CORIZON HEALTH, INC. v. WHITEHEAD

Filing 13

MEMORANDUM AND ORDER THAT PLAINTIFF'S CROSS-MOTION TO REMAND IS GRANTED. THIS MATTER IS REMANDED TO THE PHILADELPHIA COURT OF COMMON PLEAS. DEFENDANT'S MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM IS DENIED AS MOOT; ETC.. SIGNED BY HONORABLE BERLE M. SCHILLER ON 10/26/17. 10/26/17 ENTERED AND E-MAILED, COPY TO MD.(jl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CORIZON HEALTH, INC.,
Plaintiff,
v.
JOHN T. WHITEHEAD,
Defendant.

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CIVIL ACTION

No. 17-1807

MEMORANDUM
Schiller, J.

October 26, 2017

According to Corizon Health, Inc., it overpaid one of its nurses, John Whitehead, to the sum
of close to $30,000. Corizon sued Whitehead in state court, alleging a claim for breach of contract
and a claim for unjust enrichment and seeking reimbursement for the alleged overpayment.
Whitehead removed the case to this Court. He argues that this Court has subject matter jurisdiction
because Corizon’s claims are preempted by federal law and therefore the Corizon complaint includes
a federal question. Presently before the Court is Whitehead’s motion to dismiss Corizon’s complaint
as well as Corizon’s motion to remand. For the reasons that follow, the Court grants the motion to
remand and denies as moot the motion to dismiss.

I.

BACKGROUND
John Whitehead is a nurse who had worked for Corizon Health in the City of Philadelphia

Correctional facilities. (Compl. ¶ 5.) Whitehead worked for Corizon from August 1, 2013 through
June 1, 2015. (Id. ¶ 11.) According to Corizon, “[d]uring that timeframe, Corizon Health mistakenly
paid [Whitehead] time and one-half (1½) his regular hourly rate of pay, including shift differentials,
for hours that the terms and conditions of employment provided were straight time hours.” (Id. ¶ 12.)

Whitehead worked a modified weekend schedule of two sixteen hour shifts on Saturday and Sunday
and was paid for thirty-six hours at a straight time rate, including differentials. (Id. ¶ 13.) Corizon
also claims that it mistakenly paid Whitehead time and one-half his regular rate of pay for hours
worked that did not require payment of the increased rate. (Id. ¶ 14.) The Complaint then details the
specific overpayments made during the course of Whitehead’s employment. (Id. ¶¶ 15–97.) The
overpayments totaled $28,710.62. (Id. ¶ 98.) When confronted with the overpayments, Whitehead
denied any knowledge. (Id. ¶¶ 99–101.) Corizon disputes Whitehead’s ignorance. (Id. ¶¶ 105–13.)
Although the terms and conditions of Whitehead’s employment required that he inform Corizon of
any overpayments, he failed to do so. (Id. ¶¶ 114–15.) Whitehead refuses to return the overpayments.
(Id. ¶ 117.)
Corizon sued Whitehead for breach of contract and unjust enrichment, alleging that the terms
and conditions of Whitehead’s employment only allowed him overtime pay for hours worked in
excess of forty per week. (Id. ¶¶ 119–131.)
On April 20, 2017, Whitehead removed this litigation from the Philadelphia Court of
Common Pleas. In the notice of removal, Whitehead claims that prior to reaching an agreement
about the overpayments, Corizon fired Whitehead, “in violation of the National Labor Relations
Act.” Whitehead then grieved the firing as lacking just cause under the collective bargaining
agreement. Whitehead argues that Corizon’s claim for overpayment arises under the National Labor
Relations Act, 29 U.S.C. § 185, which allows for violations of a collective bargaining agreement to
be brought “in any district court of the United States having jurisdiction of the parties, without
respect to the amount in controversy or without regard to the citizenship of the parties.”
On April 27, 2017, Whitehead filed a motion to dismiss for failure to state a claim.
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Whitehead claims that Corizon’s breach of contract and unjust enrichment claims are preempted by
federal law. (Mem. of Law in Supp. of Def. John Whitehead’s Mot. to Dismiss [Whitehead Mem.]
at 5–9.) Specifically, Whitehead asserts that Corizon’s claim cannot be adjudicated without
interpretation of the collective bargaining agreement, and therefore the claim is one arising under
the Labor Management Relations Act, which thus preempts Corizon’s state law claims. (Id.)
On May 19, 2017, Corizon filed a motion to remand. Corizon contends that this Court must
remand because it lacks subject matter jurisdiction. According to Corizon, its state law claims are
not preempted because the resolution of its claim does not require interpretation of the collective
bargaining agreement.

II.

DISCUSSION
Corizon brought state law claims against Whitehead. Whitehead contends, however, that

federal question jurisdiction exists because Corizon’s state law claims are preempted by the Labor
Management Relations Act (“LMRA”). The Court disagrees that the particular claims raised by
Corizon are preempted by federal law.
Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994). In order to hear a case, the court must have both personal jurisdiction over
all parties and subject matter jurisdiction over the litigation. Parties may neither waive subject matter
jurisdiction nor may they confer it upon the court by consent. United Indus. Workers v. Gov’t of V.I.,
987 F.2d 162, 168 (3d Cir. 1993).
The law grants subject matter jurisdiction to the federal district courts over “all civil actions
arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Moreover,
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a defendant may remove a civil action that could have originally been brought by the plaintiff in
federal court. See 28 U.S.C. § 1441(a) (“[A]ny civil action brought in a State court of which the
district courts of the United States have original jurisdiction, may be removed by the defendant or
the defendants . . . .”). Here, this Court has subject matter jurisdiction—and therefore Defendant can
remove—only if Plaintiff’s complaint presents a federal question. See Caterpillar Inc. v. Williams,
482 U.S. 386, 392 (1987).
It is the defendant’s burden to show the existence of federal jurisdiction. See Pullman Co.
v. Jenkins, 305 U.S. 534, 540 (1939); Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.
1990). In considering whether to remand, “[b]ecause lack of jurisdiction would make any decree in
the case void and the continuation of the litigation in federal court futile, the removal statute should
be strictly construed and all doubts should be resolved in favor of remand.” Abels v. State Farm Fire
& Cas. Co., 770 F.2d 26, 29 (3d Cir. 1995). If there is any doubt as to the propriety of removal, that
case should not be removed to federal court. Brown v. Francis, 75 F.3d 860, 865 (3d Cir. 1996)
(citing Boyer, 913 F.2d at 111; Abels, 770 F.2d at 29).
When the basis of removal is federal question jurisdiction, the propriety of the removal rests
on whether plaintiff’s well-pleaded complaint raises claims that arise under federal law. Caterpillar,
482 U.S. at 392. In those instances where federal law creates the cause of action, subject matter
jurisdiction is undeniable. In cases where state law creates the cause of action, however, a case may
only arise under federal law if the well-pleaded complaint demonstrates that the right to relief
“necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd. v.
Constr. Laborers Vacation Trust, 463 U.S. 1, 28 (1983); see also Merrell Dow Pharms., Inc. v.
Thompson, 478 U.S. 804, 808 (1986). If it appears that this Court lacks subject matter jurisdiction,
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the appropriate course of action is to remand the matter to the state court. See 28 U.S.C. § 1447(c)
(“If at any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.”).
A plaintiff may avoid federal jurisdiction by pleading claims that rely exclusively on state
law. Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 228 (3d Cir. 1995). However, there are
areas of federal law “so powerful as to displace entirely any state cause of action.” Franchise Tax
Bd., 463 U.S. at 23. Those areas completely preempt an area of state law such that “any claim
purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and
therefore arises under federal law.” Caterpillar, 482 U.S. at 393.
The LMRA is an area of law that completely preempts state law. The LMRA states that
lawsuits for violations of contracts between an employer and a union “may be brought in any district
court of the United States having jurisdiction of the parties, without respect to the amount in
controversy or without regard to the citizenship of the parties.” 29 U.S.C. § 185(a). This statute
“authorizes federal courts to fashion a body of federal law for the enforcement of these collective
bargaining agreements.” Textile Workers Union of Am. v. Lincoln Mills, 353 U.S. 448, 450–51
(1957). Accordingly, “the preemptive force of § 301 is so powerful as to displace entirely any state
cause of action for violation of contracts between an employer and a labor organization.” Franchise
Tax Bd., 463 U.S. at 23.
Clearly, Corizon’s request for a refund from a union employee raises the possibility of
preemption. But to determine whether the request is actually preempted, the Court must decide
whether the state law claim is: (1) founded directly on rights erected by collective-bargaining
agreements; or (2) substantially dependent on analysis of a collective bargaining agreement. See
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Caterpillar, 482 U.S. at 395; see also Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 210–11 (1985).
A state law claim is independent—and thus not preempted—if the claim can be resolved without
interpreting the collective bargaining agreement itself. Lingle v. Norge Div. of Magic Chef, Inc., 486
U.S. 399, 409–10 (1988).
Whitehead cannot point to any terms of the collective bargaining agreement that will
specifically require interpretation as a result of Corizon’s lawsuit. At most, Whitehead claims that
there are a number of payment codes that will need to be examined and that Corizon maintained a
complicated pay structure. (Whitehead Mem. at 8.) The Court is not persuaded by this argument.
Corizon’s state law claims have not alleged a violation of the collective bargaining agreement, and
it is not clear that Corizon’s claims will require review of the collective bargaining agreement, let
alone interpretation of it. See Castillo v. Long Beach Mem’l Med. Ctr., 132 F. Supp. 3d 1194, 1198
(C.D. Cal. 2015) (“Mere references to a CBA in a defense to a state law claim do not result in
preemption of state law claims.”). Here, the state court may need nothing more than a calculator to
adjudicate the claims. Whitehead’s termination is not at issue in this litigation, and the collective
bargaining agreement appears silent on how to handle overpayments.
Whitehead cites to Article 35 of the collective bargaining agreement to support his position.
(Whitehead’s Mem. of Law in Opp’n to Corizon’s Cross Mot. to Remand at 7–8.) This provision,
however, merely sets forth the grievance procedure to be employed in the event of a dispute between
the parties under the collective bargaining agreement. This is not what is occurring here. Corizon has
brought state law claims arising out of purported wage overpayments, an area not covered by the
collective bargaining agreement. Moreover, if Whitehead could just point to the grievance
procedures outlined in the collective bargaining agreement as a basis for preemption, it would be
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difficult to imagine what claims would not be preempted by federal law. The Court declines to take
such an expansive view of its jurisdiction here.
Because the Court concludes that Corizon’s claims against Whitehead are “independent of
a collective bargaining agreement,” the claims are not removable. See Antol v. Esposto, 100 F.3d
1111, 1117 (3d Cir. 1996).

III.

CONCLUSION
Corizon brought state law claims against Whitehead. An interpretation of the collective

bargaining agreement is not necessary to decide Corizon’s claim and therefore the state law claims
are not preempted. This Court does not have subject matter jurisdiction, and the motion to remand
is granted. An Order consistent with this Memorandum will be docketed separately.

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