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Byars v. Greenway

United States District Court, W.D. Tennessee, Eastern Division

December 19, 2014

DEBBIE GREENWAY, individually and as an agent of M.T.D. PRODUCTS, INC., and M.T.D. PRODUCTS, INC., Defendants.


J. DANIEL BREEN, Chief District Judge.

Before the Court are a motion to dismiss filed by Defendants, Debbie Greenway and M.T.D. Products, Inc., ("M.T.D."), (Docket Entry ("D.E.") 7), and a motion to remand by Plaintiff, Betty Sue Byars, (D.E. 12). The issues having been fully briefed, these motions are now ripe for disposition.

I. Background

On January 31, 2014, Byars filed suit in the Haywood County, Tennessee, Circuit Court, alleging that Greenway, acting as M.T.D.'s agent, improperly notarized a Single Life Annuity Form, not signed by Plaintiff, preventing her from receiving distributions from her deceased husband's retirement plan. (D.E. 1-4 at 1-2.) The complaint sought monetary damages and Byars's reinstatement as a beneficiary. ( Id. at 2-4.) Defendants filed a notice of removal in this Court on February 27, 2014, Byars v. M.T.D. Prods., Inc., No. 14-1048, (W.D. Tenn. Feb. 27, 6> 2014), D.E. 1, and Plaintiff moved for voluntarily dismissal without prejudice, id., D.E. 16, which the Court granted, id., D.E. 17.

Byars refiled the case in state court on July 18, 2014, making essentially the same factual allegations. (D.E. 1-2.) She included two counts against Defendants: one for negligence in notarizing the Single Life Annuity Form "without the presence of Plaintiff" and another for "intentional, malicious, fraudulent, or reckless" activity in connection with the events at issue, seeking punitive damages. ( Id. at 2-4; D.E. 12-1 at 2.) She did not, however, request to be reinstated as a beneficiary under the plan. ( See D.E. 1-2.) Greenway and M.T.D. filed a notice of removal on August 4, 2014, insisting that Plaintiff's claims actually arise under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1001 et seq. (D.E. 1.) A week later, they moved to dismiss the case, arguing that they are not proper parties to an ERISA suit and that Byars's action is preempted. (D.E. 7; D.E. 8.) Plaintiff responded, (D.E. 18), and filed a motion to remand, contending that removal was improper because her claims do not arise under ERISA, and no other basis for federal jurisdiction exists, (D.E. 12; D.E. 12-1).

II. Analysis

As a fundamental principle, "[f]ederal courts are tribunals of limited subject matter jurisdiction." United States v. Field, 756 F.3d 911, 914 (6th Cir. 2014) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). This Court "possess[es] only that power authorized by Constitution and statute." Kokkonen, 511 U.S. at 377. "[T]he party requesting a federal forum... bears the burden of establishing federal jurisdiction." Siding & Insulation Co. v. Acuity Mut. Ins. Co., 754 F.3d 367, 369 (6th Cir. 2014) (citations omitted).

Cases originating in state court can, in some circumstances, be removed to federal court. Title 28, section 1441(a) of the United States Code provides:

Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

Defendants allege that original jurisdiction exists under "federal question" jurisdiction- sometimes called "arising under" jurisdiction-as provided for in 28 U.S.C. § 1331, and under ERISA's jurisdictional provision, contained in 29 U.S.C. § 1132(e). ( See D.E. 1 at ¶ 6.)

Section 1331 states that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." A central concept in federal question jurisdiction is the "well-pleaded complaint rule, " which provides that jurisdiction under § 1331 is generally proper only where "a federal question necessarily appears in the plaintiff's statement of his own claim[.]'" Gardner v. Heartland Indus. Partners, LP, 715 F.3d 609, 612 (6th Cir. 2013) (alteration in original) (quoting Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004)). "[I]f the plaintiff's complaint relies only on state law claims, the case may not be removed." Powers v. Cottrell, Inc., 728 F.3d 509, 515 (6th Cir. 2013) (citing Gentek Bldg. Prods., Inc. v. Sherwin-Williams Co., 491 F.3d 320, 325 (6th Cir. 2007)). The existence of a defense arising under federal law, on the other hand, will not typically give rise to federal question jurisdiction. Gardner, 715 F.3d at 612 (citing Davila, 542 U.S. at 207).

The well-pleaded complaint rule is limited, however, by the "substantial-federal-question doctrine, " the "artful-pleading doctrine, " and the "complete-preemption doctrine." Mikulski v. Centerior Energy Corp., 501 F.3d 555, 560 (6th Cir. 2007) (citations omitted). Defendants primarily argue that "Plaintiff's vague pleadings in this lawsuit are an artful attempt to hide the true nature of her claim in this action[, ]... one seeking benefits allegedly due under ERISA." (D.E. 1 at ¶ 3; see also D.E. 8 at 2.) According to Greenway and M.T.D., ERISA preempts Byars's claims, and the statute's "extraordinary preemptive power" gives rise to federal jurisdiction. (D.E. 19 at 6.) Arguments-like Defendants'-that state law claims are actually ERISA claims and therefore support federal jurisdiction are evaluated under the doctrine of complete preemption. See, e.g., Davila, 542 U.S. at 209-14; Gardner, 715 F.3d at 612-15; Fulton v. W. Coast Life Ins. Co., 2:09-CV-2015-JPM-TMP, 2010 WL 2010790, at *3 (W.D. Tenn. May 19, 2010).

To avoid getting lost in "the quagmire that is preemption, " Self-Ins. Inst. of Am., Inc. v. Snyder, 761 F.3d 631, 633 (6th Cir. 2014), it is necessary to draw a distinction between complete preemption and ordinary preemption under ERISA. See 13D Charles Alan Wright, et al., Federal Practice & Procedure: Jurisdiction § 3566 (4th ed. 2014) ("The name [complete preemption'] is misleading and this doctrine should be contrasted with ordinary' or conflict' preemption, under which federal law provides a defense to a state-law claim.").[1] The Supremacy Clause of the United States Constitution provides that the "Constitution, and the Laws of the United States... shall be the supreme Law of the Land;... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." U.S. Const. art. VI, cl. 2. Since the Supreme Court's ruling nearly two hundred years ago in M'Culloch v. Maryland, 17 U.S. 316, 427 (1819), "it has been settled that state law that conflicts with federal law is without effect.'" Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516 (1992) (citing Maryland v. Louisiana, 451 U.S. 725, 746 (1981)). Preemption occurs in three circumstances: where Congress "explicitly state[s] in [a] statute's language" its intent to supersede state law or implies it through the statute's "structure and purpose;" where state law "actually conflicts with federal law;" or where "federal law so thoroughly occupies a legislative field as to make reasonable the inference that Congress left no room for the States to supplement it." Id. (internal quotation marks and citations omitted).

ERISA contains an express-preemption clause, 29 U.S.C. § 1144(a), which states that "[e]xcept as provided in subsection (b) of this section, the provisions of [ERISA] shall supersede any and all State laws insofar as they... relate to any employee benefit plan described in section 1003(a) of this title and not exempt under section 1003(b)[.]" This clause is "broadly worded' and deliberately expansive.'" Self-Ins. Inst. of Am., 2014 WL 3804355, at *2 (quoting Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., 519 U.S. 316, 324 (1997)). As such, it covers common law claims "that (1) mandate employee benefit structures or their administration; (2) provide alternate enforcement mechanisms; or (3) bind employers or plan administrators to particular choices or preclude uniform administrative practice, thereby functioning as a regulation of an ERISA plan itself." Thurman v. Pfizer, Inc., 484 F.3d 855, 861 (6th Cir. 2007) (quoting Penny/Ohlmann/Nieman, Inc. v. Miami Valley Pension Corp., 399 F.3d 692, 698 (6th Cir. 2005)) (internal quotation marks omitted). Under ERISA, "[v]irtually all state law remedies are preempted...." Davila, 542 U.S. at 222 (Ginsburg, J., concurring) (quoting DiFelice v. Aetna U.S. Healthcare, 346 F.3d 442, 456 (3d Cir. 2003) (Becker, J., concurring)). Despite its breadth, § 1144(a)'s conflict preemption is merely a defense that does not itself support federal question jurisdiction. Gardner, 715 F.3d at 612 ("That a state-law claim is preempted under § 1144(a) is no basis to remove the case from state court to federal."); see also Franchise Tax Bd. of ...

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