Snelling Employment, LLC v. Cousins Packaging, Inc.

Filing 15

ORDER by Judge Ronald M Whyte granting 10 Motion to Remand (rmwlc2, COURT STAFF) (Filed on 1/23/2015)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SNELLING EMPLOYMENT, LLC,

Case No. 14-cv-05018-RMW

Plaintiff,
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v.

ORDER GRANTING MOTION TO
REMAND

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COUSINS PACKAGING, INC.,

Re: Dkt. No. 10

Defendant.

United States District Court
Northern District of California

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Plaintiff Snelling Employment, LLC moves to remand this case based on 28 U.S.C.

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§ 1445(c). Because this case arises under the workers’ compensation laws of California, the court

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GRANTS the motion to remand.

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I. BACKGROUND

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Plaintiff’s employee, Kevin Salas, was injured at work when using a stretch-wrapping

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machine manufactured defendant. Plaintiff paid Mr. Salas, either directly or through its insurer,

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workers’ compensation. Plaintiff, which is subrogated to the rights of Mr. Salas under California

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law, now sues defendant on negligence and breach of warranty theories. Dkt. No. 1-1 (Complt.)

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Plaintiff filed suit in Santa Clara County Superior Court, and defendant removed on the

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basis of diversity jurisdiction. Dkt. No. 1. Plaintiff now moves to remand the case. Dkt. No. 10.

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II. ANALYSIS

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Under 28 U.S.C. § 1445(c), “A civil action in any State court arising under the workmen’s

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compensation laws of such State may not be removed to any district court of the United States.”

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California Labor Code § 3852 confers a right of subrogation on employers and others who pay

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workers’ compensation benefits. The statute allows those who become obligated by state law to

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pay workers’ compensation benefits to bring an action against a tortious third party for recovery of

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those benefits. The only issue raised in the motion to remand is whether a claim brought under

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Labor Code § 3852 “arises under” California’s workers’ compensation law within the meaning of

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§ 1445(c).

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Although the Ninth Circuit has not issued any controlling precedent on the meaning of

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“arising under” in § 1445(c), all courts to have addressed the issue agree that “arising under”

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in § 1445 has the same meaning as it does in 28 U.S.C. § 1331. “Arising under” in the § 1331

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context means that “it is apparent from the face of the complaint either that (1) a federal law

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creates the plaintiff’s cause of action; or (2) if a state law creates the cause of action, a federal law

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that creates a cause of action is a necessary element of the plaintiff’s claim.” Virgin v. Cnty. of San
Luis Obispo, 201 F.3d 1141, 1142-43 (9th Cir. 2000). “Importing that definition to § 1445(c), a

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United States District Court
Northern District of California

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civil action ‘arises under’ a state’s workers’-compensation law when the worker’s-compensation

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law creates the plaintiff’s cause of action or is a necessary element of the claim.” Ramirez v. Saia

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Inc., No. 2:14-CV-04590-ODW, 2014 WL 3928416, at *2 (C.D. Cal. Aug. 12, 2014).

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Here, Labor Code § 3852 creates plaintiff’s cause of action, and is part of California’s

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workers’ compensation law. See Zurich American Ins. Co. v. General Motors Corp., 242 F. Supp.

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2d 736, 738 n.3 (E.D. Cal. 2003) (explaining that “Under California law, a cause of action for

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subrogation is available only where the legislature expressly provides that right,” and remanding

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subrogation claim (citations omitted)). Therefore, plaintiff’s cause of action arises under state

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workers’ compensation law and is not removeable. 28 U.S.C. § 1445(c).

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Defendant makes two arguments in support of retaining jurisdiction in the district court.

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First, defendant argues that the test in Humphrey v. Sequentia, 58 F.3d 1238, 1246 (8th Cir. 1995),

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which Zurich relies on, has not been adopted in this circuit. Although defendant is correct that the

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Ninth Circuit has not adopted the Humphrey test, under the Ninth Circuit’s test laid out in Virgin

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the court finds that the case arises under California’s workers’ compensation laws. Virgin, 201

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F.3d at 1142-43.

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Second, defendant argues that under Gunn v. Minton, 133 S. Ct. 1059 (2013) the case does

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not arise under workers’ compensation laws. Defendant first cites San Francisco Bay Area Rapid

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Transit Dist. v. Gen. Reinsurance Corp, which applied Gunn, but that case involved a breach of
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contract claim, and notes that a subrogation claim would not be removable. No. 14-CV-01866-

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JSC, 2014 WL 2960015 at *2 n.2 (N.D. Cal. June 30, 2014). Gunn also confirms that the analysis

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in Virgin remains correct: “For statutory purposes, a case can ‘aris[e] under’ federal law in two

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ways. Most directly, a case arises under federal law when federal law creates the cause of action

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asserted.” Gunn, 133 S. Ct. at 1064. Here, as discussed, Labor Code § 3852 creates the cause of

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action and therefore the case arises under that law. Accordingly, the court must remand the case

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per § 1445(c).

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III. ORDER

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United States District Court
Northern District of California

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For the reasons explained above, the court GRANTS the motion to remand.
IT IS SO ORDERED.
Dated: January 23, 2015
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RONALD M. WHYTE
United States District Judge

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