Bowser v. CREE, Inc. et al

Filing 33

ORDER denying as moot 20 Motion to Dismiss for Failure to State a Claim and granting 23 Motion to Remand. Signed by District Judge Terrence W. Boyle on 1/17/2023. (Stouch, L.)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WESTERN DIVISION
No. 5:22-CV-134-BO

ROBERT BOWSER,
Plaintiff,

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V.

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CREE, INC., THE CREE INC.
SEVERANCE PAY GUIDELINES, THE
CREE INC. SEVERANCE PROGRAM,
THE AMENDED AND RESTATED
SEVERANCEPROGRAM, andCREE,
INC. IN ITS CAPACITY AS THE PLAN
ADMINISTRATOR OF THE CREE
SEVERANCE PAY GUIDELINES, CREE
INC. SEVERANCE PROGRAM and/or
AMENDED AND RESTATED
SEVERANCE PROGRAM,
Defendants.

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ORDER

This cause comes before the Court on plaintiff's motion to remand. Defendants have
responded, plaintiff has replied, and a hearing on the matter was held before the undersigned on
December 7, 2022, at Raleigh, North Carolina. Also pending is a motion by defendants to
dismiss plaintiffs fifth claim for relief, of which the parties subsequently stipulated dismissal. In
this posture, the motions are ripe for ruling. For the reasons that follow, the motion to dismiss is
denied as moot and the motion to remand is granted.
BACKGROUND
Plaintiff instituted this action by filing a complaint in the Superior Court for Wake
County, North Carolina. In his complaint, filed on July 12, 2019, plaintiff sought unpaid wages,
liquidated damages, and attorney fees under the North Carolina Wage and Hour Act. Plaintiff
alleges that his former employer, defendant Cree, Inc. , failed to pay him severance as agreed in a

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severance agreement and general release executed by the parties in September 20 I 8. Plaintiff
further alleged state law claims for breach of contract and unjust enrichment. See [DE 1-1 pp. 311].
Cree answered plaintiffs complaint raising a defense of complete preemption by the
Employment Retirement Income Security Act of 1974 (ERISA) as well as counterclaims. Id pp.
26-50. Plaintiff answered the counterclaims and the case proceeded through discovery. After the
close of discovery, Cree filed a motion for summary judgment based on ERISA preemption
grounds. [DE 24-2]. The Superior Court held that plaintiffs state law claims as well as Cree' s
ERISA preemption defense should proceed to trial. See [DE 24-6] . Plaintiff then sought to
amend his complaint to assert alternative claims under ERISA in the event that it be determined
after trial that his state law claims are preempted by ERISA. Id That motion was granted, and
plaintiff filed his amended complaint, adding the Cree ERISA defendants and two alternative
claims under ERISA, on March 21 , 2022. [DE 1-1 pp. 80-93]. Plaintiffs fourth claim for relief
alleges a claim for violation of Section 502(a)(l)(B) of ERISA, "alternatively and solely in the
event that Plaintiffs state claims are determined to be preempted by ERISA." Id pp. 87-90.
Plaintiffs fifth claim for relief alleges a claim for failing to comply with ERISA notice,
reporting, and record keeping requirements in the alternative to plaintiffs state law claims,
seeking penalties under Section 502(c)(l)(B) of ERISA. Id. p. 91.
On April 6, 2022, Cree removed plaintiffs action to this Court based upon its federal
question jurisdiction. [DE 1]. Defendants filed their answer and counterclaim against plaintiff on
April 20, 2022, and moved to dismiss plaintiffs fifth claim for relief on April 21 , 2022. On May
6, 2022, the parties stipulated to the dismissal of plaintiffs fifth claim for relief and plaintiff
moved to remand this case back to Wake County Superior Court.

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DISCUSSION
I.

Motion to dismiss.
As the parties have stipulated to the dismissal of plaintiffs fifth claim for relief,

defendants' motion to dismiss this claim [DE 20] is hereby DENIED AS MOOT.
II.

Motion to remand.
Removal of a civil action from state court is only proper where the federal district courts

would have original jurisdiction, 28 U.S.C. § 1441 , and it is the burden of the removing party to
show that jurisdiction lies in the federal court. Dixon v. Coburg Dairy, Inc., 369 F.3d 811 , 816
(4th Cir. 2004) (en bane). Removal jurisdiction must be construed strictly in light of federalism
concerns, and if jurisdiction in the federal district court is determined to be doubtful, remand is
required. Mulcahey v. Columbia Organic Chems. Co. , 29 F.3d 148, 151 (4th Cir. 1994). Federal
district courts have original jurisdiction over "all civil actions arising under the Constitution,
laws, or treaties of the United States." 28 U.S.C. § 1331.
Generally, whether the district courts have federal question jurisdiction "is governed by
the ' well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a
federal question is presented on the face of the plaintiffs properly pleaded complaint."
Caterpillar Inc. v. Williams, 482 U.S . 386, 392 (1987). A defendant may not remove a case on
the basis of a counterclaim or defense, but [a] complaint purporting to rest on state law .. . can
be recharacterized as one 'arising under' federal law if the law governing the complaint is
exclusively federal. " Vaden v. Discover Bank, 556 U.S. 49, 60-61 (2009) (emphasis omitted).
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 setting forth the claim for relief upon which such action or
proceeding is based, or within 30 days after the service of summons upon the
defendant if such initial pleading has then been filed in court and is not required
to be served on the defendant, whichever period is shorter. . .. [I]f the case stated

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by the initial pleading is not removable, a notice of removal may be filed within
thirty 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.
28 U.S .C. § 1446(b)(1);(3). A defendant may, however, waive its right to remove a case from
state court if it has evidenced a "clear and unequivocal intent to remain in state court, (though]
such a waiver should only be found in extreme situations." Grubb v. Donegal Mut. Ins. Co., 935
F.2d 57, 59 (4th Cir. 1991) (internal quotations and citation omitted).
Plaintiff argues that defendant Cree waived its right to removal by demonstrating a clear,
unequivocal intent to remain in state court. Plaintiff further argues that the notice of removal was
untimely, as defendant Cree had received a copy of the proposed amended complaint alleging
ERIS A claims more than thirty days before the notice of removal was filed.
The Court agrees that removal of this action was untimely and that by its actions Cree
waived its right to removal. In order to trigger the thirty-day clock for removal, a defendant must
be presented with either an initial pleading or an amended pleading, motion, or other paper
which provides a ground for removal. The Fourth Circuit construes § 1446(b)(3) broadly to
include the receipt, whether formal or informal, of any information by defendant which would
demonstrate that the case is removable to federal court. Northrop Grumman Tech. Servs. , Inc. v.

DynCorp Int '! LLC, 865 F.3d 181 , 186-87 (4th Cir. 2017).
In this case, the initial pleading contained the information required to put Cree on notice
that the case was removable. Complete preemption of a state law claim by ERISA has long been
recognized as a ground for removal to federal court. See, e.g. , Aetna Health Inc. v. Davila, 542
U.S . 200, 209 (2004). As early as the filing of its answer in Wake County Superior Court in
September 2019, Cree moved to dismiss plaintiffs Wage and Hour Act claim as "completely
preempted" by ERISA and further raised a defense of "complete" preemption under ERISA.
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Complete preemption by ERISA is,. as defendants recognize, distinct from conflict preemption
by ERISA, as conflict preemption provides merely a defense to a state law claim and thus is not
a proper ground for removal. See Darcangelo v. Verizon Commc 'ns, Inc., 292 F .3d 181 , 187 (4th
Cir. 2002). But, contrary to defendants' argument, Cree did not raise conflict preemption in its
answer or motion to dismiss - it alleged and argued that plaintiffs claim is completely
preempted by ERISA.
Rather than filing a notice of removal based upon complete preemption, Cree elected to
litigate in Wake County Superior Court and after the close of discovery Cree filed a motion for
summary judgment in which it again argued that plaintiffs claims are completely preempted by
ERISA. Though defendants argue that Cree risked a remand challenge had it removed the
original complaint, that is a risk Cree was required to weigh when it was put on notice that it had
a right to remove; indeed, if, as Cree has argued in the state court case, plaintiffs claims are
clearly preempted, then any risk of remand was arguably low.
Once a case is determined to be removable, the thirty-day time period begins to run.
While the Court is not required to determine when Cree subjectively knew there were grounds
for removal, Lovern v. Gen. Motors Corp., 121 F.3d 160, 162 (4th Cir. 1997), it is satisfied that
Cree' s answer and motion to dismiss is sufficient on its face to demonstrate that Cree was aware
it had grounds to remove plaintiffs complaint to federal court. Cree' s failure to remove this case
in 2019 once it was aware that it had a basis to remove due to complete ERISA preemption
means that its removal April 2022 was untimely. See also Waite v. Perfect Fit Indus., LLC, No.
317CV00373FDWDCK, 2017 WL 3741554, at *2 (W.D.N.C. Aug. 30, 2017) (holding, without
deciding whether ERISA preemption applied, that defendant started thirty-day time period for
removal by arguing complete ERISA preemption in answer). The Court further relies on Cree' s

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conduct, which included actively litigating this matter for a period of years, despite again raising
complete ERISA preemption in a motion for summary judgment, to amount to a waiver of its
right to removal based on its clear intent to remain in state court. See Northrup Grumman Tech.
Servs. , 865 F .3d at 188 (actively engaging in litigation for seven months despite knowledge that

grounds for removal existed waived defendant' s right to remove).
Cree additionally argues that the Cree ERISA defendants who were first named in the
amended complaint are new parties who, themselves, have a right to remove the case as of the
filing of the amended complaint. Removal requires the consent of each defendant that is a real
party in interest. 28 U.S.C. § 1441(a); Hartford Fire Ins. Co. v. Harleysville Mut. Ins. Co., 736
F.3d 255, 259 (4th Cir. 2013). Plaintiff has persuasively argued, and defendants have not
demonstrated otherwise, that the added Cree ERISA defendants are, in essence, nominal or
formal parties in that they are not legally distinguishable from Cree itself. See Hartford Fire Ins.
Co., 736 F.3d at 260. The newly added defendants do not, therefore, provide a basis for proper

removal.
In sum, Cree failed to timely remove this action based on the initial complaint and further
waived its right to removal by extensively participating in litigation despite having grounds for
removal. That plaintiff later amended the complaint to add alternative claims under ERIS A I did
not provide Cree with a new opportunity to remove the case. See Clark v. Unum Life Ins. Co. of
Am., 95 F. Supp. 3d 1335, 1356 (M.D. Fla. 2015). Finally, the addition of the nominal Cree

ERIS A defendants further did not provide Cree with an opportunity to remove. Accordingly,
Cree' s removal of the complaint was improper and remand of this matter to Wake County
Superior Court is required.
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The Court further notes that the state court may exercise jurisdiction over plaintiff's remaining
ERISA claim. See 29 U.S.C. § 1132(e)(l).
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CONCLUSION
For the foregoing reasons, defendants ' motion to dismiss [DE 20] is DENIED AS MOOT
and plaintiff's motion to remand [DE 23] is GRANTED. This action is hereby REMANDED to
Wake County Superior Court.

SO ORDERED, this

J!l_day of January 2023.

TE
NCE W. BOYLE
UNITED STATES DISTRICT JU

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