Heldt v. The Guardian Life Insurance Company of America

Filing 32

ORDER Regarding Subject Matter Jurisdiction. Court ordered the parties to show cause as to why it should not remand Plaintiff's remaining claims to state court re 29 Order to Show Cause. Court concludes it lacks the ability to remand these cl aims and orders Defendant to respond to Plaintiff's amended pleading. Defendant The Guardian Life Insurance Company of America ordered to answer to Plaintiff's First Amended Complaint by 6/12/2017. Signed by Judge Cynthia Bashant on 6/5/2017. (jah)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

SOUTHERN DISTRICT OF CALIFORNIA

10
11

JAMES HELDT,
Plaintiff,

12
13
14
15

Case No. 16-cv-00885-BAS-NLS

v.

ORDER REGARDING SUBJECT
MATTER JURISDICTION

GUARDIAN LIFE INSURANCE
COMPANY OF AMERICA,
Defendant.

16
17

This action arises out of Defendant Guardian Life Insurance Company of

18

America allegedly disclosing Plaintiff James Heldt’s confidential medical

19

information without his consent. Previously, the Court exercised jurisdiction over

20

this case because it determined Plaintiff’s claim for breach of an employee benefit

21

plan was completely preempted by the Employee Retirement Income Security Act of

22

1974 (“ERISA”). (ECF No. 24.) The Court also dismissed this claim with leave to

23

amend. (Id.) Plaintiff then filed a First Amended Complaint, but he declined to amend

24

his breach of contract claim or plead a claim under ERISA. (See ECF No. 25.) Rather,

25

Plaintiff’s amended pleading eliminates the breach of contract claim that provided a

26

basis for federal question jurisdiction under ERISA’s complete preemption doctrine.

27

(See id.) Consequently, the Court ordered the parties to show cause as to why it

28

should not remand Plaintiff’s remaining claims to state court. (ECF No. 29.) As
–1–

16cv0885

1

explained below, the Court concludes it lacks the ability to remand these claims and

2

therefore orders Defendant to respond to Plaintiff’s amended pleading.

3

Under 28 U.S.C. § 1441(a), a defendant may remove to federal court “any civil

4

action brought in a State court of which the district courts of the United States have

5

original jurisdiction.” “If at any time before final judgment it appears that the district

6

court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. §

7

1447(c). This remand provision, however, does not require the court to remand state

8

law claims if the basis for federal jurisdiction is eliminated before trial following

9

removal. See Albingia Versicherungs A.G. v. Schenker Int’l Inc., 344 F.3d 931, 936

10

(9th Cir. 2003) (“Where removal was proper, but the federal question claim is

11

defeated on the merits, the district court nevertheless may in its discretion retain

12

supplemental jurisdiction over the state law claims.”), amended at 350 F3d 916.

13

Rather, the court has “discretion either to retain jurisdiction to adjudicate the

14

[supplemental] state claims or to remand them to state court.” Harrell v. 20th Century

15

Ins. Co., 934 F.2d 203, 205 (9th Cir. 1991); accord Carlsbad Tech., Inc. v. HIF Bio,

16

Inc., 556 U.S. 635, 639 (2009).

17

That said, the court does not have discretion to remand state law claims if there

18

is an independent basis for subject matter jurisdiction over the claims—such as

19

diversity jurisdiction. See Williams v. Costco Wholesale Corp., 471 F.3d 975, 977

20

(9th Cir. 2006) (per curiam); see also, e.g., Ramirez v. Bank of Am. Corp., No. CV

21

09-07788 DDP SSX, 2009 WL 5184480, at *1 (C.D. Cal. Dec. 22, 2009); Charles

22

Alan Wright et al., Federal Practice and Procedure § 3739 (4th ed. 2017)

23

(“Nevertheless, the exercise of jurisdiction over claims supported by an independent

24

basis of federal subject-matter jurisdiction in removed cases ordinarily is mandatory,

25

so that discretionary remand of such claims ordinarily is prohibited.”). Further, after

26

“a case has been properly removed, the district court has jurisdiction over it on all

27

grounds apparent from the complaint, not just those cited in the removal notice.”

28

Williams, 471 F.3d at 977. In addition, “post-removal pleadings must be treated just
–2–

16cv0885

1

as they would be in a case originally filed in federal court.” Id. Thus, if an amended

2

pleading in a properly removed case presents “an independent jurisdictional basis for

3

the state law claims,” the district court has “no discretion to remand these claims to

4

state court.” Id.

5

In this case, Defendant argues for the first time in its response to the Court’s

6

order to show cause that diversity jurisdiction provides an independent basis for

7

subject matter jurisdiction over Plaintiff’s remaining state law claims. (ECF No. 30.)

8

To support this position, Defendant provides a stipulation between the parties that

9

“the amount in controversy” in this case “exceeds the sum or value of $75,000.” (ECF

10

No. 30-2.)1 Defendant also submits that it is incorporated in the State of New York,

11

and the company’s principal place of business is also in New York because that is

12

where Defendant’s “senior management . . . direct, control, and coordinate” its

13

activities. (Mineo Decl. ¶ 1, ECF No. 30-3.)

14

The Court agrees that diversity provides a basis for jurisdiction over Plaintiff’s

15

remaining state law claims in his First Amended Complaint. The issue before the

16

Court is not whether jurisdiction existed at the time of removal—the Court already

17

concluded removal was proper based on complete preemption under ERISA. Rather,

18

now that Plaintiff has filed an amended pleading and has eliminated the claim that

19

served as a basis for federal question jurisdiction, the Court must determine whether

20

an independent basis for jurisdiction over Plaintiff’s remaining claims currently

21

exists. See Williams, 471 F.3d at 977 (“Any post-removal pleadings must be treated

22

just as they would be in a case originally filed in federal court.”). It does. The parties

23

agree that the amount in controversy exceeds $75,000, and there is complete diversity

24

of citizenship because Plaintiff is a citizen of California and Defendant is only a

25
26
27
28

Defendant also includes with its response a settlement communication from Plaintiff’s
counsel indicating Plaintiff believes the amount in controversy significantly exceeds $75,000. (See
Nalty Decl. ¶ 1, Ex. A, ECF No. 30-6.)
1

–3–

16cv0885

1

citizen of New York. (See Mineo Decl. ¶ 1; First Am. Compl. ¶¶ 1–2.) Thus, the

2

requirements for diversity jurisdiction are satisfied. See 28 U.S.C. § 1332(a); see also,

3

e.g., Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). Because the Court has

4

diversity jurisdiction over the state law claims asserted in Plaintiff’s First Amended

5

Complaint, the Court has “no discretion” to decline to exercise jurisdiction over and

6

“remand these claims to state court.” See Williams, 471 F.3d at 977.

7

Further, Plaintiff’s objection to Defendant’s response to the Court’s order to

8

show cause does not change this outcome. Plaintiff argues Defendant’s response

9

improperly raises “issues already decided by the Court,” given that the Court

10

previously forecast that it would remand Plaintiff’s remaining state law claims if he

11

filed a pleading that did not raise a federal issue. (ECF No. 31.) The Court

12

acknowledges this inconsistency. But the parties did not raise the issue of diversity

13

jurisdiction in their prior motions regarding subject matter jurisdiction, and the Court

14

similarly did not examine the issue until it was considering remanding the claims

15

presented in Plaintiff’s First Amended Complaint. Recognizing that it may have

16

diversity jurisdiction over Plaintiff’s remaining claims, the Court issued an order to

17

show cause in lieu of remanding Plaintiff’s claims sua sponte. Now that diversity

18

jurisdiction has been established, the Court “has a virtually unflagging obligation to

19

exercise the jurisdiction conferred upon [it].” See Williams, 471 F.3d at 977 (internal

20

quotation marks omitted). Accordingly, notwithstanding that the Court previously

21

forecast otherwise, the Court will not remand the claims raised in Plaintiff’s First

22

Amended Complaint.

23
24
25

In light of the foregoing, the Court ORDERS Defendant to file a response to
Plaintiff’s First Amended Complaint no later than June 12, 2017.
IT IS SO ORDERED.

26
27

DATED: June 5, 2017

28
–4–

16cv0885