Opinion
5:24-cv-01277-MCS-JPR
07-23-2024
Dean v. Kaiser Found. Health Plan, Inc.
PRESENT: THE HONORABLE MARK C. SCARSI, UNITED STATES DISTRICT JUDGE
CIVIL MINUTES-GENERAL
Proceedings: (In Chambers) Order to Show Cause
Plaintiffs Stephan Dean and Liza Dean, individually and doing business as SureFile Filing Systems, initiated this breach of contract action against Defendants Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals in the Riverside County Superior Court. (Compl., ECF No. 1-2.) Defendants removed the action to this court, invoking federal-question jurisdiction. (Notice of Removal, ECF No. 1.)
The Court questions its jurisdiction over the action. Courts have an obligation to examine subject matter jurisdiction issues sua sponte. Gonzalez v. Thaler, 565 U.S. 134, 141 (2012). “Federal courts are courts of limited jurisdiction” and “possess only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A defendant may remove an action to federal court if the federal court could exercise original jurisdiction over the action. 28 U.S.C. § 1441(a). Federal courts have original jurisdiction where an action arises under federal law. Id. § 1331.
There is a “strong presumption” against removal jurisdiction, and the removing party bears the burden of proving that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Id. If a defendant fails to meet its burden to establish subject-matter jurisdiction, the action must be remanded. 28 U.S.C. § 1447(c).
Defendants maintain that Plaintiffs' claim for breach of contract is in effect “a trademark and cybersquatting dispute” arising under or raising substantial questions of federal law. (Notice of Removal ¶ 15; see id. ¶¶ 15-19.) But references to Defendants' trademarks and trademark issues do not necessarily transmogrify Plaintiffs' contract claim into a federal claim under the Lanham Act. In evaluating federal-question jurisdiction, federal courts follow “the ‘well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). “The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.” Id. The Court questions whether the breach claim here arises under federal law. See, e.g., Duncan v. Stuetzle, 76 F.3d 1480, 1486 (9th Cir. 1996) (articulating factors for deciding whether a complaint touching on trademark issues arises under the Lanham Act).
In a prior case between the parties, this Court determined that it had original federal-question jurisdiction over Plaintiffs' claim for a judicial “declaration that Plaintiffs have the right to use Defendants' trademarks,” a claim which “would require an adjudication of the parties' rights under federal law.” Dean v. Kaiser Found. Health Plan, Inc., 562 F.Supp.3d 928, 932 (C.D. Cal. 2022) (Scarsi, J.). The Court did not decide whether it had original jurisdiction over the breach of contract claim in that case, which had been withdrawn. See id. at 931.
The Court orders Defendants to show cause why the case should not be remanded for lack of jurisdiction. Defendants shall file a written response within 14 days either conceding the Court lacks jurisdiction or adducing additional facts and argument toward federal-question jurisdiction. Failure to file a timely and satisfactory response will result in remand without further notice. Plaintiffs may respond to Defendants' response within seven days of its filing.
IT IS SO ORDERED.