Wagner v. Team Health Holdings, Inc.
Filing
16
MEMORANDUM OPINION & ORDER: (1) GRANTING pla's 11 motion to remand; (2) DENYING AS MOOT dft's 10 motion to dismiss; (3) this matter is REMANDED to the Fayette Circuit Court. Signed by Judge Joseph M. Hood on 7/21/14.(KJR)cc: COR, Fayette Circuit Court; Modified text on 7/21/2014 (KJR).
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION at LEXINGTON
LORI WAGNER, individually and
on behalf of all others
similarly situated,
)
)
)
)
)
)
)
)
)
)
)
Plaintiff,
v.
TEAM HEALTH HOLDINGS, INC.,
Defendant.
Civil Action No.
5:14-cv-176-JMH
MEMORANDUM OPINION
AND ORDER
***
This matter is before the Court upon Defendant’s Motion to
Dismiss [D.E. 10] and Plaintiff’s Motion to Remand. [D.E. 11].
The motions being fully briefed, and the Court being otherwise
sufficiently advised, these motions are now ripe for review.
I. Procedural Background
Plaintiff,
individually
and
on
behalf
of
all
others
similarly situated, filed her complaint on April 10, 2014 in
Fayette Circuit Court. [D.E. 1-1 at 4]. Plaintiff made claims of
breach of contract, conversion, violation of KRS 337.385, fraud
and
fraud
in
the
inducement,
negligence,
and
a
claim
for
punitive damages. [D.E. 1-1 at 7-13]. On May 5, 2014, Defendant
filed a Notice of Removal, alleging the Court has jurisdiction
based upon federal-question jurisdiction and the Class Action
Fairness Act (CAFA). [D.E. 1]. On May 7, 2014, Defendant made a
motion to reassign the matter to the undersigned, which was
granted on May 8, 2014. [D.E. 7]. On May 27, 2014, Defendant
filed a Motion to Dismiss, [D.E. 10], and, on June 4, 2014,
Plaintiff filed a Motion to Remand. [D.E. 11].
II. Standard of Review
A. Plaintiff’s Motion to Remand
“[A]ny civil action brought in a State court of which the
district courts of the United States have original jurisdiction,
may
be
district
removed
by
the
defendant
court
of
the
United
or
States
the
for
defendants,
the
to
the
district
and
division embracing the place where such action is pending.”
U.S.C. § 1441(a).
28
“The notice of removal of a civil action or
proceeding shall be filed within 30 days after the receipt by
the defendant, through service or otherwise, of a copy of the
initial pleading.”
Id. § 1446(b)(1). “[I]f the case stated by
the initial pleading is not removable, a notice of removal may
be filed within 30 days after receipt by the defendant, through
service or otherwise, of a copy of an amended pleading, motion,
order or other paper from which it may first be ascertained that
the case is one which is or has become removable.”
Id.
1446(b)(3).
Only state-court actions that originally could
have been filed in federal court may be removed to
federal court by the defendant. . . . The presence or
absence of federal-question jurisdiction is governed
by the ‘well-pleaded complaint rule,’ which provides
that federal jurisdiction exists only when a federal
2
§
question is presented on the face of the plaintiff’s
properly pleaded complaint.
Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing
Gully v. First Nat’l Bank, 299 U.S. 109, 112-13 (1936)).
“[A]
case may not be removed to federal court on the basis of a
federal defense, including the defense of pre-emption. . . .”
Id. at 393 (alteration in original).
However, “[o]n occasion,
the Court has concluded that the pre-emptive force of a statute
is
so
‘extraordinary’
common-law
complaint
that
into
it
one
‘converts
stating
a
an
ordinary
federal
purposes of the well-pleaded complaint rule.’”
state
claim
for
Id. (quoting
Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)).
“Once
an area of state law has been completely pre-empted, any claim
purportedly
based
on
that
pre-empted
state
law
claim
is
considered, from its inception, a federal claim, and therefore
arises under federal law.”
Id. (citing Franchise Tax Bd. of
Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1,
24 (1983)).
“The party seeking removal bears the burden of establishing
its right thereto.”
Her Majesty the Queen in Right of the
Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th
Cir. 1989) (citing Wilson v. Republic Iron & Steel Co., 257 U.S.
92, 97-98 (1921)).
“The removal petition is to be strictly
3
construed,
with
all
doubts
resolved
against
removal.”
Id.
(citations omitted).
B. Defendant’s Motion to Dismiss
A party may present the defense of failure to state a claim
upon which relief can be granted through motion. Fed. R. Civ. P.
12(b)(6). A motion to dismiss pursuant to Federal Rule of Civil
Procedure
12(b)(6)
complaint.
The
tests
Court
the
views
sufficiency
the
of
the
plaintiff’s
in
the
light
complaint
most
favorable to the plaintiff and must accept as true “well-pleaded
facts” set forth in the complaint.
Morgan v. Church’s Fried
Chicken, 829 F.2d 10, 12 (6th Cir. 1987) (citations omitted). “A
complaint must contain either direct or inferential allegations
with respect to all material elements necessary to sustain a
recovery under some viable legal theory.” Weiner v. Klais & Co.,
108
F.3d
86,
88
(6th
Cir.
1997)
(citations
omitted).
If
it
appears beyond doubt that the plaintiff’s complaint does not
state
facts
sufficient
to
“state
a
claim
to
relief
that
is
plausible on its face,” then the claims must be dismissed.
Bell
Atl.
also
Corp.
v.
Twombly,
550
U.S.
544,
570
(2007);
see
Weisbarth v. Geauga Park Dist., 499 F.3d 538, 542 (6th Cir.
2007). Further, the complaint must establish “enough fact to
raise
a
evidence”
reasonable
to
show
expectation
the
Twombly, 550 U.S. at 556.
that
averments
are
discovery
factually
will
reveal
plausible.
While the Court presumes all factual
4
allegations to be true and makes all reasonable inferences in
favor
of
Plaintiffs,
the
Court
does
not
have
to
“accept
unwarranted factual inferences.” Total Benefits Planning Agency,
Inc. v. Anthem Blue Cross & Blue Shield, 552 F.3d 430, 434 (6th
Cir.
2008)
(citations
omitted).
If
the
“complaint
does
not
contain any factual allegation sufficient to plausibly suggest”
each essential element of the averred violation, it does not
contain enough factual content to nudge the claim across the
line
from
conceivable
to
plausible,
and
must
be
dismissed.
Ashcroft v. Iqbal, 556 U.S. 662, 680-83 (2009).
III. Analysis
The parties’ motions focus on the nature of Plaintiff’s
claims and how they relate to two cases previously before this
Court.
Therefore,
to
properly
account
for
the
parties’
arguments, a short history of these cases must be recounted. In
the first of the cases, Berera v. Mesa Medical Group, PLLC, the
Court determined that Berera’s state law claims amounted to a
tax refund suit, which was preempted by 26 U.S.C. § 7422 and
required Berera to seek recovery before the Internal Revenue
Service (IRS). Berera v. Mesa Medical Group, PLLC, No. 5:13-cv294-JMH (E.D. Ky.), at [D.E. 20]. In the second of the cases,
Ednacot v. Mesa Medical Group, PLLC, the Court determined that
Ednacot’s
state
law
claims
sought
recovery
of
federal
taxes
excessively withheld, as well as claims for recovery of state
5
taxes
and
employee
expenses
excessively
withheld.
Thus,
the
Court dismissed the claims relating to federal taxes, finding
they should be pursued before the IRS, and remanded the claims
related to state taxes and employee expenses. Ednacot v. Mesa
Medical
Group,
PLLC,
No.
5:14-cv-96-JMH
(E.D.
Ky.
2014),
at
[D.E. 24]. These cases did not involve either party currently
before
the
filings
Court.
that
the
As
Plaintiff
claims
unequivocally
currently
before
the
states
in
its
Court
have
no
relation to the claims made against Mesa and seek recovery for
actions taken after the alleged tortious activity of Mesa, the
Court has no basis for federal jurisdiction because Plaintiff’s
well-pleaded complaint states only state law causes of action.
Accordingly,
for
the
reasons
which
follow,
the
Court
lacks
complaint,
taken
with
jurisdiction and must remand.
A. Motion to Remand
1. Federal-Question Jurisdiction
The
face
of
the
well-pleaded
Plaintiff’s assertions in her filings before this Court, does
not present a basis for this Court to assert federal-question
jurisdiction. “Federal jurisdiction exists only when a federal
question is presented on the face of the plaintiff’s properly
pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386,
392 (1987) (citing Gully v. First Nat’l Bank, 299 U.S. 109, 11213 (1936)). A matter may not be removed to federal court on the
6
basis of a federal defense, but “[o]nce an area of state law has
been completely pre-empted, any claim purportedly based on that
pre-empted
state
law
is
considered,
from
its
inception,
a
federal claim, and therefore arises under federal law.” Id. at
393. Defendant contends that Plaintiff’s state law claims are
preempted by 26 U.S.C. § 7422, and therefore, this Court has
federal-question jurisdiction.
Defendant’s argument that Plaintiff’s claims are completely
preempted by § 7422 is based upon Defendant’s contention that
Plaintiff’s claims seek recovery for claims previously dismissed
by this Court in Berera v. Mesa Medical Group, PLLC, No. 5:13cv-294-JMH, and Ednacot v. Mesa Medical Group, PLLC, 5:14-cv-96JMH. The plaintiffs in Berera and Ednacot sought recovery for
wages allegedly withheld from their paychecks by Mesa. In those
cases, it was alleged that the excessive withholding was equal
to
Mesa’s
federal
payroll
tax
obligations.
Thus,
this
Court
reasoned that the plaintiffs were seeking a tax refund because
it was alleged that the full 15.3% of FICA taxes, rather than
the
legally
prescribed
7.65%,
was
being
withheld
from
the
plaintiffs’ paychecks. Section 7422 completely preempts state
law claims seeking a tax refund, and requires a party to file a
claim for a tax refund with the IRS before seeking relief in a
United States court.
See
26 U.S.C. § 7422. Accordingly, the
7
Court dismissed all of the plaintiffs’ state law claims seeking
a federal tax refund.
Unlike Berera and Ednacot, Plaintiff does not argue, and
there
is
no
evidence,
that
Plaintiff
is
seeking
to
recover
excessive federal tax withholdings. Defendant argues that the
Complaint
shows
Plaintiff
is
essentially
seeking
to
recover
monies withheld by Mesa. The Complaint itself is unclear on this
point. However, the filings before this Court make clear that
Plaintiff is only attempting to recover damages after a contract
addendum Defendant presented to Plaintiff and other former Mesa
employees on March 24, 2014. [D.E. 11 at 12] (“[T]he tortious
conduct that is the subject of this action began at the delivery
of the contract addendum on March 24, 2014.”); [D.E. 11 at 19]
(“Wagner is filing suit for the actions occurring after the FICA
adjustment ceased.”); [D.E. 11 at 33] (“Wagner is not asking
Team
Health
to
bear
responsibility
for
MESA’s
massive
wage
conversion.”).
Essentially, all of Plaintiff’s claims seek to recover for
a breach of contract. According to Plaintiff, she is attempting
to
recover
contractually
contract
with
only
agreed
Mesa
the
difference
upon
and
rate
the
in
rate
in
wages
the
original
included
in
between
the
employment
the
contract
addendum with Team Health. See [D.E. 12 at 4] (“Team Health
breached the terms of the contract by unilaterally reducing the
8
contractual amount through a mandatory contract addendum.”). In
fact, as noted above, Plaintiff went as far as to state that she
“is
filing
adjustment
Plaintiff’s
excessively
suit
for
ceased.”
the
[D.E.
allegations,
withheld
actions
11
after
the
FICA
at
33].
Thus,
is
she
taxes.
occurring
not
seeking
to
recover
Health
was
properly
Rather,
Team
according
to
accounting for all taxes, but the wage being taxed was lower
than that contractually agreed upon. Therefore, unlike Berera
and Ednacot, this Court has no basis to find that Plaintiff
seeks the recovery of excessively withheld federal taxes. In
Berera and Ednacot, the plaintiffs explicitly argued that they
were seeking recovery of taxes. That is not the case here. Thus,
the
Court
finds
that
this
is
a
breach
of
contract
action
properly governed by state law. Therefore, the Court does not
have federal-question jurisdiction over this action.
2. CAFA Jurisdiction
Defendants
also
argue
that
the
Court
has
jurisdiction
pursuant to CAFA, contained in 28 U.S.C. § 1332. In this action,
jurisdiction will exist under CAFA if the amount in controversy
exceeds $5 million, any member of the class of Plaintiffs is a
citizen of a state that is different than the state in which
Defendant resides, and there are at least 100 members in the
class. See 28 U.S.C. § 1332(d)(2)(A), (d)(5)(B).
9
Without discussing the other requirements, the Court finds
that
the
amount
in
controversy
has
not
been
proved
by
a
preponderance of the evidence. See Smith v. Nationwide Prop. &
Cas. Ins. Co., 505 F.3d 401, 404 (6th Cir. 2007) (“CAFA does not
alter the fact that the removing defendant has the burden of
demonstrating,
by
a
preponderance
of
the
evidence,
that
the
amount in controversy requirement has been met.” (quoting Brown
v. Jackson Hewitt, Inc., No. 1:06-cv-2632, 2007 WL 642011, at *2
(N.D. Ohio Feb. 27, 2007) (internal quotation marks omitted))).
Defendant attempts to prove the amount of damages by relying on
an affidavit sworn by Mesa’s Chief Executive Officer, Lawrence
Kraska, and produced in the Berera and Ednacot matters. [D.E. 13
at 22-23]. However, Plaintiff claims that this document will not
be used to support her damage calculation. [D.E. 11 at 21] (“The
damages from this fraudulent misrepresentation are measured in
terms of Plaintiffs’ resulting economic loss, not the figures in
the
Kraska
affidavit
was
affidavit.”).
submitted
to
Rather,
the
Plaintiff
Court
to
claims,
provide
this
background
information. Because the Kraska affidavit was sworn on September
9, 2013, [D.E. 1-1 at 16], and Plaintiff asserts she is only
seeking
damages
after
the
March
24,
2014
contract
addendum
presented by Team Health, the Kraska affidavit, concerning only
actions taken by Mesa, would appear to be irrelevant to this
action. Thus, based on Plaintiff’s statements before this Court,
10
the amount Mesa may or may not have excessively withheld from
its employees’ paychecks is irrelevant to the matter at hand.
[D.E. 11 at 33] (“Wagner is not asking Team Health to bear
responsibility for MESA’s massive wage conversion.”). The Kraska
affidavit is the only evidence Defendant has provided to prove
the amount in controversy. Accordingly, the Court cannot find,
by a preponderance of the evidence, that the class action seeks
damages
exceeding
$5
million,
and
the
Court
cannot
assert
jurisdiction over this matter pursuant to CAFA. See Ramsey v.
Kearns, No. 12-cv-06-ART, 2012 WL 602812, at *1 (E.D. Ky. Feb.
23, 2012) (“A defendant’s claims of the amount in controversy
must
be
supported
by
competent
proof,
which
can
include
affidavits, documents, or interrogatories.” (internal quotation
marks omitted) (citations omitted))).
Therefore, the Court finds that, at this time, the case is
not removable because there is no evidence that the Court has
jurisdiction over Plaintiff’s claims. In short, Defendant sought
to remove before it became apparent that this particular case
was
removable.
If
at
any
time
Plaintiff
seeks
to
recover
excessively withheld federal payroll taxes, either from a time
after the contract addendum of March 24, 2014 or for monies
allegedly withheld by Mesa, or if it becomes apparent that CAFA
jurisdiction exists, Defendant can re-file a notice of removal.
11
The removal clock has not yet started to tick for
[Defendant]. Therefore, by remanding this case, the
Court has not deprived [Defendant] of its only
opportunity to remove the case to federal Court.
[Defendant] will get another bite at the apple if and
when the evidence it obtains during discovery in the
state court reveals that [federal-question or CAFA
jurisdiction exists].
May v. Wal-Mart Stores, Inc., 751 F. Supp. 2d 946, 953 (E.D. Ky.
2010).
Contrary to Plaintiff’s allegations that ordinary diversity
jurisdiction has been waived, the Court also finds that the
removal clock has not started to tick for ordinary diversity
jurisdiction. Plaintiff’s complaint does not state the amount of
damages she seeks, [D.E. 1-1 at 4-14], and because Defendant
filed its notice of removal before any discovery could take
place,
it
has
not
yet
become
apparent
that
the
amount
in
controversy exceeds $75,000. Plaintiff alleges that the tortious
conduct started on March 24, 2014, see, e.g., [D.E. 11 at 12],
and that the Kraska affidavit is not being used to support a
damages calculation. [D.E. 11 at 20]. Thus, there has not been
“a copy of an amended pleading, motion, order or other paper
from which it may first be ascertained that the case is one
which
is
or
has
become
removable.”
28
U.S.C.
§
1446(b)(3).
Accordingly, the removal clock has not yet begun to tick. See
May, 751 F. Supp. 2d at 953 (“In other words, the 30-day clock
stands still ‘until the defendant receives discovery responses
12
showing
that
the
amount
in
controversy
exceeds
the
jurisdictional amount.’” (quoting King v. Household Fin. Corp.
II, 593 F. Supp. 2d. 958, 960 n.2 (E.D. Ky. 2009))).
B. Motion to Dismiss
As the Court has no basis to assert jurisdiction over this
matter, Defendant’s Motion to Dismiss must be denied as moot.
See Moir v. Greater Cleveland Reg’l Transit Auth., 895 F.2d 266,
269 (6th Cir. 1990) (“[W]e are bound to consider the 12(b)(1)
motion first, since the Rule 12(b)(6) challenge becomes moot if
this court lacks subject matter jurisdiction.”).
IV. Conclusion
Accordingly, for the foregoing reasons, IT IS ORDERED:
(1)
that Plaintiff’s Motion to Remand [D.E. 11] be, and
the same hereby is, GRANTED;
(2)
that Defendant’s Motion to Dismiss [D.E. 10] be, and
the same hereby is, DENIED AS MOOT;
(3)
that this matter be, and the same hereby is, REMANDED
to the Fayette Circuit Court.
This the 21st day of July, 2014.
13
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