Hofmann v. Virgin America Inc.

Filing 37

ORDER GRANTING 26 MOTION TO REMAND. Signed by Judge Beth Labson Freeman on 4/17/2017. (blflc4, COURT STAFF) (Filed on 4/17/2017)

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1 2 3 UNITED STATES DISTRICT COURT 4 NORTHERN DISTRICT OF CALIFORNIA 5 SAN JOSE DIVISION 6 7 IAN HOFMANN, Plaintiff, 8 VIRGIN AMERICA INC., Defendant. 11 United States District Court Northern District of California ORDER GRANTING MOTION TO REMAND v. 9 10 Case No. 16-cv-05178-BLF 12 13 Before the Court is Plaintiff Ian Hofmann (“Hofmann”)’s motion to remand on the ground 14 that there is no federal question jurisdiction. Mot. 2, ECF 26. For reasons stated below, the Court 15 GRANTS Hofmann’ motion. 16 I. BACKGROUND 17 On August 5, 2016, Hofmann, an airline pilot, filed a complaint in Superior Court of the 18 State of California, San Mateo County, alleging that Defendant Virgin America, Inc. (“Virgin”) 19 wrongfully terminated him in retaliation for complaints he raised about airline safety. Compl., 20 ECF 1-2. The following facts are taken from Hofmann’s complaint. 21 On April 9, 2014, Hofmann filed a report detailing his co-pilot’s non-conformance and 22 insubordination to the Aviation Safety Action Program (the “ASAP”), established by the Federal 23 Aviation Administration (“FAA”). Compl. ¶ 10. Through ASAP an Event Review Committee 24 (“ERC”) made up of representatives from the airline, the FAA, and employee associations review 25 submitted reports to identify potential threats to passengers’ safety and to develop corrective 26 actions for individuals. Id. ¶ 9. Virgin’s ERC dismissed Hofmann’s complaint on May 29, 2014, 27 claiming that it did not involve a legitimate safety issue. Id. ¶ 11. Hofmann challenged Virgin’s 28 handling of the complaint on several grounds and complained to Virgin’s ASAP program manager 1 and director of operations. Id. ¶ 12. On June 12, 2014, Hofmann stated his intent in an email to 2 “[make his] inquires to the FAA.” Id. ¶ 13. Virgin then allegedly began “a systematic campaign 3 of retaliation against him,” and terminated him on August 26, 2014, a few weeks after Hofmann 4 started aiding the FAA in an investigation of how Virgin handled the ASAP complaint. Id. ¶¶ 13- 5 14. Hofmann further claims that Virgin failed to follow the written policy of the agreement for his 6 termination pursuant to the pilots’ agreement with Virgin. Id. ¶ 15. During the almost eight years 7 he was an aircraft captain at Virgin, Hofmann was not an “at-will” employee as the pilots’ 8 agreement required Virgin to terminate a pilot only upon established “just cause.” Id. ¶¶ 7-8. Hofmann filed a state court complaint asserting the following four causes of actions: 9 wrongful termination in violation of public policy, retaliation against an employee for disclosing 11 United States District Court Northern District of California 10 information to a government agency in violation of California Labor Code § 1102.5, breach of 12 contract, and tortious breach of convenient of good faith and fair dealing. Id. ¶¶ 20-40. On September 8, 2016, Virgin removed the case to this Court, based on federal question 13 14 jurisdiction because Virgin’s liability “turns on federal law under the Federal Aviation Act of 15 1958.” Notice of Removal ¶¶ 8, 11, 12, ECF 1 (citing 28 U.S.C. § 1331). Hofmann now moves to 16 remand, arguing that there is no federal jurisdiction. Having carefully considered the submitted 17 papers, the Court GRANTS Hofmann’s motion and remands this action to state court for the 18 reasons discussed below. 19 20 II. LEGAL STANDARD Removal is proper where the federal courts have original jurisdiction over an action 21 brought in state court. 28 U.S.C. § 1441(a). Courts strictly construe the removal statute against 22 removal jurisdiction. E.g., Provincial Gov’t of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 23 1087 (9th Cir. 2009); Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031, 1034 (9th 24 Cir.2008). “A defendant seeking removal has the burden to establish that removal is proper and 25 any doubt is resolved against removability.” Luther, 533 F.3d at 1034 (citation omitted); see also 26 Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir.2009) (“[A]ny doubt about 27 the right of removal requires resolution in favor of remand.”). 28 Under 28 U.S.C. § 1331, federal courts have original jurisdiction over civil actions “arising 2 1 under the Constitution, laws, or treatises of the United States.” Federal question jurisdiction “is 2 determined, and must exist, as of the time the complaint is filed and removal is effected.” Strotek 3 Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129, 1131 (9th Cir. 2002). Removal pursuant to § 4 1331 is governed by the “well-pleaded complaint rule,” which provides that federal question 5 jurisdiction exists only when “a federal question is presented on the face of plaintiff’s properly 6 pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). 7 III. 8 9 10 DISCUSSION The issue before this Court is whether there is original federal question jurisdiction to support the removal of this case from state court. According to Hofmann, Virgin overstates the scope of preemption and the FAA does not United States District Court Northern District of California 11 completely preempt the state law claims asserted in the complaint. Mot. 4, ECF 26. Specifically, 12 Hofmann contends that the Ninth Circuit has made it clear that Congress does not occupy the field 13 of employment law in the aviation context. Id. (citing Ventress v. Japan Airlines, 747 F.3d 716, 14 722 (9th Cir. 2014)). Hofmann further argues that the wrongful termination and the whistleblower 15 statutes do not fall within the zone of preemption as they do not interfere with the federal 16 regulatory scheme for airlines. Mot. 5-7 (citing Ulysse v. AAR Aircraft Component Servs., 841 F. 17 Supp. 2d 659, 676 (E.D.N.Y. 2012); Hamilton v. United Airlines, Inc., 960 F. Supp. 2d 776, 784 18 (N.D. Ill. 2012)) 19 In opposing this motion, Virgin argues that the FAA completely preempts Hofmann’s state 20 law claims so the “well-pleaded complaint rule” does not apply. Opp’n 4. Specifically, Virgin 21 contends that Hofmann’s complaint is a “backdoor challenge” to Virgin’s determination of his 22 qualification and fitness and “necessarily depends on resolution of substantial questions of federal 23 law.” Id. at 5. 24 Pursuant to the well-pleaded complaint rule, “absent diversity jurisdiction, a case will not 25 be removable if the complaint does not affirmatively allege a federal claim.” Beneficial Nat’l 26 Bank v. Anderson, 539 U.S. 1, 6 (2003). The Court’s evaluation is generally restricted to review 27 of the complaint and does not include consideration of extrinsic evidence. An “independent 28 corollary to the well-pleaded complaint rule” is “the complete pre-emption doctrine.” Caterpillar, 3 1 482 U.S. at 393 (internal quotation marks and citation omitted). That doctrine posits that there are 2 some federal statutes that have such “extraordinary pre-emptive power” that they “convert[] an 3 ordinary state common law complaint into one stating a federal claim for purposes of the well- 4 pleaded complaint rule.” Retail Prop. Trust v. United Bhd. of Carpenters & Joiners of Am., 768 5 F.3d 938, 947 (9th Cir. 2014) The Court first evaluates whether there is complete preemption of Hofmann’s claims. The 7 “complete preemption” doctrine “applies in select cases where the preemptive force of federal law 8 is so ‘extraordinary’ that it converts state common law claims into claims arising under federal law 9 for purposes of jurisdiction.” K2 Am. Corp. v. Roland Oil & Gas, LLC, 653 F.3d 1024, 1029 (9th 10 Cir. 2011) (citing Holman v. Laulo-Rowe Agency, 994 F.2d 666, 668 (9th Cir. 1993)). “Once an 11 United States District Court Northern District of California 6 area of state law has been completely preempted, any claim purportedly based on that pre-empted 12 state law is considered, from its inception, a federal claim, and therefore arises under federal law.” 13 K2 Am., 653 F.3d at 1029 (citing Caterpillar, 482 U.S. at 393). There are only a handful of 14 “extraordinary” situations where even a well-pleaded state law complaint will be deemed to arise 15 under federal law for jurisdictional purposes. Holman, 994 F.2d at 668. The test is whether 16 Congress clearly manifested intent to convert state law claims into federal-question claims. Id. 17 The United States Supreme Court has identified only three federal statutes whose preemptive force 18 is extraordinary: (1) The Labor Management Relations Act (LMRA), 29 U.S.C. § 185(a), Avco 19 Corp. v. Aero Lodge No. 735, 390 U.S. 557, 558-62 (1968); (2) the Employee Retirement Income 20 Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq., Metro. Life Ins. Co. v. Taylor, 481 U.S. 21 58, 66 (1987); and (3) §§ 85 and 86 of the National Bank Act, 12 U.S.C. §§ 85-86, Beneficial Nat. 22 Bank v. Anderson, 539 U.S. 1, 11 (2003).1 See Wayne v. DHL Worldwide Express, 294 F.3d 1179, 23 1183 (9th Cir. 2002); Reply 1-2, ECF 31. 24 In contrast, “ordinary preemption” will not support removal jurisdiction if a plaintiff 25 chooses to frame his claim based solely on state law, and preemption is raised only as a defense by 26 1 27 28 A possible additional instance of complete preemption may be found in Oneida Indian Nation v. County of Oneida, which concerned an ejectment action based upon Indian title. 414 U.S. 661, 677 (1974). 4 1 the defendant. Metro. Life, 481 U.S. at 63; Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 2 1244 (9th Cir. 2009) (holding that the lower court erred in finding the Railway Labor Act subject 3 to “complete” rather than “ordinary” preemption). Under “ordinary preemption,” Congress 4 preempts state law as the substantive law of the case, but does not preempt state remedies and does 5 not deprive state courts of jurisdiction. See Retail Prop. Trust, 768 F.3d at 947-48 (comparing 6 complete preemption to defensive, or ordinary, preemption and discussing “express” and 7 “implied” preemption as types of ordinary preemption). “The fact that a defendant might 8 ultimately prove that a plaintiff’s claims are preempted under [federal law] does not establish that 9 they are removable to federal court.” Caterpillar, 482 U.S. at 398. 10 Recognizing that no courts have held that the Federal Aviation Act of 1958 (the “FAA”) United States District Court Northern District of California 11 completely preempts state law claims such as the ones Hofmann asserts here, Virgin urges this 12 Court to make a finding of complete preemption. The Court, however, finds no support for 13 Virgin’s argument for removal jurisdiction based on complete preemption. Virgin’s arguments for 14 removal jurisdiction focus solely on its defenses. But “a case may not be removed to federal court 15 on the basis of a federal defense, including the defense of preemption, even if the defense is 16 anticipated in the plaintiff’s complaint, and even if both parties concede that the federal defense is 17 the only question truly at issue.” Caterpillar, 482 U.S. at 393. As such, Virgin’s application of 18 defensive or ordinary preemption is not an adequate ground for removal jurisdiction. 19 Virgin’s reliance on Ventress v. Japan Airlines is misplaced and Virgin unsuccessfully 20 attempts to borrow findings by the Ninth Circuit in a case limited to defensive preemption to 21 establish complete preemption here. 747 F.3d 716, 720 (9th Cir. 2014). The Ninth Circuit in 22 Ventress examined the doctrine of “implied preemption,” a type of ordinary and defensive 23 preemption, in a case concerning a former flight engineer for Japan Airlines (“JAL”) who had 24 filed state-law statutory and common-law retaliation claims against JAL in federal court. Id. at 25 719-20. The plaintiff alleged that he was subject to unnecessary psychiatric evaluations after he 26 made a report regarding the fitness of a JAL pilot. Id. at 719. Finding implied preemption, the 27 court reasoned that because the FAA occupies “the field of pilot qualifications, including the 28 medical fitness of airmen, federal law forecloses [the plaintiff’s] state law claims, which [were] 5 little more than backdoor challenges to JAL’s safety-related decisions.” Id. at 722. However, the 2 Ventress court explicitly stated that “Congress has not occupied the field of employment law in the 3 aviation context and that the FAA does not confer upon the agency the exclusive power to regulate 4 all employment matters involving airmen.” Id. at 722-23. As a matter of fact, the Ventress court 5 was not confronted with the issue of complete preemption or removal jurisdiction, because the 6 complaint was filed in the federal court and federal jurisdiction was not based on complete 7 preemption. Ventress v. Japan Airlines, 828 F. Supp. 2d 1166, 1167 (D. Haw. 2011); see also 8 Retail Prop. Trust, 768 F.3d at 949 (finding that in a case that pleads a federal claim, thus 9 conclusively establishing federal jurisdiction, preemption of individual state law claims can only 10 be considered under the doctrine of defensive preemption); Montalvo v. Spirit Airlines, 508 F.3d 11 United States District Court Northern District of California 1 464, 470 (9th Cir. 2007) (analyzing implied preemption in a case concerning an airline’s failure to 12 warn passengers of the risk of developing deep vein thrombosis, without being presented issues of 13 complete preemption or removal jurisdiction). Thus, although Ventress analyzes similar issues 14 regarding the preemptive effect of the FAA on state law employment claims, it is not persuasive 15 authority in the realm of complete preemption. 16 Other courts squarely addressing the issue of whether the FAA completely preempts state 17 law claims have rejected arguments similar to Virgin’s. In Bagley v. Teirstein, the plaintiff sued a 18 pilot on state law personal injury claims arising from a plane crash. No. 15-2396, 2016 WL 19 5818567, at *1 (S.D. Cal. Oct. 5, 2016). The defendant removed the case from state court based 20 on federal question jurisdiction arguing that the allegations concerned his compliance with the 21 Federal Aviation Regulations (“FAR”). Id. In granting the motion to remand, the court held that 22 plaintiff’s “state law negligence claims are not subject to complete preemption as a result of [the] 23 reference to the FAR in the Complaint.” Id. at *4. In reaching that conclusion, the court noted 24 “that Congress did not intend the FAA to preempt all state law claims.” Id. (citing Gilstrap v. 25 United Air Lines, Inc., 709 F.3d 995, 1004 (9th Cir. 2013)) 26 In Kinzer v. Allegiant Air, LLC, the plaintiff, also a pilot, sued his former airline employer 27 for wrongful discharge, defamation, and intentional infliction of emotional distress, based on 28 events stemming from an emergency landing and a passenger evacuation from his plane. No. 156 1 02306, 2016 WL 3176570, at *1 (D. Nev. June 1, 2016). The defendant removed the case to 2 federal court, arguing federal question jurisdiction and relying on cases similarly proffered by 3 Virgin here. Id. at *2. The Kinzer court pointed out that “[a]ll of these cases involved defensive 4 field preemption in the dispositive-motion context; none touched on the distinct, jurisdictional 5 concept of complete preemption.” Id. The court thus found that “[c]ollectively, these cases 6 simply [held] that state standards of care may be preempted when a given area is subject to 7 pervasive federal regulations.” Id. Accordingly, the court granted the motion to remand. Id. at 8 *4. 9 Virgin also tries to cobble together some of the conclusions by the Ninth Circuit in Ventress and a district court in Yates v. Superior Air Charter, LLC, in an attempt to win a 11 United States District Court Northern District of California 10 complete preemption argument. No. 15-00847, 2015 WL 4464806, at *1 (C.D. Cal. July 20, 12 2015). As discussed above, Ventress fails to support federal question jurisdiction in this case 13 because the Ventress court did not consider complete preemption and in fact, also noted that “the 14 FAA does not confer upon the agency the exclusive power to regulate all employment matters 15 involving airmen.” 747 F.3d at 722-23. In Yates, the court also rejected the defendants’ reliance 16 on Ventress, finding that the holding in Ventress was narrow and distinguishable. 2015 WL 17 4464806 at *2-3. Similar to Hofmann, the plaintiff pilot in Yates alleged that his employment was 18 wrongfully terminated by defendants after he sent written complaints to the National 19 Transportation Safety Board and the manufacturer of an aircraft that crashed. Id. at *1. The court 20 granted the motion to remand, noting that the complaint presented no facts showing that the 21 “defendants’ decision concerned Plaintiffs [sic] fitness” and no fact showing that a “factfinder will 22 need to ‘to intrude upon the federally occupied field of aviation safety by deciding questions of 23 pilot medical standards and qualifications.’” Id. at *3 (citing Ventress, 747 F.3d at 719). 24 Similarly here, Hofmann’s complaint does not affirmatively present any federal issue. While 25 Virgin urges this Court to consider its anticipated defenses to support removal, that argument may 26 be more successful at a later stage when Virgin can request the proper court to consider defensive 27 preemption but the argument is not successful here on jurisdictional grounds. Without complete 28 preemption, and the lack of any federal claim affirmatively raised in Hofmann’s complaint, this 7 1 2 case provides no federal question jurisdiction. Separate from complete preemption, Virgin also argues that there is federal jurisdiction 3 because Hofmann’s claims qualify for the narrow circumstance carved out by Grable & Sons 4 Metal Prod., Inc. v. Darue Eng’g & Mfg., in which all the following factors are supposedly met: 5 that the claims “necessarily raise a stated federal issue, actually disputed and substantial, which a 6 federal forum may entertain without disturbing any congressionally approved balance of federal 7 and state judicial responsibilities.” Opp’n 5 (citing 545 U.S. 308, 314 (2005)). In Grable, the 8 petitioner brought a quite title action, alleging that the Internal Revenue Service did not properly 9 serve the notice before seizing its property. 545 U.S. at 310. Finding that the case warranted removal jurisdiction, the court reasoned that “[w]hether Grable was given notice within the 11 United States District Court Northern District of California 10 meaning of the federal statute [was] an essential element of its quiet title claim, and the meaning 12 of the federal statute [was] actually in dispute; it appear[ed] to be the only legal or factual issue 13 contested in the case.” Id. at 315. The court also noted the meaning of the federal law tax 14 provision belongs in federal court. Id. Underscoring that all these factors must be met for federal 15 jurisdiction to lie, the court further stated that “federal jurisdiction demands not only a contested 16 federal issue, but a substantial one, indicating a serious federal interest in claiming the advantages 17 thought to be inherent in a federal forum.” Id. at 313. 18 This case is distinguishable from Grable, because first, whether Virgin violated or 19 complied with the FAA regulations is not a necessary element to any of Hofmann’s claims. 20 Rather, Virgin is raising federal questions only as a defense against Hoffmann’s claims. Virgin 21 actually acknowledges that a factfinder may not have to determine whether the FAA statute or 22 regulation was violated in order to decide whether Hofmann reasonably believed that Virgin 23 violated the FAA. Opp’n 7. Second, Hofmann’s claims do not meet Grable’s “substantial” 24 requirement, as his claims do not turn on a pure issue of law like Grable. The substantiality 25 inquiry looks to the “importance of the issue to the federal system as a whole” and pure issues of 26 law are more likely to be substantial than “fact-bound and situation specific” inquiries. Gunn v. 27 Minton, 133 S. Ct. 1059, 1066 (2013); Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 28 677, 700 (2006). Although evaluating Hofmann’s reasonable belief as to whether Virgin violated 8 1 the FAA may involve some federal statutory interpretation, no authority supports the proposition 2 that the merits of Hofmann’s retaliation claim would turn solely on federal statutory interpretation 3 in the same way Grable’s quiet title claim did. See also Empire, 547 U.S. at 700-01 4 (distinguishing from Grable as a case that presented a pure issue of law and holding that federal 5 jurisdiction does not encompass health-plan carrier’s action for reimbursement claims, which was 6 “fact-bound and situation-specific”); Kinzer, 2016 WL 3176570, at *3 (finding that the plaintiff’s 7 claims do not fall in the narrow Grable exception to confer federal jurisdiction). Because an 8 interpretation of the FAA regulations is not necessary to the resolution of Hofmann’s claims and 9 that the federal issue raised by Virgin is not “substantial,” this case does not meet all the factors 10 listed in Grable and no federal jurisdiction is invoked. Accordingly, the Court finds that Virgin has not met its burden to establish that removal is United States District Court Northern District of California 11 12 proper and GRANTS the motion to remand. 13 14 IV. ORDER 15 For the foregoing reasons, IT IS HEREBY ORDERED that: 16 1. The motion to remand is GRANTED. 17 2. The Clerk shall REMAND this case to San Mateo County Superior Court. All 18 other matters are TERMINATED and VACATED, and the Clerk shall close this file. 19 20 21 22 Dated: April 17, 2017 ______________________________________ BETH LABSON FREEMAN United States District Judge 23 24 25 26 27 28 9

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