Opinion
IP 00-1398-C-B/S.
September 29, 2001
ORDER GRANTING MOTION FOR REMAND
Plaintiffs sue Wal-Mart Stores, Inc. ("Wal-Mart") and two store managers for failure to record and pay for all of the time employees are required to work and for failure to permit employees to take rest breaks and lunch breaks. Currently before the Court are a number of motions, including Plaintiff's Motion to Remand, Wal-Mart's Motion to Dismiss the Class Action Allegations and individual Defendants Marie Ward and Nathan Clark's Motion to Dismiss for failure of service. For the reasons set forth below, the Motion to Remand is GRANTED, and the case, along with the motions to dismiss, are DISMISSED for lack of jurisdiction.
Procedural History Plaintiffs filed a class action complaint in Indiana state court on August 17, 2000, against Wal-Mart and individual defendants alleging violations of Indiana statutory and common law. On September 7, 2000, Wal-Mart filed a Notice of Removal, alleging, based on its interpretation of one of the counts in the complaint, that federal question jurisdiction exists under 28 U.S.C. § 1331. Specifically, Wal-Mart claims that Count IV of Plaintiffs' original complaint actually states a federal claim under the Fair Labor Standards Act, 28 U.S.C. § 201, et seq. ("FLSA"). Plaintiffs then filed a Motion to Amend on November 14, 2000. The amended complaint sets forth seven counts, all under Indiana common law, and most significantly, eliminates Count IV of the original complaint. Defendant objected to Plaintiffs' Motion to Amend, asserting that Plaintiffs were eliminating the federal question from their action in an attempt to defeat the court's jurisdiction. On December 12, 2000,
Plaintiffs were permitted to amend their complaint, but the Court reserved discussion of Wal-Mart's objection for a later date.
On January 5, 2001, Plaintiffs filed a Motion to Remand this matter to the state court. Plaintiffs maintain that this action must be remanded because (1) Plaintiffs have not alleged a claim under federal law, and alternatively, (2) Plaintiffs have a right to maintain any claims under the FLSA in state court. Remand is appropriate because the complaint, as amended does not assert federal claims.
Because we remand the case to state court for other reasons, this argument is not addressed.
Removal of the Original Complaint was Proper When no diversity of citizenship has been alleged, the propriety of removal depends on whether the complaint contains a federal question. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 8 (1983); Burda v. M. Ecker, 954 F.2d 434, 438 (7th Cir. 1992). A party may remove an action from state court when the federal court has "original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States . . ." 28 U.S.C. § 1441(b). Further, any doubt regarding jurisdiction should be resolved in favor of the states, and the burden of establishing jurisdiction falls on the party seeking removal. Doe v. Allied Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993) (citations omitted).
Under Hammond v. Terminal Railroad Ass'n, 848 F.2d 95 (7th Cir. 1998), we look to the original complaint to determine whether removal was proper. Count IV of the complaint formally states a claim under Indiana Code § 22-2-2-4 alleging a violation arising out of Wal-Mart's failure to pay Plaintiffs a minimum hourly wage for all the labor they performed for Defendant. The problem with calling such a claim a state law claim, however, rests on the application of the term "employer" defined elsewhere in this section of the code. Under Indiana Code § 22-2-2-3, an "employer," as defined by the Code "shall not include any employer who is subject to the minimum wage provision of the federal Fair Labor Standards Act of 1938, as amended ( 29 U.S.C. § 201-209)." One of the main effects of this provision in Indiana Law is the exclusion of large employers from the purview of state law. No party contests that Wal-Mart is subject to requirements imposed on employers by the FLSA. Hence, Plaintiffs' claim in the original complaint is "really one of federal law." Cf. County Collector of the County of Winnebago, Illinois v. O'Brien, 96 F.3d 890, 895 (7th Cir. 1996) (removal improper where conduct complained was not necessarily governed by federal law). Removal of the original complaint was proper.
Elimination of Count IV in Amended Complaint Defeats Federal Jurisdiction In their amended complaint, Plaintiffs omit Count IV and claim that the deletion defeats federal jurisdiction. We agree. Federal Rule of Civil Procedure 15(a) permits amendment once as of right. In addition, the statute governing remand, 28 U.S.C. § 1447(c), provides that a case may be remanded "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction." Count IV, the sole basis for federal jurisdiction in the original complaint, no longer provides the necessary jurisdictional hook.
In opposition, Wal-Mart argues that Plaintiffs should not be permitted to engage in forum manipulation. We note that "Plaintiffs' voluntary nonsuit of their federal claims gives this Court discretion to remand this case to state court." Valentini v. Fernandez, 1992 WL 6736, at *1 (N.D.Ill. Jan. 14, 1992) (citing Carnegie-Mellon University v. Cohill, 484 U.S. 343 (1988)). We need take into account considerations of fairness, comity, and judicial economy. Id. Such considerations include guarding against forum manipulation, as Defendant properly notes. Assuming, however, that Plaintiffs intended to be in state court (as would appear to be the case, based on the state-law citations in the headings of the various counts in the complaint filed in state court), the Court finds that the mistake of Plaintiffs' counsel in including Count IV in the original complaint precludes the sophistication inherent in forum manipulation. A mindful reading of the Indiana statute in light of the common sense observation that Wal-Mart stores, given their ubiquity, must employ hundreds of thousands of people, should have alerted Plaintiffs to the fact that Count IV was not maintainable as a state law action. This is not the stuff of forum manipulation. Furthermore, this case is distinguishable from Halkett v. Bridgestone/Firestone, Inc., 128 F. Supp.2d 1198, 1201 (S.D.Ind. 2001). In that case, plaintiffs sought to delete an explicitly federal claim for relief. The Halkett plaintiffs cited the National Highway Traffic and Motor Vehicle Safety Act of 1966, 49 U.S.C. § 30118 in their original complaint. Here, Plaintiffs mistakenly, but apparently honestly, believed they were filing exclusively state law claims.
Moreover, Defendant suffered no unfairness by delay in filing an amended complaint or in seeking remand, a factor often considered. See Payne v. Parkchester North Condominiums, 134 F. Supp.2d 582, 587 (S.D.N.Y. 2001) (considering delay as factor causing possible prejudice). While waiting almost four months to file their motion for remand is not a prime example of alacrity, very little happened in the case during those months to affect the substance of the case. The docket primarily consists of filings for extension of time (filed by Defendant) and motions pro hac vice. As to judicial economy, few resources have been utilized in this case, since this motion is the first substantive motion we have addressed. As such, remand is appropriate.
Finally, we note that Plaintiffs request costs and expenses incurred as a result of removal. As Plaintiffs correctly point out, the propriety of removal is the critical element in determining whether to impose fees. Excell, Inc. v. Sterling Boiler Mechanical, Inc., 106 F.3d 318, 322 (10th Cir. 1997); Sciala v. Scala Packing Co., 821 F. Supp. 1276, 1278 (N.D.Ill. 1993). As we discussed above, the complaint was not the picture of clarity concerning the federal or state nature of the claims it asserted. As such, imposition of fees and costs on Defendant is not warranted.