Whelchel v. Regus Management Group, LLC
Filing
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Judge Nathaniel M. Gorton: ORDER entered. MEMORANDUM AND ORDER: "In accordance with the foregoing, 1) plaintiff's motion for remand (Docket No. 9 ) is ALLOWED, 2) plaintiff's motion for attorney's fees (Docket No. 9 ) is DENIED. So ordered." (Moore, Kellyann)
United States District Court
District of Massachusetts
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v.
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REGUS MANAGEMENT GROUP, LLC
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Defendant.
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PATRICIA WHELCHEL
Plaintiff,
Civil Case No.
12-11369-NMG
MEMORANDUM & ORDER
GORTON, J.
Plaintiff Patricia Whelchel ("Whelchel") commenced this
action against her former employer Regus Management Group, LLC
("Regus") at the Massachusetts Commission Against Discrimination
("the MCAD") in 2008.
Welchel alleges that Regus discriminated
against her based on her age in violation of Mass. Gen. Laws ch.
151B.
Defendant attempted to “remove” the case to this Court in
July, 2012.
Currently before the Court are plaintiff's motions
to remand the case to the MCAD and for attorneys fees.
I.
Background
A.
Factual Background
According to the complaint, Whelchel worked for HQ Business
Centers ("HQ") from 1988 to 1992, when she was laid off.
In
1994, she returned to the company at the request of then-owner
Bill Van Loan and continued to work for HQ for another decade.
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In 2004, Regus assumed management of HQ and implemented a
reorganization plan.
That plan eliminated Whelchel's position
and led to her termination in May, 2008 at age 49.
The day she
was terminated, Whelchel learned that her position had not been
eliminated and, instead, a younger employee with significantly
less experience was promoted to fill the vacant position.
B.
Procedural History
Whelchel commenced this action in the MCAD in 2008.
July, 2011, the MCAD issued a Notice of Dismissal.
In
Whelchel
appealed that decision and in January, 2012, the MCAD reversed
itself and entered a finding of Probable Cause.
Whelchel submitted a settlement proposal.
In March, 2012,
In June, 2012, after
conciliation efforts failed, the MCAD discontinued its
investigation of the complaint and referred the matter for
adjudication, i.e., determined that Whelchel could sue.
In July, 2012, Regus filed and served a “Notice of Removal”
to this Court pursuant to 28 U.S.C. § 1332.
Whelchel now moves
to remand the case to the MCAD on the grounds that the agency is
not a state court from which an action may be removed under 28
U.S.C. §§ 1441 and 1446.
In the alternative, Whelchel argues
that the removal was untimely.
Welchel also is currently pursuing an action before the
Equal Employment Opportunity Commission ("EEOC"), a federal
agency.
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II.
Motion for Remand
A.
Legal Standard
Under 28 U.S.C. 1446(b) and 1441(a) only an action in "state
court" may be removed to federal court.
Although state
administrative proceedings are generally not removable, in rare
cases an action before a state agency may be properly removed if
stringent removal requirements are met.
Sousa v. Chrysler Motors
Corp., No. 86-2694-W, 1986 WL 507 (D. Mass. Dec. 2, 1986).
The
party seeking removal bears the burden of showing that removal is
proper.
Danca v. Priv. Health Care Sys., Inc., 185 F.3d 1, 4
(1st Cir. 1999).
To determine whether an action commenced in a state agency
may be removed, the district court applies a "functional test"
that evaluates 1) the state agency's procedures and enforcement
powers, 2) whether the locus of traditional jurisdiction over the
subject matter is state or federal and 3) the respective state
and federal interests in the subject matter and in the provision
of a forum.
Volkswagen de P.R., Inc. v. P.R. Labor Relat. Bd.,
454 F.2d 38, 44 (1st Cir. 1972).
Numerous other courts have
since either explicitly adopted the Volkswagen test or applied a
very similar functional test.
E.g. Sun Buick, Inc. v. Saab Cars
USA, Inc., 26 F.3d 1259, 1264 (3d Cir. 1994)(applying similar
functional test); Rockville Harley-Davidson v. Harley-Davidson
Motor Co., 217 F. Supp. 2d 673, 676 (D. Md. 2002) (collecting
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cases).
Although the Volkswagen Court laid out a three part
test, subsequent cases applying Volkswagen have relied on only
the first and third prongs.
E.g. Sousa, 1986 WL 507 at *1.
Furthermore, both state agencies and federal courts are
traditional loci for discrimination claims so the second prong is
not determinative in this case.
The Court, therefore, declines
to address the second prong.
B.
Application
1.
Agency Functions and Powers
Under the first prong of the Volkswagen test the court
evaluates whether the state agency exercises powers and utilizes
procedures that are sufficiently judicial in nature to constitute
a “state court” for removal purposes.
The MCAD does provide an
adjudicative format similar to that of a state court.
Parties
engage in discovery under rules akin to the Massachusetts and
Federal Rules of Civil Procedure.
(2012).
804 Mass. Code Regs. § 1.19
The MCAD must “follow the rules of evidence then
prevailing in the courts of the Commonwealth.”
Regs. § 1.21(11) (2012).
proceedings.
804 Mass. Code
Oral argument is permitted at MCAD
804 Mass. Code Regs. § 1.21(14) (2012).
Furthermore, parties, witnesses and counsel are directed to
conduct themselves according to the standards of decorum observed
in the state courts.
804 Mass. Code Regs. § 1.21(3) (2012).
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On the other hand, weighing strongly against a finding of
state court status is the fact that the MCAD cannot enforce its
own judgments.
Sousa, 1986 WL 507 at *2 (agency “unlike a state
court” where it lacked enforcement power).
Instead, the MCAD
must appeal to the Massachusetts Superior Courts to ensure
compliance with its orders.
See Mass. Gen. Laws ch. 151B
§ 6 (1987).
Courts applying the functional test have found “uncourtlike”
powers to be “even more significant” than “courtlike” powers.
DeLallo v. Teamsters Local Union No. 776, No. CIV.A. 94-3875,
1994 WL 423873, at *4 (E.D. Pa. Aug. 12, 1994).
Thus, an
agency’s non-judicial functions are also weighed heavily against
a finding of state court status.
Volkswagen, 454 F.2d at 44.
The MCAD exercises significant non-judicial powers in the course
of its adjudicative proceedings.
For example, the MCAD exercises
significant investigatory powers not possessed by a court and at
times its role is prosecutorial.
In fact, the MCAD actually
functions as the prosecutor for any discrimination claim pending
before the agency.
Mass. Gen. Laws ch. 151B, § 5 (2003)(“MCAD,
and not the complainant... prosecutes the claim”).
In addition
to investigating discrimination complaints filed by individuals,
the MCAD also possesses the power to initiate investigations
without an individual complainant.
Mass. Gen. Laws ch. 151B,
§ 5 (2003); 804 Mass. Code Regs. § 1.10 (2012).
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The Volkswagen Court also held, however, that when an agency
lacks rule-making power it is more like a court. 454 F.2d at 44.
Subsequent cases have also found that an agency that lacks
legislative powers is more “court-like.”
*2.
Sousa, 1986 WL 507, at
Nevertheless, the MCAD is charged with significant
legislative duties, including adopting, promulgating, amending
and rescinding rules to prevent discrimination. See Mass. Gen.
Laws ch. 151B, § 3(5) (2012).
These legislative functions weigh
heavily against a determination that the MCAD is a state court.
In opposing remand, Regus relies on Brunson v. Wall, in
which the Supreme Judicial Court held that the MCAD is a “court
of competent jurisdiction” on the grounds that it is properly
authorized to adjudicate discrimination claims.
340 (Mass. 1989).
541 N.E.2d 338,
Regus’ reliance is misplaced, however, because
in Brunson the Court evaluated an MCAD proceeding to determine
whether preclusive effect could be given to unreviewed decisions
by the MCAD. 541 N.E. 2d at 339.
The Court did not find that the
MCAD was a state court for federal removal purposes.
Furthermore, the Brunson court considered only the MCAD’s
judicial nature in the proceeding at issue, whereas the
Volkswagen test requires evaluation of the “judicial nature of
the [agency] in general.”
Sun Buick, Inc. v. Saab Cars USA,
Inc., 26 F.3d 1259, 1262 (3rd Cir. 1994).
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In the rare instances in which removal from a state agency
has been granted, federal courts have emphasized that the agency
was considered judicial under state law.
1259, 1263 (3d Cir. 1994).
E.g. Sun Buick, 26 F.3d
Indeed, the Volkswagen court noted
that its determination that state court status was appropriate
was based, in part, on the fact that the Puerto Rico Labor
Relations Board had previously been described as “quasi-judicial”
by the state court. 454 F.2d at 44.
Furthermore, the United
States Supreme Court has held that removal from a county court
was proper, even though the county court was charged with some
administrative duties, because it was a judicial tribunal and a
court of record as ordained by the state constitution.
Madisonville Traction Co. v. Saint Bernard Mining Co., 196 U.S.
239, 250-251 (1905).
In contrast, the statute that established
the MCAD does not construe it as a court of record or as part of
the state’s judicial structure. Mass. Gen. Laws ch. 6 § 56
(2007); ch. 151B § 3 (2012).
Instead, ch. 151B
authorizes suits in court, in order to free the [MCAD] to
work for the remedy best designed to eliminate and prevent
discrimination.
804 Mass. Code Regs. § 1.02 (2012).
That regulation indicates
that the primary function of the MCAD is administrative rather
than judicial and that the legislature did not intend the MCAD to
operate as a state court.
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2.
Federal Interest
Courts applying the Volkswagen test have considered the
third prong to be the most important test.
Rockville Harley-
Davidson v. Harley-Davidson Motor Co., 217 F. Supp. 2d 673, 679
(D. Md. 2002) (collecting cases).
Under that prong the court
considers whether there is sufficient federal interest in the
case to warrant removal to a federal forum.
In order to justify
removal, the federal court must have a greater interest than
simply providing a forum for diverse parties.
Such an interest
is negligible compared to the substantial state interest in
“administering a state program and preserving the oversight role
of a state agency”. Id. at 680.
Removal may be appropriate in cases where federal law is
directly applicable.
E.g. Nationwide Mut. Ins. v. N.H. Dept. of
Labor, No. 07-CV-241-PB, 2007 WL 2695387 (D.N.H. Sept. 12,
2007)(removal appropriate because ERISA expressly preempts state
law claim).
Regus contends that there is no functional
difference between Whelchel’s state law claim before the MCAD and
the federal claim pending before the Equal Employment Opportunity
Commission (“EEOC”) and that such a similarity creates sufficient
federal interest in adjudicating the MCAD claim in a federal
forum.
This is not, however, a case where removal is appropriate
because the claim will ultimately be decided under federal law
regardless of the forum.
See Floeter v. C. W. Transp., Inc., 597
-8-
F.2d 1100, 1102 (7th Cir. 1979).
The only claim pending in this
matter is the Chapter 151B claim.
Thus, there is a very strong
state interest but little or no federal interest in the case.
3.
Timeliness of Removal
Because the court finds that removal is unwarranted, it need
not reach the issue of whether the removal was timely.
III. Motion to Award Attorneys Fees
A.
Legal Standard
A district court may award attorneys' fees incurred as a
result of an order of remand because of improper removal.
28
U.S.C. § 1447(c)(“an order remanding the case may require payment
of just costs and actual expenses, including attorneys' fees”).
Federal Rule of Civil Procedure 11 authorizes a court to assess
“reasonable attorneys' fees and other expenses” against an
“attorney, law firm or party” who fails to conduct a reasonable
inquiry into the underlying law and facts before filing.
The
court is to conduct an objective evaluation of the reasonableness
of the pleading under the circumstances.
Ballard's Serv. Ctr,
Inc. v. Transue, 865 F.2d 447, 449 (1st Cir. 1989).
Attorneys
fees are appropriate when a party has “acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.”
F. D. Rich
Co., Inc. v. U.S. for Use of Indus. Lumber Co., Inc., 417 U.S.
116, 129 (1974).
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B.
Application
Because the Volkswagen test requires the court to conduct a
fact intensive evaluation of the specific agency and because no
federal court has previously evaluated the MCAD under the
Volkswagen test, it was not settled law whether removal from the
MCAD is permitted.
Consequently, the Court finds that the
defendant’s removal was not frivolous or vexatious and declines
to award attorney’s fees.
ORDER
In accordance with the foregoing,
1) plaintiff’s motion for remand (Docket No. 9) is ALLOWED,
2) plaintiff’s motion for attorney’s fees (Docket No. 9) is
DENIED.
So ordered.
/s/ Nathaniel M. Gorton
Nathaniel M. Gorton
United States District Judge
Dated November 8, 2012
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