Opinion
Civil Action No. 01-2232 Section "A" (2)
July 15, 2002
MINUTE ENTRY
Before the Court is a Motion to Remand (Rec. Doc. 18) filed by plaintiff Brad Zeringue ("Zeringue"). Defendant Roche Laboratories, Inc. ("Roche") opposes the motion. The motion, set for hearing on July 3, 2002, is before the Court on the briefs without oral argument. For the reasons that follow, the motion is GRANTED and this suit is REMANDED to state court.
Background
Zeringue, an ex-employee of Roche, filed this suit against Roche and two of his former supervisors, defendants Gary Oser and William Naro, in state court. Zeringue alleged that he was fired by Roche for reporting violations of the federal Prescription Drug Marketing Act ("PDMA"), 21 U.S.C. § 331, and in anticipation that he would report violations of Medicaid regulations to state and/or federal officials. Zeringue alleged that his firing violated the Louisiana Whistleblower Act, La. R.S. 23:967, and the Louisiana Medicaid Whistleblower Act, La. R.S. 46:440.3. He also alleged that various conduct on the part of Oser and Naro constituted intentional infliction of emotional distress under Louisiana law.
Defendants removed the suit to this Court asserting federal question jurisdiction. Although Zeringue's complaint ostensibly contains only state law claims, Defendants asserted that resolution of Zeringue's Whistleblower state law claim required a determination as to whether federal law, i.e., the PDMA, had been violated, thereby bringing the suit within the original jurisdiction of this Court.
On May 7, 2002, the Court held a status conference in light of the parties' Joint Motion to Continue Trial. At the conference, the Court sua sponte raised the issue of subject matter jurisdiction given that the state court petition appeared to assert only state law claims. The Court instructed counsel to brief the issue of subject matter jurisdiction and to file said memoranda no later than June 7, 2002. Pursuant to that order, Zeringue filed the instant motion to remand and Roche filed a memorandum in opposition.
The Parties' Contentions
Roche asserts that this Court has subject matter jurisdiction over this matter under both federal question jurisdiction and diversity jurisdiction. On the federal question issue, Roche asserts that the viability of Zeringue's state law Whistleblower claims necessarily turns on whether Defendants actually violated a federal law, i.e., the PDMA. Thus, this case "arises under" federal law because Zeringue's right to relief under state law requires resolution of a substantial question of federal law. Alternatively, Defendants assert that the Court has diversity jurisdiction over this matter because the non-diverse defendants, Oser and Naro, have been fraudulently joined to defeat this Court's subject matter jurisdiction.
Law Analysis
1. Principles off Subject Matter Jurisdiction and Removal
Federal courts have limited subject matter jurisdiction and cannot entertain cases unless authorized by the Constitution and legislation. Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996) (citing 1 J. Moore, Moore's Federal Practice § 0.71[1] [5.-1] (1996)). The parties can never consent to federal subject matter jurisdiction, and lack of such jurisdiction is a defense which cannot be waived. Id. (citing Fed.R.Civ.P. 12(h)(3); City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 76, 62 S.Ct. 15, 20, 86 L.Ed. 47 (1941)). Accordingly, there is a presumption against subject matter jurisdiction in a federal court. Id. (citing Strain v. Harrelson Rubber Co., 742 F.2d 888, 889 (5th Cir. 1984); 1 J. Moore, Moore's Federal Practice § 0.71[5.-1] (1996))
It is well established that the party invoking the jurisdiction of a federal court has the burden of proving that the exercise of such jurisdiction is proper. In re North American Philips Corp., 1991 WL 40259, at *2 (5th Cir. 1991). In a removal case, the removing party bears that burden, a burden unaffected by the status of discovery, the number of plaintiffs, or any problems created by state law. Id. Any doubt regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction and in favor of remand. Acuna v. Brown Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000) (citing Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988)
In the instant case, Defendants removed the case to this Court and therefore bear the burden of establishing that subject matter jurisdiction over Zeringue's claims is proper. As noted above, Defendants argue that both federal question and diversity jurisdiction are present. The Court considers each of these contentions in turn.
2. Federal Question Jurisdiction
Even though Zeringue's state court petition asserts only state law causes of action, Roche argues that this case nevertheless comes within the original federal question jurisdiction of this Court because Zeringue must prove an actual violation of federal law in order to prevail on his whistleblower claim. In opposition, Zeringue argues that Louisiana's whistleblower statute does not require Zeringue to prove an actual violation of federal law. Assuming however, that Louisiana law does impose such a burden, Zeringue argues that the issue of federal law imbedded in Zeringue's state law claim is insufficient to transform his state claim into a federal one.
Federal district courts have jurisdiction over cases "arising under the Constitution, laws, or treaties of the United States." Howery v. Allstate Insurance Company, 243 F.3d 912, 916 (5th Cir. 2001) (quoting 28 U.S.C. § 1331 (2000)). In determining whether a case "arises under federal law," the Court looks to whether "plaintiff's well-pleaded complaint raises issues of federal law." Id. (quoting City of Chicago v. International College of Surgeons, 522 U.S. 156, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997)).
Generally speaking, a "suit arises under the law that creates the cause of action." Id. at 917 (quoting American Well Works Co. v. Layne Bowler Co., 241 U.S. 257, 36 S.Ct. 585, 60 L.Ed. 987 (1916)). Even when a cause of action is created by state law, the case may nevertheless "arise under" federal law if (1) a federal right is an essential element of the claim, (2) interpretation of the federal right is necessary to resolve the case, and (3) the question of federal law is substantial. Id. Thus, not every state law cause of action involving a federal issue will support federal question jurisdiction. See id. When deciding whether federal question jurisdiction exists for a state law created cause of action, the court factors in the nature of the federal interest at stake. See id.
The first issue for consideration is whether the Louisiana whistleblower statute does in fact require Zeringue to prove a violation of federal law. Only if that question is answered in the affirmative need the Court consider whether the federal issue involved would suffice to transform Zeringue's state law claims into a federal case. Roche cites to no authority that recognizes such a requirement but instead relies on the plain wording of the whistleblower statute itself to assert that an actual violation mist be proved.
The Louisiana whistleblower statute reads as follows:
A. An employer shall not take reprisal against an employee who in good faith, and after advising the employer of the violation of law:
(1) Discloses or threatens to disclose a workplace act or practice that is in violation of state law.
(2) Provides information to or testifies before any public body conducting an investigation, hearing, or inquiry into any violation of law.
(3) Objects to or refuses to participate in an employment act or practice that is in violation of law.
B. An employee may commence a civil action in a district court where the violation occurred against any employer who engages in a practice prohibited by Subsection A of this Section. If the court finds the provisions of Subsection A of this Section have been violated, the plaintiff may recover from the employer damages, reasonable attorney fees, and court costs.
C. For the purposes of this Section, the following terms shall have the definitions ascribed below:
(1) "Reprisal" includes firing, layoff, loss of benefits, or any discriminatory action the court finds was taken as a result of an action by the employee that is protected under Subsection A of this Section; however, nothing in this Section shall prohibit an employer from enforcing an established employment policy, procedure, or practice or exempt an employee from compliance with such.
(2) "Damages" include compensatory damages, back pay, benefits, reinstatement, reasonable attorney fees, and court costs resulting from the reprisal.
D. If suit or complaint is brought in bad faith or if it should be determined by a court that the employer's act or practice was not in violation of the law, the employer may be entitled to reasonable attorney fees and court costs from the employee.
La. R.S. 23:967 (West 1998).
While the statute does not expressly state that Zeringue must prove a violation of law, the Court notes that the statute does not refer to an alleged violation of law but rather "any violation of law." Thus, Roche's interpretation of the statute is not unfounded.
However, Plaintiff makes persuasive arguments against the interpretation urged by Roche. For instance, Zeringue points out that the purpose of the statute is to protect employees from reprisal, not to turn them into prosecutors for the government. Rather, the public body conducting the investigation and perhaps a court of law will ultimately determine if a violation of law has occurred — something that a mere citizen like Zeringue lacks the expertise to do.
As an Erie court, this Court is bound to apply the law as interpreted by the state's highest court when state law provides the rule of decision. FDIC v. Abraham, 137 F.3d 264, 267-68 (5th Cir. 1998) (citing Ladue v. Chevron U.S.A., Inc., 920 F.2d 272 (5th Cir. 1991)). When the state's highest court has not spoken on an issue, the Court's task is to determine as best it can how that court would rule if the issue were before it. Id.
The Louisiana Supreme Court offers no guidance on the issue as that court has not addressed whether a whistleblower plaintiff is required to prove an actual violation of law in order to prevail on a claim. Nor does Roche cite any authority so holding. However, the Court's own research did reveal one case, Puig v. Greater New Orleans Expressway Commission, 772 So.2d 842, 845 (La.App. 5th Cir. 2000), a case cited by neither party, in which one Louisiana appellate court stated that the Louisiana whistleblower statute does require an actual violation of law. The Puig court did not address any of the persuasive arguments made by Zeringue in this case, however, given that the issue before the Puig court was simply whether public employees could avail themselves of whistleblower protection. Unlike a ruling by the state's highest court, a decision by an intermediate state appellate court generally does not bind this Court. See FDIC, 137 F.3d at 267-68.
Based on the foregoing, the Court cannot state with certainty that Louisiana's whistleblower statute requires Zeringue to prove a violation of federal law. Given that Roche is attempting to premise federal question subject matter jurisdiction on a point open to such debate, the Court concludes that Zeringue's whistleblower claims cannot form the basis for a federal claim. Accordingly, the Court concludes that Roche has failed to meet its burden of proving federal question jurisdiction.
Even if the Court were to conclude that Louisiana law required proof of an actual violation, the "substantiality" of the federal issue involved would also be open to debate as "the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 813, 106 S.Ct. 3229, 3234, 92 L.Ed.2d 650 (1986). Although federal courts employ the three part test detailed above when determining substantiality, the underlying consideration is whether the exercise of federal jurisdiction over a state law cause of action would serve "congressional purposes and the federal system." Id. at 814, 106 S.Ct. at 3235. Such a finding could be difficult to reach in this case.
3. Diversity Jurisdiction
Although Zeringue and the individual defendants, Oser and Naro, are all citizens of Louisiana, Roche argues that Oser and Naro's citizenship should be ignored for jurisdictional purposes as those two defendants are fraudulently joined. Roche alleges that the amount in controversy requirement is met. Roche also asserts that whistleblower claims lie only against an employer, not against supervisory personnel, and that Zeringue states no claim for intentional infliction of emotional distress against either Oser or Naro.
Zeringue's motion does not address the issue of diversity jurisdiction. Defendants did not allege diversity jurisdiction in their removal petition and have argued the issue for the first time in their opposition memorandum.
In order for a federal court to assert diversity jurisdiction, diversity of citizenship must be complete; the citizenship of all of the plaintiffs must be different from the citizenship of all of the defendants. Stafford v. Mobil Oil Corp., 945 F.2d 803, 804 (5th Cir. 1991) (citing Getty Oil Corp., Div. of Texaco, Inc. v. Insurance Co. of North Am., 841 F.2d 1254, 1258-59 (5th Cir. 1988); Aetna Casualty Surety Co. v. Hillman, 796 F.2d 770, 773 (5th Cir. 1986)). "The burden of proving that complete diversity exists rests upon the party who seeks to invoke the court's diversity jurisdiction." Id. (quoting Getty Oil, 841 F.2d at 1259; McGovern v. American Airlines, Inc., 511 F.2d 653, 654 (5th Cir. 1975))
If the removing party alleges jurisdiction on the basis that parties of non-diverse citizenship have been fraudulently joined, then the removing party must prove the existence of fraud. Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993) (citing Carrier v. Sears, Roebuck Co., 893 F.2d 98 (5th Cir. 1990)). To prove its allegation of fraud, defendant "must show either that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or that there has been outright fraud in the plaintiff's pleadings of jurisdictional facts." Id. (citing B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. 1981)). In determining whether the joinder was fraudulent, the court must consider all factual allegations in the light most favorable to plaintiff, and resolve all contested issues of substantive fact in favor of plaintiff. Id. (citing B., Inc., 663 F.2d at 549). If there is "arguably a reasonable basis for predicting that the state law might impose liability on the facts involved," then there is no fraudulent joinder. Id. (citing Bobby Jones Garden Apts. v. Suleski, 391 F.2d 172 (5th Cir. 1968)
Based on the foregoing, Roche must establish that the facts as alleged in Zeringue's petition state no cause of action against either Oser or Naro. The Court will assume that Zeringue does not state a cause of action against the individual defendants, Oser and Naro, for whistleblower violations as they were not his "employer," however the Court must still determine whether Zeringue states a claim for intentional infliction of emotional distress against either defendant. If there is any possibility that Zeringue's allegations are sufficient then his joinder of Naro and Oser was not fraudulent.
In support of its fraudulent joinder argument, Roche cites a multitude of cases in which various courts have concluded that various forms of workplace harassment did not suffice for plaintiff to recover for intentional infliction of emotional distress under the rigorous standards set out in White v. Monsanto, 585 So.2d 1205 (La. 1991). However, most of those cases were decided either on summary judgment or appeal, after all of the evidence was considered. In this case, the Court has only Zeringue's bare allegations upon which to conclude whether or not he states a claim against Oser and Naro. While the Court does not necessarily conclude that Zeringue does state a cause of action against Oser and Naro, the Court likewise cannot conclude that Roche has met its heavy burden of showing that Zeringue has no possibility of stating a cause of action against Oser and Naro for intentional infliction of emotional distress.
In sum, Roche has failed to establish a basis for federal subject matter jurisdiction.
Accordingly;
IT IS ORDERED that Plaintiff's Motion to Remand (Rec. Doc. 18) should be and is hereby GRANTED. This matter is REMANDED to the Civil District Court for the Parish of Orleans pursuant to 28 U.S.C. § 1447 (c).