Isolani et al v. Highland General Hospital et al

Filing 20

FURTHER ORDER RE: SUBJECT MATTER JURISDICTION. Signed by Magistrate Judge Jacqueline Scott Corley on 1/27/2014. (ahm, COURT STAFF) (Filed on 1/27/2014)

1
2
3
4
5
6
7

IN THE UNITED STATES DISTRICT COURT

8

FOR THE NORTHERN DISTRICT OF CALIFORNIA

9
10

Northern District of California

United States District Court

11
12

FRANCESO ISOLANI, M.D., et al.,

13
14

Plaintiffs,

Case No.: C-13-05119 JSC
FURTHER ORDER RE: SUBJECT
MATTER JURISDICTION

v.

15
16
17
18

HIGHLAND GENERAL HOSPITAL, et
al.,
Defendants.

19
20

Plaintiffs brought this state-law employment action against Defendants in the Superior Court

21

of California for the County of Alameda, asserting that they were denied certain wages,

22

reimbursements, and medical insurance arising out of Defendants’ alleged misclassification of

23

Plaintiffs as independent contractors rather than employees. Defendants subsequently removed the

24

action to this Court on the basis of federal question jurisdiction.

25

Defendants, as the parties seeking removal to this federal court, bear the burden of

26

establishing that subject matter jurisdiction exists, and courts strictly construe the removal statute

27

against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566-67 (9th Cir. 1992). Further,

28

when a case is removed to federal court, the court has an independent obligation to satisfy itself that

1

it has federal subject matter jurisdiction. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir.

2

2004). Although Defendants have already responded to the Court’s order to show cause as to why

3

subject matter jurisdiction exists in this case, Defendants’ response, as explained below, does not

4

apply the correct law in analyzing the relevant issue.

5

“Federal question jurisdiction exists only when a federal question exists on the face of a well-

6

pleaded complaint.” ING Bank, FSB v. Pineda, 2012 WL 2077311, at *1 (N.D. Cal. June 8, 2012).

7

“[T]he plaintiff is the master of his complaint and may avoid federal jurisdiction by relying

8

exclusively on state law.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (internal

9

quotation marks omitted). Nonetheless, “there exist a handful of extraordinary situations where even

Northern District of California

a well-pleaded state law complaint will be deemed to arise under federal law for jurisdictional

11
United States District Court

10

purposes.” Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 687 (9th Cir. 2007) (internal quotation

12

marks omitted). “Under the ‘artful pleading’ doctrine, a well-pleaded state law claim presents a

13

federal question when a federal statute has completely preempted that particular area of law.” Id.

14

“The artful pleading doctrine allows removal where federal law completely preempts a plaintiff’s

15

state-law claim.” Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998).

16

“ERISA is one such exception to the ‘well-pleaded complaint rule.’” Vandenberg v. Beyers

17

Costin, 2014 WL 108380, at *3 (N.D. Cal. Jan. 10, 2014). It was enacted to “provide a uniform

18

regulatory regime over employee benefit plans,” and thus contains broad preemption provisions to

19

ensure that employee benefit plan regulation is “exclusively a federal concern.” Aetna Health Inc. v.

20

Davila, 542 U.S. 200, 208 (2004) (internal citations omitted). There are two types of preemption

21

under ERISA: (1) “complete preemption” under § 502(a) of ERISA, 29 U.S.C. § 1132(a); and (2)

22

“conflict preemption” under § 514(a) of ERISA, 29 U.S.C. § 1144(a). Marin Gen. Hosp. v. Modesto

23

& Empire Traction Co., 581 F.3d 941, 944–945 (9th Cir. 2009).

24

In Marin General, the Ninth Circuit “ma[de] clear” the difference between complete

25

preemption and conflict preemption under ERISA, as well as “the different jurisdictional

26

consequences that result from these two kinds of preemption.” 581 F.3d at 945. The court explained:

27

If a complaint alleges only state-law claims, and if these claims are entirely
encompassed by § 502(a), that complaint is converted from an ordinary state common
law complaint into one stating a federal claim for purposes of the well-pleaded

28

2

1
2

complaint rule. But if the doctrine of complete preemption does not apply, even if the
defendant has a defense of conflict preemption within the meaning of § 514(a) because
the plaintiff’s claims ‘relate to’ an ERISA plan, the district court is without subject
matter jurisdiction .

3
4
5
6
7
8
9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26

Id. (alterations, citations, and internal quotation marks omitted).
To determine whether state-law claims are completely preempted under Section 502, courts
apply the two-step test set forth in Davila: “a state-law cause of action is completely preempted if (1)
‘an individual, at some point in time, could have brought [the] claim under ERISA § 502(a)(1)(B),’
and (2) ‘where there is no other independent legal duty that is implicated by a defendant’s actions.’”
Marin Gen., 581 F.3d at 946 (quoting Davila, 542 U.S. at 210).
Defendants’ response to the Court’s Order does not apply this two-step test; rather, Defendants
assert that complete preemption exists merely because Plaintiffs’ claims “relate to” an employee
benefit plan under Section 514. However, as explained by the Ninth Circuit in Marin General,
Section 514 conflict preemption is not the same as Section 502 complete preemption, and a finding of
conflict preemption is insufficient to confer subject matter jurisdiction over state law claims. Because
Defendants’ response does not address the relevant test, the Court will allow Defendants another
opportunity to demonstrate that subject matter jurisdiction exists in this case. In their supplemental
response, if any, Defendants shall apply the two-part test set out in Davila and further explained in
Marin General. Defendants shall address under the first prong, in particular, how Plaintiffs could
have brought a claim under Section 502 of ERISA given Defendants’ insistence that Plaintiffs were
never Defendants’ employees. See 29 U.S.C. § 1132(a)(1) (providing that an action under Section
502 may be brought by a “participant or beneficiary”); see also 29 U.S.C. 1002(7) (defining
“participant” as “any employee or former employee of an employer”).
Defendants shall file their response to this Order by no later than February 7, 2014. Plaintiffs
may file a response to Defendants’ submission by no later than February 14, 2014. The Court cannot
decide Defendants’ motion to dismiss until Defendants have demonstrated that this Court has subject
matter jurisdiction of this action.

27
28

IT IS SO ORDERED.

3

1
2
3

Dated: January 27, 2014
_________________________________
JACQUELINE SCOTT CORLEY
UNITED STATES MAGISTRATE JUDGE

4
5
6
7
8
9
10

Northern District of California

United States District Court

11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28

4