Opinion
Civil Action No. 3:03-CV-0061-L
September 30, 2003
MEMORANDUM OPINION AND ORDER
Before the court are Plaintiffs' Motion to Remand, filed on January 30, 2003; Defendants' Motion to Dismiss for Failure to State a Claim, filed February 14, 2003; and Plaintiffs' Motion to Dismiss Defendants' Affirmative Defenses of Contributory Negligence and Sole Proximate Cause of Decedent Juan Castillo for Failure to State a Claim, filed September 25, 2003. After careful consideration of the motions, responses, replies, evidence, and the applicable law, the court grants Plaintiffs' Motion to Remand. I. Factual and Procedural History
As this case is being remanded, the court need not address the other pending motions in this case.
The decedent, Juan Castillo, ("Decedent") was employed by Angelo Iafrate Construction ("Iafrate") from November 1999 to July 18, 2002 in the Dallas/Fort Worth area, In May 2002, Iafrate temporarily assigned Decedent to a construction project in Florida where he was fatally injured on July 18, 2002, while working on the project. Decedent is survived by his wife, Ana Lilia Castillo, and four minor children (collectively "Plaintiffs"), all of whom are residents of Dallas County, Texas.
On November 25, 2002, Plaintiffs brought this action against Iafrate and Jerry Cortez ("Cortez"), Decedent's supervisor, in the 162nd Judicial District Court of Dallas County, seeking to recover exemplary damages for the gross negligence of Iafrate and Cortez (collectively "Defendants") pursuant to section 408.001 of the Labor Code and article 16, section 26 of the Texas Constitution. Defendants removed this case to federal court on January 9, 2003, asserting that Plaintiffs fraudulently joined Cortez to defeat diversity jurisdiction pursuant to 28 U.S.C. § 1332.
Plaintiffs filed their Motion to Remand on January 30, 2003, within thirty days after the filing of the Notice of Removal, contending that the pending claims arise under the Texas workers' compensation laws, are nonremovable under 28 U.S.C. § 1445(c), and must be remanded to state court. Defendants filed a motion to dismiss the claims against Cortez on February 14, 2003. They contend that, as a matter of law, Plaintiffs cannot recover against Cortez for Decedent's wrongful death.
On July 17, 2003, Plaintiffs filed their First Amended Complaint adding three defendants: Robert Hamilton, a vice-president of Iafrate and a resident of Louisiana; Randy Robertson, a manager with Iafrate and a resident of Covington, Texas; and David Funkhouser, a manager with Iafrate and a resident of Florida. Plaintiffs also clarified that they are suing in their capacities as wrongful death claimants and as heirs to Decedent's estate. Plaintiffs' First Amended Complaint does not affect the court's ruling and thus is of no moment.
II. Plaintiffs' Motion to Remand
Under the general removal statute, 28 U.S.C. § 1441(a), any civil action brought in state court over which the federal district courts have original jurisdiction may be removed by a defendant to federal court "[e]xcept as otherwise expressly provided by Act of Congress." The burden is on the party removing the action to establish that federal jurisdiction exists and that removal is proper. See St. Paul Reinsurance Co. v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998). If a plaintiff moves to remand, a defendant retains the burden of showing that removal was proper and establishing the federal court's jurisdiction over the case. See Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 397 (5th Cir. 1998).
Defendants removed this case to federal court, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1441(b). Plaintiffs and Cortez are residents of Texas, and Iafrate is a foreign corporation. Despite the lack of complete diversity between the parties, Defendants contend that removal was proper because Cortez was fraudulently joined by Plaintiffs for the purpose of defeating diversity jurisdiction. Plaintiffs counter that (1) regardless of whether Cortez is a proper defendant, this case cannot be removed to federal court because it "arises under" the Texas workers' compensation laws, and (2) Cortez is a proper defendant.
A defendant may rely on diversity of citizenship to remove an action to federal court only if "no defendant is a citizen of the state in which such action is brought . . ." Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996) (citing 28 U.S.C. § 1441(b)) (internal quotations omitted).
A. Texas Workers' Compensation Laws
Plaintiffs move to remand on the basis of 28 U.S.C. § 1445(c) which provides: "A civil action in any State court arising under the workmen's compensation laws of such State may not be removed to any district court of the United States." For the purposes of section 1445(c), a case "arises under" the workmen's compensation laws if "the workers' compensation statute creates the cause of action and the claim arises under that law." Patin v. Allied Signal, Inc., 77 F.3d 782, 788 (5th Cir. 1996) (emphasis added). "The `arising under' standard is to be interpreted broadly in favor of remand." Id. at 787.
The meaning of "arising under" in § 1445(c) is consistent with the interpretation of that standard under § 1331; namely, that "a suit arises under the law that creates the cause of action." Jones v. Roadway Exp., Inc., 931 F.2d 1086, 1092 (5th Cir. 1991) (quoting Lowe v. Ingalls Shipbuilding, 723 F.2d 1173, 1178 (5th Cir. 1984)).
Plaintiffs pled a claim of gross negligence seeking recovery of exemplary damages, pursuant to the article 16, section 26 of the Texas Constitution and section 408.001(b) of the Labor Code. Section 408.01of the Texas Labor Code provides as follows:
(a) Recovery of workers' compensation benefits is the exclusive remedy of an employee covered by workers' compensation insurance coverage or a legal beneficiary against the employer or an agent or employee of the employer for the death of or a work related injury sustained by the employee.
(b) This section does not prohibit the recovery of exemplary damages by the surviving spouse or heirs of the body of a deceased employee whose death was caused by an intentional act or omission of the employer or by the employer's gross negligence.
(Vernon 1996).
The issue before the court is whether section 408.001(b) creates a cause of action for the recovery of exemplary damages. Plaintiffs contend that it does and therefore "arises under" the workers' compensation laws. Defendants counter that section 408.001(b) merely saves a preexisting cause of action and thus does not "arise under" the Texas workers' compensation laws.
Defendants primarily rely on Duhart v. State, 610 S.W.2d 740 (Tex. 1980), to support their position, hi Duhart, survivors of a state employee sought exemplary damages under a gross negligence claim against the state of Texas. The issue in Duhart was whether the state had waived its sovereign immunity. The plaintiffs contended that the state waived its sovereign immunity by incorporating the language of section 408.001(b)'s predecessor into the statute that provided workers' compensation insurance to employees of the Texas Highway Department. The Duhart court rejected the plaintiffs' argument and held that the state was immune from suit. In so holding, the Duhart court stated, in dicta, that section 408.001(b)'s predecessor "does not create a cause of action for exemplary damages, but merely saves an existing one to the extent allowed by law." Duhart, 610 S.W.2d at 743.
Duhart is distinguishable from this case because it dealt with a public employer and sovereign immunity, which involve considerations that do not exist here. The biggest drawback to Duhart, insofar as supporting Defendants' position that section 408.001(b) merely saves an existing cause of action, is the language of Duhart itself. The Duhart court stated "[i]t should be recognized at the outset that this is not a suit under the Texas Workers' Compensation Law." Id. at 742 (emphasis added). As Duhart was not brought under the workers compensation laws, it cannot be precedent with respect to whether section 408.001(b) "saves" an already existing cause of action or creates an independent cause of action. At best, this language is a gratuitous statement by the court regarding a statute which was not even the basis of the lawsuit. Making a gratuitous comment is a far cry from a specific holding where a court is squarely faced with an issue. For these reasons, Duhart does not support Defendants' position.
Likewise, Defendants reliance on Bridges v. Phillips Petroleum Co., 733 F.2d 1153 (5th Cir. 1984) is misplaced. The issue in Bridges was whether section 408.001(b)' s predecessor violated the equal protection laws by failing to provide parents and siblings a cause of action for exemplary damages. The Bridges court relied on the dicta in Duhart, and this court has already expressed its concerns regarding Duhart. Moreover, whether section 408.001(b)'s predecessor created an independent cause of action or merely saved an existing cause of action was not the issue in Bridges and thus any statement made in that regard is merely dicta. See Sbrush v. The Dow Chemical Co., 124 F. Supp.2d 1090, 1092 (S.D. Tex. 2000).
Several courts have squarely addressed whether section 408.001(b) creates an independent cause of action. Sbrush, 124 F. Supp.2d at 1092; Wyble v. E.I. Dupont De Nemours Co., 17 F. Supp.2d 641, 645 (E.D. Tex. 1998) ("[A] wrongful death cause of action for gross negligence does exist under the Texas Workers' Compensation Act."); Callis v. Union Carbide Chem. and Plastics Corp., 932 F. Supp. 168, 172 (S.D. Tex. 1996) (citing Cowen v. Mobil Oil Corp., 901 F. Supp. 1204, 1206 (E.D. Tex. 1995)) ("The court sees no reason why the statutory remedy outlined in the Texas Labor Code could not form the necessary compensatory damages springboard and thereby allow recovery of exemplary damages."); Zacharie v. U.S. Natural Resources, Inc., 94 S.W.3d 748, (Tex.App.-San Antonio 2002, no pet.) (Texas law permits an independent cause of action for exemplary damages against an employer for gross negligence resulting in the employee's death.); Perez v. Todd Shipyards Corp., 999 S.W.2d 31, 33 (Tex.App. — Houston [14th Dist.] 1999, pet. denied) (Plaintiffs had an independent, nonderivative cause of action for gross negligence under the Texas Constitution and the Labor Code.); Smith v. Atlantic Richfield Co., 927 S.W.2d 85, 87 (Tex.App.-Houston [1st Dist] 1996, writ denied) ("[T]he cause of action for exemplary damages provided for in section 408.001(b) of the Labor Code is still viable ").
The court finds this case more closely analogous to Sbrush. hi Sbrush, the plaintiff brought an action under section 408.001(b), and the Defendant removed the case on the basis of diversity jurisdiction. The plaintiff moved to remand contending that the case arose under the workers' compensation laws of Texas. The Sbrush court listed several Texas cases that have considered whether section 408.001(b) creates an independent cause of action and concluded that it does create an independent cause of action. The Sbrush court remanded the case and opined that if the Texas Supreme Court were "confronted with the issue directly, [it] would hold that section 408.001 creates an independent cause of action for exemplary damages based on wrongful death, as opposed to merely saving a pre-existing cause of action." Id. at 1092. This court finds the Sbrush court's reasoning persuasive. For these reasons, the court concludes that Plaintiffs' case "arises under" the Texas workers' compensation laws. Accordingly, under 28 U.S.C. § 1445(c), such a case cannot be removed to federal court. The court therefore remands this case to the 162nd Judicial District Court of Dallas County.
B. Fraudulent Joinder
Since this case must be remanded to state court, the issue of fraudulent joinder is moot. Accordingly, the court does not address Defendants' fraudulent joinder arguments. III. Attorney's Fees and Costs
Plaintiffs request the court to award them costs incurred as a result of the removal and such other relief the court deems appropriate. Section 1447(c) provides that "[a]n 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). The Fifth Circuit has held that there is no "automatic entitlement to an award of attorney's fees." Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 292 (5th Cir. 2000). In applying § 1447(c), the court must consider "whether the defendant had objectively reasonable grounds to believe the removal was legally proper." Id. at 293. In light of some authority stating the section 408.001(b) did not create an independent cause of action, albeit dicta, the court determines that Defendants had objectively reasonable grounds to believe that removable was legally proper. For these reasons, the parties shall bear their own costs and attorney's fees.
IV. Conclusion
For the reasons stated herein, Plaintiffs' Motion to Remand is granted. This action is remanded to the 162nd Judicial District Court of Dallas County, Texas. The clerk of the court shall effect the remand in accordance with the usual procedure.
It is so ordered