Opinion
Civil Action No. 3:03-CV-0194-P
April 23, 2003
MEMORANDUM OPINION AND ORDER
This case was removed to federal court on January 29, 2003. Plaintiff filed a timely Motion to Remand on February 19, 2003. Defendant filed Response on March 3, 2003, and Plaintiff filed a Reply on March 18, 2003. After reviewing the filings, the briefing, and the applicable law, the Court concludes that Defendant's removal was untimely. Plaintiffs Motion to Remand is GRANTED.
Factual Background
Plaintiff first filed this case in the 162d Judicial District Court, Dallas County, Texas, in December 2000, alleging that Defendant discriminated against him on the basis of his age in violation of the Texas Commission on Human Rights Act ("TCHRA") and the Age Discrimination in Employment Act ("ADEA"). Notice of Removal, Ex. C-1 ¶ 6. Defendant removed the case to federal court on account of the federal question. Id., Ex. C-7 ¶ 3. When Plaintiff amended his complaint to omit the ADEA claim, Judge Barbara M.G. Lynn granted Plaintiff's motion to remand the case to state court. Id., Ex. C-8.
In June 2001, Plaintiff amended his petition to claim that Defendant violated the TCHRA by "discriminating against him in the terms, conditions, and privileges of his employment." Id., Ex. C-26 ¶ 6. At a deposition in September 2001, Plaintiff explained what he meant by this amendment:
Q: What aspects of your employment do you feel you were robbed of or refused or denied because of SBC's acts?
A: My ability to complete my service with the company; to be able to, after 29 years, complete one more year of service and retire with full pension and benefits.
Pl.'s App. at 5.
In a subsequent deposition, in November 2001, Plaintiff was again asked about his damages:
Q: . . . Tell the jury how you have been damaged as a result of your termination from Southwestern Bell.
A: I lost my pension which includes my health insurance for myself and my wife, potential earnings, bonuses, potential stock dividends. I've had to utilize 401(k) monies that otherwise I might not have needed to.Id. at 11. Plaintiff filed his Fourth Amended Petition in February 2002, alleging that Defendant violated the TCHRA by "discriminating against him in the terms, conditions, and privileges of his employment, specifically by stripping him of pension, health and insurance benefits because of his age and the fact that such benefits were shortly to become vested." Notice of Removal, Ex. C-58 ¶ 6 (emphasis added). The petition also sought redress for violations of unspecified aspects of the common law. Id. ¶ 3.
Plaintiff filed his Fifth Amended Petition on December 2, 2002. Id., Ex. C-102. In addition to the above-mentioned claims based on age discrimination in violation of the TCHRA, Plaintiff added claims of retaliation in violation of the TCHRA, breach of contract, fraud, and negligence. Plaintiff alleged that Defendant "retaliated against [him] for asserting his rights by denying him insurance benefits to which he was entitled. . ." Id. ¶ 8. As for the breach-of-contract claim, he alleged that Defendant had promised him benefits — benefits for which he had worked his entire professional life and which were to become payable in mere months — that Plaintiff relied on that promise, and that Defendant breached its promise by "denying Kirby the benefits to which he was entitled." Id. ¶ 9. The fraud claim was also premised on the loss of expected benefits: Defendant allegedly "materially misrepresented its intentions to pay retirement benefits to Kirby. . . " Id. ¶ 10. The Fifth Amended Petition sought punitive damages in addition to the relief previously sought. Id. ¶ 12.
Defendant again deposed Plaintiff on January 9, 2003. Plaintiff was asked to explain the basis of his breach-of-contract claim. He explained, "When I went to work for Bell and worked there for almost 29 years, I worked with the understanding that for as long as there was work for me to do and I performed my job in a satisfactory manner, I would be entitled to a certain amount of pension and benefits for life once I left the company. [¶] When I was terminated, I lost the pensions — the lifetime pensions . . ." Notice of Removal, Ex. 1. Plaintiff was later asked about the basis for his fraud claim:
Q: What is the basis for your contention that SBC somehow defrauded you?
A: When I went to work for SBC, I decided to make a career at Bell by giving them the best of my ability and . . . to do the job that they would pay me to do with the understanding that at the end of the job part of the pay would be a benefit — benefit package. [¶] When I was terminated for what I feel were unjust reasons and unfairly, I was defrauded of the benefits that I had expected to receive for myself and my family after retirement from Bell.Id.
On January 16, 2003, Defendant moved to compel Plaintiff to answer certain deposition questions. Id., Ex. C-115. A hearing was scheduled for January 31, but Defendant removed the case to federal court on January 29, 2003, stating that "[d]espite the characterization of [his new] claims as ones for retaliation, breach of contract and fraud, Plaintiff clearly alleges wrongful denial of pension and medical benefits under two separate SBC [ERISA] Plans. . . . Plaintiff's claims are thus completely preempted by ERISA . . . and thus removable based on this Court's federal question jurisdiction." Id. ¶ 7. Defendant maintains that it first ascertained a basis for federal jurisdiction at Plaintiff's deposition on January 9, 2003. Def.'s Resp. ¶ 3.
The Motion to Remand
Plaintiff now moves this Court to remand the case to state court, attacking this Court's jurisdiction on three fronts. First, Plaintiff claims that the benefits he seeks are not governed by an ERISA plan. Pl.'s Mot. ¶ 8. Second, Plaintiff contends that Defendant failed to remove the case within the thirty-day window provided by 28 U.S.C. § 1446 (b). Id. ¶ 11. Third, Plaintiff suggests that Defendant waived its right to remove by proceeding in state court after learning that the case was removable. If the Court finds that there is no ERISA plan, federal jurisdiction will not lie and remand is mandatory. Hansen v. Continental Ins. Co., 940 F.2d 971, 973 (5th Cir. 1991). Remand is also appropriate if the Notice of Removal was untimely filed. Leininger v. Leininger, 705 F.2d 727, 729 (5th Cir. 1983). Likewise, if waiver applies. Brown v. Demco, Inc., 792 F.2d 478, 481 (5th Cir. 1986). Insofar as the motion can be granted on any of the three bases invoked by Plaintiff, it does not matter which question is answered first. In its discretion, the Court begins with the second line of attack, assuming arguendo that Plaintiff's pension benefits are governed by an ERISA plan. If the Notice of Removal was untimely filed, the Motion to Remand maybe granted without deciding whether Defendant waived its right to remove or whether an ERISA plan is in dispute.
Notice of Removal Must be Timely Filed
A defendant may remove a case to federal court after receiving a copy of "an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446 (b). The defendant must file a notice of removal within thirty days of receiving a paper indicating that the case has become removable. Id. Unless the plaintiff waives the time limit or there is some equitable reason not to apply the time limit, "a defendant who does not timely assert the right to remove loses that right." Brown v. Demco, Inc., 792 F.2d 478, 481 (5th Cir. 1986). The thirty-day deadline for filing a notice of removal begins running when it first becomes "unequivocally clear and certain" that the case is removable. Bosky v. Kroger Tex., LP, 288 F.3d 208, 211 (5th Cir. 2002). The Fifth Circuit has held that a notice of removal may be based on answers given in deposition. S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 494 (5th Cir. 1996).
Removability and the Complete-Preemption Doctrine
Removal of a state-law action to federal court is proper when the complaint falls within the original jurisdiction of the federal district court. See 28 U.S.C. § 1331 (a). Where, as here, there is no diversity of citizenship between the parties, the propriety of removal depends upon the existence of a federal question, that is, whether any of Plaintiff's claims "arise under" federal law. See 28 U.S.C. § 1331. An action arises under federal law when the face of the "well-pleaded complaint" raises a federal issue. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-12 (1983).
The well-pleaded-complaint rule is qualified, however, by the complete-preemption doctrine. As the Supreme Court stated in Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62-63 (1986), "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Under these circumstances, the courts treat the state claim asserted by the plaintiff as a claim "arising under" federal law. Franchise Tax Bd., 463 U.S. at 24. In other words, when Congress has made federal court the sole venue for resolving a particular type of claim, a state-law suit seeking to resolve such a claim will be treated as if it asserted a federal question, and timely removal to federal court is proper. McClelland v. Gronwaldt, 155 F.3d 507, 518 (5th Cir. 1998) (such claims are "converted" or "recast" as federal claims). The Supreme Court has held that Congress expressed an intent to completely preempt state law with respect to claims that duplicate or fall within the scope of the rights enforceable by way of § 502(a) of ERISA, 29 U.S.C. § 1132 (a). Taylor, 481 U.S. at 64; Giles v. NYL Care Health Plans, Inc., 172 F.3d 332, 337 (5th Cir. 1999).
There is no original jurisdiction and removal is not proper where a claim is preempted by federal law but Congress has expressed no intent to completely occupy the field: "Since 1887 it has been settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption. . ." Franchise Tax Bd., 463 U.S. at 13. In cases where a defendant alleges removal jurisdiction based on the fact that a state claim is preempted to the extent it conflicts with federal law, a federal district court presented with a motion to remand should send the case back to state court. Roark v. Humana, Inc., 307 F.3d 298, 305 (5th Cir. 2002). State-law claims preempted by § 514 of ERISA, 29 U.S.C. § 1144, but falling outside the purview of § 502(a), are "conflict preempted." Giles, 172 F.3d at 337. Conflict preemption will not confer original or removal jurisdiction. Roark, 307 F.3d at 305.
The Fifth Amended Petition
Arguing that the basis for removal first became clear at the deposition on January 9, 2003, Defendant implicitly contends that the Fifth Amended Petition did not make the basis for removal "unequivocally clear and certain." In determining whether Defendant's basis for removal (ERISA preemption) was ascertainable from the Fifth Amended Petition, the Court asks whether it is ascertainable from the Fifth Amended Petition that Plaintiff is asserting claims that are completely preempted by ERISA.
The Fifth Circuit uses a two-prong analysis in determining whether a claim is completely preempted by ERISA. First, the Court must find that "the claim is subject to ordinary preemption under section 514(a)." McClelland v. Gronwaldt, 155 F.3d 507, 517 (5th Cir. 1998). Second, the state-law claim must "fall within the scope of the civil enforcement provisions contained in section 502(a)." Id. Thus, if the Fifth Amended Petition makes it "unequivocally clear and certain" that any of Plaintiffs claims are both preempted under § 514(a) and within the scope of § 502(a), the thirty-day time limit will be counted from the date on which Defendant received that amended pleading. Bosky v. Kroger Texas, LP, 288 F.3d 208, 211 (5th Cir. 2002).
First, the Court finds that both the breach-of-contract claim and the fraud claim are preempted by § 514. In Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 81 (1987), the plaintiff alleged that the defendant insurance company had breached its insurance contract by refusing to pay disability benefits. With relative ease, the Supreme Court found that the plaintiffs common-law contract claim was preempted by ERISA: it was based on a common law of general application that was not a law regulating insurance. Id. at 62. See also Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236 (5th Cir. 1990) (contract claim alleging improper denial of benefits preempted by ERISA); Lee v. E.I. duPont de Nemours Co., 894 F.2d 755 (5th Cir. 1990) (tort claim alleging misrepresentation of details of plan preempted under ERISA); Ramirez v. Inter-Continental Hotels, 890 F.2d 760 (5th Cir. 1989); Cefalu v. B.F. Goodrich Co., 871 F.2d 1290 (5th Cir. 1989) (contract claim alleging improper denial of benefits); Degan v. Ford Motor Co., 869 F.2d 889 (5th Cir. 1989) (same). Stripped of their link to the pension plan, these claims would cease to exist. Christopher v. Mobil Oil Corp., 950 F.2d 1209, 1220 (5th Cir. 1992). Assuming that the pension plan is an ERISA plan, the Court finds that Plaintiffs breach-of-contract and fraud claims would be preempted under § 514.
The second step in the complete-preemption analysis requires the Court to determine whether the claims fall within the scope of § 502(a). The Court has no trouble finding Plaintiffs breach-of-contract and fraud claims to be completely preempted. Plaintiff claims that Defendant promised Plaintiff benefits and that Defendant breached its promise by "denying Kirby the benefits to which he was entitled." Notice of Removal, Ex. C-102 ¶ 9. Plaintiff also alleges that Defendant "materially misrepresented its intentions to pay retirement benefits to Kirby. . ." Id. ¶ 10. These claims clearly duplicate the causes of action available under § 502: "A civil action may be brought . . . by a participant or beneficiary . . . to recover benefits due to him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his right to future benefits under the terms of the plan . . ." 29 U.S.C. § 1132 (a)(1)(B). See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 62-63 (1987). Furthermore, Plaintiff alleges that "[Defendant] breached its contract with [Plaintiff] by the groundless termination of his employment mere months before retirement benefits for which Kirby had worked his entire professional life were to become payable." With this claim, Plaintiff asserts a basis for relief that is indistinguishable from the cause of action provided by § 510 of ERISA. See 29 U.S.C. § 1140 (making it unlawful to discharge a participant or beneficiary "for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan. . ."). Such claims are completely preempted under Ingersoll-Rand Co. v. McClendon, 489 U.S. 133 (1990).
However, Defendant would have this Court believe that complete preemption was not ascertainable from the Fifth Amended Petition but only became clear at the deposition on January 9, 2003. Defendant's argument is without merit. The plain language of the Fifth Amended Petition is unequivocal, clear, and certain. The import of this language is even plainer in light of Plaintiffs deposition testimony in the fall of 2001 and the intimations of preemption contained in the Fourth Amended Petition.
On the chance that this Court were to deny his Motion to Remand, Plaintiff asked for leave to file his Sixth Amended Petition. Defendant contends that language in this proposed amended pleading still provides a basis for finding Plaintiffs claims to be completely preempted. Def.'s Resp. ¶ 29. As Plaintiff notes, the cited language also appears in the Fourth Amended Petition (and, the Court notes, the Fifth Amended Petition as well). Pl.'s Reply ¶ 14; Notice of Removal, Ex. C-102 ¶ 6. Without conceding the existence of an ERISA plan or the viability of Defendant's complete-preemption argument, Plaintiff argues that Defendant's claims of complete preemption in the sixth petition should apply equally to the fourth petition.
Finding Defendant's removal to be untimely on the basis of claims asserted in the Fifth Amended Petition, the Court declines to determine whether complete preemption was also ascertainable from the Fourth Amended Petition. Furthermore, the Court remands the case without commenting on the merits of any conflict-preemption defense available to Defendant, as this is a matter for the state court to determine. See Arana v. Ochsner Health Plan, Inc., 302 F.3d 462, 469 n. 5 (5th Cir. 2002) (citing Soley v. First Nat'l Bank of Commerce, 923 F.2d 406, 410 (5th Cir. 1991)). See generally Rozzell v. Security Services, Inc., 38 F.3d 819, 823 (5th Cir. 1994); Rokohl v. Texaco, Inc., 77 F.3d 126, 129 (5th Cir. 1996); Cathey v. Metropolitan Life Ins. Co., 805 S.W.2d 387 (Tex. 1991).
The Fifth Amended Petition made a basis for removal ascertainable more than thirty days before Defendant filed its Notice of Removal. Defendant did not need to hear anything more from Plaintiff at deposition to ascertain a basis for removal jurisdiction. The Notice of Removal was untimely and remand is appropriate.
Conclusion
The rule is long standing which states that removal statutes are to be strictly construed against removal. See Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 107-109 (1941). Defendant received an amended pleading from which the basis for removal was ascertainable more than thirty days before it filed its Notice of Removal. The removal being untimely, the Court GRANTS Plaintiffs Motion to Remand. The case is hereby remanded to the 162d Judicial District Court of Dallas County, Texas. Plaintiffs request for sanctions is DENIED.