9, 2021, Defendant removed the action to this Court on grounds that Plaintiff's state-law claims arise under the Employee Retirement Income Security Act ("ERISA") and are therefore preempted by federal law.
The Complaint alleges as follows:
Beginning in May 2010, TravelSky employed Plaintiff as a Finance Manager and Human Resources Manager. (Compl. ¶ 10). Plaintiff reported directly to Zhiwei Tian, TravelSky's General Manager. (Id.).
In October 2018, an employee by the name of Mingming Zhang was hired by TravelSky. (Id. ¶ 11). As an employee, Mingming was entitled to be offered TravelSky's group health insurance after 60 days of employment, as well as TravelSky's 401k plan after 6 months of employment. (Id.).
In November 2018, Plaintiff asked her supervisor, Tian, if she should enroll Mingming in the company's group health insurance plan once she reached her 60-day requirement. (Id. ¶ 12). Plaintiff did not receive a response, so she followed up again in December 2018. (Id.). In response to Plaintiffs second inquiry, Tian informed Plaintiff that because Mingming's husband's company's health insurance covered Mingming already, it was not necessary to enroll Mingming herself in TravelSky's group health insurance plan. (Id.).
In March 2019, when Mingming was nearing 401k enrollment eligibility, Plaintiff emailed Tian suggesting they prepare for her enrollment. (Id. ¶ 13). Tian, however, instructed Plaintiff not to enroll Mingming in TravelSky's 401k plan and further instructed Plaintiff not to enroll two other employees as well. (Id.).
Plaintiff was skeptical of Tian's decisions, and then in January 2020, her concerns grew stronger when Mingming came to Plaintiff to discuss her pregnancy and related health insurance issues. (Id. ¶¶ 13-14). Although Tian had previously told Plaintiff that it was not necessary to enroll Mingming in TravelSky's group health insurance plan, Mingming informed Plaintiff that Tian had actually denied Mingming's request for health insurance because Mingming had a pre-existing medical condition. (Id. ¶ 14). Plaintiff alleges that Tian's denial was discriminatory because the denial was made to prevent inflated insurance costs due to Mingming's pre-existing condition. (Id.).
During Spring 2020, Plaintiff re-raised her concerns about Mingming's healthcare denial, the 401k denials, and other issues related to financial noncompliance because Plaintiff believed Tian's actions were discriminatory and against the law. (Id. ¶¶ 17-18). Tian took no action in response to Plaintiff's complaints; rather, shortly after Plaintiff raised her concerns, Tian took away Plaintiffs cabinet and mailbox keys without explanation. (Id. ¶ 18). Notably, the cabinet is where all the important finance books, records, and company files were kept. (Id.).
On July 3, 2020, Plaintiff determined it was necessary to escalate her complaints to TravelSky's Headquarters. (Id. ¶ 20). Plaintiff sent a letter that reported Tian's non-compliant and allegedly unlawful work practices. (Id.). On that same day, six hours after sending the letter, Plaintiff received a "warning" letter from Tian stating that she was unsatisfied with Plaintiff's performance on July 1st and July 2nd, and the letter further invited Plaintiff to resign. (Id. ¶ 21). Tian also stated that she was suspending Plaintiffs access to her company email. (Id.).
Plaintiff alleges that she timely completed the assignment underpinning Tian's letter, and furthermore, that after nearly 10 years of employment, the timeliness of a single report is a suspicious basis to urge Plaintiff to resign. (Id.). The warning letter convinced Plaintiff that Tian intended to either terminate her or force her to resign as a result of her complaints regarding Tian's allegedly illegal conduct. (Id.).
On July 5 and July 12, 2020, Plaintiff sent a second and third letter to TravelSky Headquarters that raised concerns over Tian's retaliation. (Id. ¶¶ 22-24). On July 22, 2020, as TravelSky had still failed to take any action in response to Plaintiffs several complaints, Plaintiff submitted a formal complaint against Tian with the U.S. Department of Labor. (Id. ¶ 25). On July 23, 2020, Plaintiff submitted another formal complaint to the Department of Fair Employment and Housing. (Id. ¶ 26).
On August 17, 2020, Plaintiff sent her fourth letter to TravelSky Headquarters and included the case No. from the formal complaints she filed the month prior. (Id. ¶ 27). On August 24, 2020, in response to Plaintiffs fourth letter, TravelSky stated that her complaints would be investigated. (Id.).
On August 27, 2020, Headquarters called Plaintiff to inquire into the financial compliance issues, and later that same day Tian emailed Plaintiff requesting detailed information about the 401k plan. (Id. ¶ 28). The following day, Tian emailed Plaintiff at 2:00 p.m. requesting her to bring all of her company assets to the office by 3:00 p.m. that same day for asset stock counting purposes. (Id. ¶ 29). Plaintiff explained that the requested materials were too numerous to gather and prepare on such short notice. (Id.).
Two hours after Plaintiff responded to Tian's email, Plaintiff received an email from Tian terminating Plaintiffs employment. (Id. ¶ 30). Based on the above facts and Plaintiffs termination, Plaintiff filed a complaint alleging six state-law retaliation claims against TravelSky. (See Id. ¶¶ 31-79) (alleging state-law violations under California Labor Code §§ 1102.5, 232.5 and California Government Code §§ 12940 et seq.).
II. LEGAL STANDARD
Courts should "strictly construe the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Doubts as to removability should be resolved in favor of remanding the case to the state court. Id.; see also Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus, 980 F.2d at 566.
"On a plaintiffs motion to remand, it is a defendant's burden to establish jurisdiction by a preponderance of the evidence." Taylor v. United Road Services, No. CV 18-330-LJO-JLT, 2018 WL 2412326, at *2 (E.D. Cal. May 29, 2018) (citing Dart Cherokee Basin Operating Co. v. Owens, 574 U.S. 81, 88 (2014); Rodriguez v. AT&T Mobility Servs., LLC, 728 F.3d 975, 978 (9th Cir. 2013)). The non-moving party bears the burden of identifying "a legitimate source of the court's jurisdiction" and "[disputed questions of fact and ambiguities in the controlling law must be resolved in favor of the remanding party." Pac. Mar. Ass'n v. Mead, 246 F.Supp.2d 1087, 1089 (N.D. Cal. 2003) (citing Gaus, 980 F.2d at 566).
III. DISCUSSION
Generally speaking, "[a] cause of action arises under federal law only when the plaintiffs well-pleaded complaint raises issues of federal law." Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 944 (9th Cir. 2009) (citation omitted). However, "there is an exception to the well-pleaded complaint rule for state-law causes of action that are completely preempted by [ERISA] § 502(a)." Id.
The parties here, like the parties in Marin, have not clearly understood the difference between complete preemption under ERISA § 502(a), 29 U.S.C. § 1132(a), and conflict preemption under ERISA § 514(a), 29 U.S.C. § 1144(a). Id. at 944-45. "[R]emoval and preemption are two distinct concepts." Toumajian v. Frailey, 135 F.3d 648, 655 (9th Cir. 1998) (quotation omitted). These differences should be appreciated, as removal is appropriate under complete preemption but not under conflict preemption.
"Federal pre-emption is ordinarily a federal defense to the plaintiffs suit. As a defense, it does not appear on the face of a well-pleaded complaint, and, therefore, does not authorize removal to federal court." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987).
However, under the doctrine of complete preemption, "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life, 481 U.S. at 63-64. "[E]ven if the only claim in a complaint is a state law claim, if that claim is one that is 'completely preempted' by federal law, federal subject matter jurisdiction exists and removal is appropriate." Toumajian, 135 F.3d at 653 (citing Metropolitan Life, 481 U.S. at 63-64).
Under ERISA, a state-law claim is completely preempted if it comes within the scope of ERISA § 502(a) - the Act's civil enforcement provision. See Metropolitan Life, 481 U.S. at 67 (finding that a state-law claim was completely preempted because it fell within the scope of ERISA § 502(a)). "Section [502(a)] of ERISA, by its express terms, limits the causes of action that are available under the statute, as well as by whom and against whom they may be brought." Toumajian, 135 F.3d at 656. For example, the most common cause of action authorizes a plan participant or beneficiary to bring a civil action to recover benefits due under the plan or to clarify rights to future benefits under the terms of the plan. Id.
As the Ninth Circuit has explained, removal is only appropriate if Plaintiff's claims are "completely preempted" by ERISA's civil enforcement provision.
Complete preemption removal is an exception to the otherwise applicable rule that a plaintiff is ordinarily entitled to remain in state court so long as its complaint does not, on its face, affirmatively allege a federal claim. The general rule is that a defense of federal preemption of a state-law claim, even conflict preemption under § 514(a) of ERISA, is an insufficient basis for original federal question jurisdiction under § 1331(a) and removal jurisdiction under § 1441(a).Marin, 581F.3dat945 (internal citation omitted).
Put simply, "a defense of conflict preemption under § 514(a) does not confer federal question jurisdiction on a federal district court." Id. (emphasis added). Therefore, "[a] party seeking removal based on federal question jurisdiction must show [] that the state-law causes of action are completely preempted by § 502(a) of ERISA." Id.; see also Toumajian, 135 F.3d at 655 ("[A] state law claim that falls outside the scope of [ERISA § 502(a)], even if preempted under [ERISA § 514(a)], is still governed by the well-pleaded complaint rule and is not removable under the complete preemption doctrine described by the Supreme Court.").
Here, the parties' briefs exclusively focus on the timeliness of Defendant's removal and whether there is conflict preemption under ERISA § 514(a). The Court, however, need not reach these arguments because Defendant has failed to establish the threshold requirement for removal - that Plaintiffs state-law claims are "completely preempted" by ERISA § 502(a).
Defendant fails to make any argument that Plaintiff's claims are subject to complete preemption. And after reviewing ERISA § 502(a), the Court concludes that Plaintiffs state-law retaliation claims could not possibly fall within the scope of ERISA's civil enforcement provisions.
Accordingly, the Remand Motion is GRANTED. The action is REMANDED to the Los Angeles County Superior Court.
IT IS SO ORDERED