Combs v. Spring Creek Produce, LLC

Filing 23

MEMORANDUM AND OPINION as set forth in following order. Signed by Magistrate Judge H Bruce Guyton on 8/25/17. (ABF)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
JORDAN COMBS, doing business as
COMBS FARMS,

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Plaintiff,
v.
SPRING CREEK PRODUCE, LLC,
Defendant.

No. 3:17-CV-121-HBG

MEMORANDUM OPINION
This case is before the undersigned pursuant to 28 U.S.C. § 636(c), Rule 73(b) of the
Federal Rules of Civil Procedure, and the consent of the parties, for all further proceedings,
including entry of judgment [Doc. 19].
Now before the Court is Plaintiff’s Motion to Remand [Doc. 5]. The Defendant has
responded in opposition [Doc. 11] to the Motion. The parties appeared telephonically before the
Court on July 10, 2017, for a motion hearing. Attorney Thomas Leveille appeared on behalf of
the Plaintiff. Attorney Jason Klinowski appeared on behalf of the Defendant. Accordingly, for
the reasons more fully set forth below, the Plaintiff’s Motion [Doc. 5] will be GRANTED. This
case will be REMANDED to the Chancery Court of Grainger County, Tennessee.
I.

BACKGROUND
The Plaintiff filed the instant action in the Chancery Court of Grainger County, Tennessee.

[Doc. 1-2]. The Complaint alleges that the Plaintiff grows fruits and vegetables in Grainger
County. [Id. at ¶ 3]. The Defendant purchases vegetables and fruits and resells them to various
retailers. [Id. at ¶ 4]. The Complaint continues that the Defendant purchased produce from the
Plaintiff in October 2015. [Id. at ¶ 5]. Following this sale, the Plaintiff and the Defendant entered
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into an oral agreement in which the Defendant agreed to purchase produce from the Plaintiff during
the 2016 growing season. [Id. at ¶ 6]. The Complaint states that as part of the parties’ oral
agreement, the Defendant agreed to purchase and install at Combs Farms industrial walk-in
coolers, and the Defendant would receive a credit against purchases of produce for the expense of
the coolers. [Id. at ¶ 7]. The Complaint alleges that beginning in June 2016, the Defendant placed
two of its employees to work on the premises of Combs Farms to accept deliveries of produce into
the coolers. [Id. at ¶ 9]. The Complaint states that the Defendant’s representatives maintained
exclusive control over the coolers once the deliveries of produce began. [Id. at ¶ 11].
The Complaint alleges that Defendant’s representatives informed the Plaintiff that the
Defendant would pay a minimum of $1.00 per box over the United States Department of
Agriculture’s prices for each item of produce. [Id. at ¶ 15]. The Complaint continues that the
Plaintiff delivered the produce between June and October 2016. [Id.]. The Complaint states that
the Defendant began making payments to the Plaintiff in August 2016 and that the Defendant
received credit for all expenses related to the coolers. [Id. at ¶¶ 14, 16]. The Complaint alleges
that the Defendant began to fall behind on its payments and currently owes $626,850.10 for the
produce that Plaintiff delivered. [Id. at ¶¶ 17-18]. The Complaint requests that the Plaintiff be
awarded a money judgment against the Defendant in an amount up to and including $626,850.10
and that the Plaintiff be awarded pre-judgment and post-judgment interest. [Id. at 6].
Relevant to the instant Motion, the Defendant removed this action on April 3, 2017,
claiming that this Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1441, 1446.
[Doc. 1]. On May 2, 2017, the Plaintiff moved to remand this case.

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II.

POSITIONS OF THE PARTIES
The Plaintiff’s Motion [Doc. 5] asserts that the Court does not have jurisdiction under the

well-pleaded complaint rule and that the Plaintiff has only pled a state law cause of action. The
Plaintiff states that while the Notice of Removal asserts that the civil action arises under the
Perishable Agricultural Commodities Act of 1930 (“PACA”), the Complaint does not reference
PACA or any federal law. The Plaintiff argues that federal preemption provides an exception to
the well-pleaded complaint rule but that PACA, by its own terms, does not provide for preemption.
The Plaintiff asserts that there is no substantial federal question in this case that warrants removal.
The Plaintiff continues that the presence of a defense based on federal law is insufficient to confer
federal jurisdiction and will not provide a basis for removal. Further, the Plaintiff contends that
the reference to the United States Department of Agriculture (“USDA”) market report price in the
Complaint is simply a reference to a federal unit of measurement and would not require the state
court to interpret any provision of federal law. The Plaintiff continues that the artful pleading
doctrine does not apply to this case as a basis for bringing the case within federal question
jurisdiction. Finally, the Plaintiff states that he is entitled to attorney’s fees and costs upon remand
of this case to state court.
The Defendant responds [Doc. 11] that the well-pleaded allegations of the Complaint
invoke a federal claim under PACA. The Defendant disagrees with the Plaintiff’s characterization
of the Complaint as alleging a state cause of action for breach of oral contract and states that the
Complaint does not cite a cause of action. The Defendant continues that the substance of the
Complaint reveals allegations covered by PACA. The Defendant contends that the Complaint and
the calculation of the Plaintiff’s alleged damages involve the Court’s interpretation of federal

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claims. The Defendant states that the Complaint alleges a violation of a PACA-imposed duty.
Further, the Defendant argues that the true nature of the Plaintiff’s allegations arise under PACA.
The Defendant continues that even if the Court does not find that the Plaintiff’s wellpleaded allegations state a claim under PACA, several exceptions to the well-pleaded complaint
rule apply to invoke the Court’s jurisdiction. The Defendant states that PACA preempts state law
to the extent state law conflicts with PACA. In addition, the Defendant states that removal was
appropriate under the artful pleading doctrine. The Defendant also contends that the Complaint
raises substantial federal questions that justify removal. The Defendant argues that the cause of
action necessarily raises a disputed federal issue, the federal interest in resolving this PACA claim
is substantial, and that the Court’s exercise of jurisdiction would not disturb the balance of federal
and state court power. Finally, the Defendant asserts that costs and attorney’s fees are not
warranted in this case.
III.

ANALYSIS
The Court has considered the parties’ positions, and the Court finds the Plaintiff’s request

well-taken. As an initial matter, the Defendant asserts that the Complaint fails to cite a cause of
action. In several footnotes, the Defendant explains that it did not seek dismissal in state court
because motions to dismiss are not designed to correct inartfully worded pleadings. It is unclear
whether the Defendant is raising this issue in its Response. Given that the Court will remand this
case, however, the Court declines to address the Defendant’s argument.
As mentioned above, the Defendant argues that the well-pleaded allegations of the
Complaint invoke a federal claim under PACA. In addition, the Defendant asserts that even if the
Court does not find that the Plaintiff’s well-pleaded allegations state a claim under PACA, several

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exceptions to the well-pleaded complaint rule apply to invoke the Court’s jurisdiction. The Court
will discuss each of these arguments and then address the Plaintiff’s request for attorney’s fees.
A.

Well-Pleaded Complaint Rule

The Defendant asserts that the Plaintiff cannot avail himself of the well-pleaded complaint
rule because the Complaint is not “well-pleaded.” The Defendant continues that the substance of
the Complaint reveals allegations under PACA.
If the requirements for diversity jurisdiction are not met, a defendant may remove a case
to federal court if the complaint establishes federal question jurisdiction via the well-pleaded
complaint rule. Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987); Mikulski v. Centerior
Energy Corp., 501 F.3d 555, 560 (6th Cir. 2007). The well-pleaded complaint rule provides that
federal jurisdiction exists when the plaintiff presents a federal question on the face of the
complaint. Caterpillar Inc., 482 U.S. at 392. The well-pleaded complaint rule “makes the plaintiff
master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.”
Id. The burden of proving jurisdiction falls on the party seeking removal and that, due to
federalism concerns, removal statutes must be narrowly construed. Long v. Bando Mfg. of
America, Inc., 201 F.3d 754, 757 (6th Cir. 2000). Further, “[t]o remove a case as one falling within
federal-question jurisdiction, the federal question ordinarily must appear on the face of a properly
pleaded complaint; an anticipated or actual federal defense generally does not qualify a case for
removal.” Jefferson Cnty. Ala. v. Acker, 527 U.S. 423, 430-31 (1999).
Here, the Complaint does not reference any federal causes of action. The Defendant
emphasizes six allegations, arguing that they relate to PACA. [Doc. 11 at 3]. For instance, the
Defendant underscores the Plaintiff’s use of the term “grower” in the Complaint and states that
“grower” is defined by PACA. In addition, the Defendant asserts that the Plaintiff’s allegations

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utilize certain phrases that are defined by PACA. [Id. at 3-4]. The Court finds that simply using
terms that are defined by federal law does not equate to the Plaintiff alleging a violation of federal
law. The Defendant further asserts that the Plaintiff relies on the prices set by the USDA market
reports. The Court finds this argument not well-taken. As explained in Hill v. Pikeville Med. Ctr.,
Inc.:
As the Sixth Circuit said in a related context, “[i]f a case could be
deemed to ‘arise under’ federal law—and thereby invoke federal
jurisdiction—any time the litigation involves the interpretation of a
provision in the federal tax code,” then cases like Grable “would be
meaningless insofar as they attempt to define” the limits of such
jurisdiction. The same applies when a contract merely refers to a
provision in a federal regulation.
No. CV 16-276-ART, 2017 WL 690535, at *4 (E.D. Ky. Feb. 21, 2017) (quoting Mikulski, 501
F.3d at 572–73). The Defendant states that Hill is distinguishable from the instant matter. The
Defendant explains that in Hill, the only basis for removal was the fee schedule values were
determined by a federal program and that in the instant matter, there are multiple bases for removal.
As explained below, the Court disagrees. Accordingly, the Court finds that the Complaint does
not state a federal cause of action.
B.

Exceptions

There are several exceptions to the well-pleaded complaint rule, including (1) preemption,
(2) the artful pleading doctrine, and (3) the substantial-federal-question doctrine. Mikulski, 501
F.3d at 560. The Defendant argues that all three exceptions apply.
1. Preemption
The Defendant asserts that PACA preempts state law to the extent that state law conflicts
with PACA. The Defendant argues that the Plaintiff’s attempts to impose obligations and rights
in produce transactions conflict with the obligation and duties specified under PACA.

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The

Defendant states that PACA provides a comprehensive scheme defining the roles of growers,
dealers, brokers, and so forth and that PACA explains the duties and responsibilities of those
involved in buying and selling produce.

The Defendant asserts that given the absence of

controlling Tennessee law and the presence of a comprehensive statutory scheme that governs
every issue underlying the Complaint, federal preemption bars the state law claim.
The Supreme Court has provided for removal of a state court claim into federal court where
there is a federal statute that completely preempts the state law cause of action. Beneficial Nat.
Bank v. Anderson, 539 U.S. 1, 8 (2003). Complete preemption is only found when the relevant
federal statute provides the exclusive cause of action for the claim at issue and offers governing
procedures and remedies for that cause of action. Mikulski, 501 F.3d at 564. Due to this strict
requirement, the Supreme Court has only found complete preemption in three statutes: the Labor
Management Relations Act, ERISA, and the National Bank Act. See Dillon v. Medtronic, Inc.,
992 F. Supp. 2d 751, 758 (E.D. Ky. 2014). “[T]he Sixth Circuit has only expanded this doctrine
twice.”

Id. (citing Ritchie v. Williams, 395 F.3d 283, 286–87 (6th Cir. 2005) (Copyright

Act); Gibson v. Am. Bankers Ins. Co., 289 F.3d 943, 949–50 (6th Cir. 2002) (National Flood
Insurance Act)).
There are two other types of preemption: conflict preemption and implied preemption.
Conflict preemption occurs when a state law actually conflicts with a federal law.

Garcia v.

Wyeth-Ayerst Labs., 385 F.3d 961, 965 (6th Cir. 2004); Byars v. Greenway, No. 14-1181, 2014
WL 7335694, at *2 (W.D. Tenn. Dec. 19, 2014). Implied preemption occurs when a federal law
so thoroughly occupies a legislative field as to make a reasonable inference that Congress left no
room for States to supplement it. Garcia, 385 F.3d at 965.

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In the instant matter, the Court finds complete preemption inapplicable. PACA provides,
“[T]his section shall not in any way abridge or alter the remedies now existing at common law or
by statute, and the provisions of this chapter are in addition to such remedies.” 7 U.S.C. § 499e(b);
see also Jacobs Silver K Farms, Inc. v. Taylor Produce, LLC, 101 F. Supp. 3d 962, 971 (D. Idaho
2015) (“Other courts have likewise held that the broad remedial statement in 7 U.S.C. § 499e(b)
and the policy behind the statute support the finding that the rights and remedies available at
common law are preserved under PACA.”). The Defendant distinguishes Jacobs by asserting that
the discussion of PACA preemption was only in reference to whether additional state law claims
could be brought along with a PACA claim. [Doc. 11 at 10]. Here, however, the Plaintiff chose
to file a state claim, and the Court will not force the Plaintiff to litigate a claim that he did not file
under the guise of preemption.
With respect to conflict preemption, the Court notes that the Defendant does not explain
how state law conflicts with PACA, other than to assert, “PACA preempts any such state law
claim.” [Doc. 11 at 8]; see State Farm Bank v. Reardon, 539 F.3d 336, 342 (6th Cir. 2008)
(explaining that conflict preemption refers to circumstances “where compliance with both federal
and state regulations is a physical impossibility, or where state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of Congress”). The Defendant
has simply not explained how compliance with PACA and state law is a physical impossibility,
nor has it explained how state law is an obstacle to PACA’s objectives. See C.H. Robinson Co. v.
Global Fresh, Inc., No. CV-08-2002, 2010 WL 11515522, at *4 (D. Ariz. Jan. 22, 2010) (“Rather
than replacing traditional precepts of contract law, as a general matter, PACA creates an alternative
remedy.”).

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Further, with respect to implied preemption, the Defendant explains that PACA provides
“a comprehensive scheme governing every issue underlying Plaintiff’s complaint.” [Doc. 11 at
9]. Again, the Defendant does not explain how PACA’s “comprehensive scheme” governs any
issue raised in the Complaint. See Garcia, 385 F.3d at 965 (noting that the district court properly
noted that in “analyzing implied preemption, a court must begin with the assumption that a state
law is valid and should be reluctant to resort to the Supremacy Clause”). To be sure, the Defendant
emphasizes that the Complaint uses certain terms that are defined in PACA and alleges violations
of PACA-imposed duties. Such arguments, however, are insufficient in establishing that PACA
so thoroughly occupies a legislative field as to make a reasonable inference that Congress left no
room for States to supplement it. Accordingly, the Court does not find preemption.
2. Artful Pleading Doctrine
The Defendant asserts that removal is appropriate under the artful pleading doctrine. It
continues that the Plaintiff’s factual foundation of the purported state-law claim will center on the
rights and obligations provided for under PACA.
The artful pleading doctrine allows for removal to a federal court if the plaintiff “artfully
pleads state-law claims that amount to federal-law claims in disguise.” Ohio ex rel. Skaggs v.
Brunner, 629 F.3d 527, 530 (6th Cir. 2010); see also Swartz v. Oracle Corp., 787 F. Supp. 2d 686,
691 (N.D. Ohio 2011) (“This doctrine of ‘artful pleading’ does not convert legitimate state claims
into federal ones, but uncloaks the suit's federal character.”). However, the “artful pleading
doctrine does not apply whenever it is possible to construe a state-law theory as a federal one.”
Brunner, 629 F.3d 527. The purpose of the doctrine is to provide for removal in circumstances
where federal law completely preempts state law. Rivet v. Regions Bank of Louisiana, 522 U.S.
470, 471 (1998); see also Caterpillar Inc., 482 U.S. at 397 n. 11 (explaining that most cases confine

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this doctrine to areas of the law preempted by federal substantive law) (other citations omitted).
As explained in Dillon, “What, if any, independent work this doctrine does, however, remains a
mystery.” 992 F. Supp. 2d at 758; but see Berera v. Mesa Medical Group, 779 F.3d 352, 360 (6th
Cir. 2015) (explaining that preemption and the artful pleading doctrine are closely aligned but
separate exceptions). In addition, the “doctrine might also encompass ‘situations in which federal
issues are embedded within state law causes of action . . .’” Dillion, 992 F. Supp. 2d at 758
(quoting Wright & Miller § 3722.1).
The Court finds the artful pleading doctrine inapplicable.

See Magic Chef, Inc. v.

International Molders & Allied Workers Union, 581 F. Supp. 772, 776 (E.D. Tenn. 1983) (“The
fact that a plaintiff has both state and federal remedies does not mean that he must state his federal
claim.”). The Defendant has not sufficiently explained why the artful pleading doctrine applies
in this case, other than to assert, in a conclusory fashion, that Plaintiff’s purported state law claims
will center on the rights and obligations provided under PACA. Further, the Court notes that
PACA contains an explicit provision that it does not abridge or alter other remedies. See 7 U.S.C.
§ 499e(b); see also Mikulski, 501 F.3d at 563 (“Furthermore, neither this section of the statute nor
the Act itself contains any indication that Congress intended it to be the exclusive remedy for a
fraudulent overstatement of taxable dividend distributions, so the plaintiffs' claims do not
necessarily state a federal claim.”). Accordingly, the Court finds the Defendant’s argument not
well-taken.
3. Substantial Federal Question
The Defendant argues that the Plaintiff’s cause of action necessarily raises disputed federal
issues, the federal interest in resolving the PACA claim is substantial, and the Court’s exercise of
jurisdiction would not disturb the balance of federal and state court power.

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The Supreme Court has held that the cause of action must not only be a contested federal
issue but also a substantial one. Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg.
545 U.S. 308, 313 (2005). A substantial federal question is present only when a state-law claim
“turns on a disputed and substantial federal issue.” Brunner, 629 F.3d at 531. There are three
factors to consider with respect to the substantial federal question doctrine: (1) the claim must
necessarily raise a disputed federal issue, (2) there must be a substantial federal interest in the
issue, and (3) the exercise of jurisdiction must not disrupt the federal-state balance of judicial
responsibilities. Mikulski, 501 F.3d at 568.
As to the first factor, the Plaintiff does not state a federal issue in the Complaint. See [Doc.
1-2]. Furthermore, the loose relation to PACA, mentioned by the Defendant, focuses on
definitional and licensing concerns. Such concerns are not issues on which the Plaintiff’s claim is
based, and therefore, do not amount to a disputed federal issue in this case.
With respect to the second factor, the Supreme Court has recognized several aspects of an
issue that affect the substantiality of a federal interest, such as (1) whether it involves a federal
agency, and whether that agency’s compliance with the statute is in dispute, (2) whether the federal
question is important (non-trivial), (3) whether the court’s decision on that question will resolve
the case, and (4) whether the court’s decision on the question will be controlling on numerous
other cases. Mikulski, 501 F.3d at 570 (citing Empire HealthChoice Assurance, Inc. v. McVeigh,
547 U.S. 677, 700 (2006)).
In the present matter, the Defendant acknowledges that the first factor is not relevant
because this case does not involve a federal agency’s compliance with a federal statute. [Doc. 11
at 14].

Further, the Court finds that the federal issues, if any, are quite trivial. Moreover, while

the Defendant asserts that the federal issues are important, the Defendant does not specifically

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identify any federal issues. With respect to the third factor, the Defendant argues that the “parties’
rights and duties under PACA are determinative as to whether the Plaintiff will ultimately prevail
in his cause of action.” [Doc. 11 at 15]. The Defendant does not explain what “rights” or “duties”
will be determinative in this case.

Finally, because the Defendant has not identified a federal

question, the Court finds that the fourth factor does not weigh in the Defendant’s favor.
As to the final element of the substantial-federal-question doctrine, even if the issues were
of substantial federal interest, the Court finds that federal jurisdiction over this lawsuit would likely
disrupt the congressionally approved balance of state and federal judicial responsibilities. While
the Court acknowledges that PACA contains a private right of action, the Plaintiff has specifically
chosen not to allege a PACA claim and simply relies on a breach of contract theory. See Hill,
2017 WL 690535, at *4 (“The state courts conduct the bulk of the nation's contract law.”).
Accordingly, the Court finds that the Complaint does not raise substantial federal questions.
C. Awarding of Attorney’s Fees
As mentioned above, the Plaintiff requests attorney’s fees. The Defendant opposes such
request and argues that attorney’s fees are not warranted.
The Court may require the payment of just costs and actual expenses, including attorney’s
fees at its discretion pursuant to 28 U.S.C. § 1447(c). In Martin v. Franklin Capital Corp., 546
U.S. 132, 134 (2005), the United States Supreme Court granted certiorari expressly “to determine
the proper standard for awarding attorney's fees when remanding a case to state court” under the
discretionary language used in the statute. The Court provided the following guidance:
The process of removing a case to federal court and then having
it remanded back to state court delays resolution of the case,
imposes additional costs on both parties, and wastes judicial
resources. Assessing costs and fees on remand reduces the
attractiveness of removal as a method for delaying litigation and
imposing costs on the plaintiff. The appropriate test for awarding
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fees under § 1447(c) should recognize the desire to deter removals
sought for the purpose of prolonging litigation and imposing costs
on the opposing party, while not undermining Congress' basic
decision to afford defendants a right to remove as a general matter,
when the statutory criteria are satisfied.

Id.

The Court may exercise its discretion and award attorney’s fees where removal was not

objectively reasonable. See Warthman v. Genoa Township Bd. of Trustees, 549 F.3d 1055, 1061
(6th Cir. 2008). This standard does not require a showing that the Defendant’s arguments for
removal were without foundation. Kent State Univ. Bd. of Trustees v. Lexington Ins. Co., 512 Fed.
Appx. 485, 489 (6th Cir. 2013).
As discussed above, in the present case, the Plaintiff has not referenced any federal statute
in the Complaint, and PACA contains a provision stating that its purpose is to supplement existing
legal remedies, not replace them. 7 U.S.C. §499e(b). In light of these facts, the Court finds that
removal was not objectively reasonable and an award of attorney’s fees is appropriate. The
Plaintiff SHALL file a memorandum of costs and expenses, including attorney’s fees, incurred as
a result of removal within fourteen (14) days of entry of this Memorandum Opinion. The
Defendant shall be permitted to file any opposition to the Plaintiff’s memorandum within fourteen
(14) days of filing. See Stallworth v. Greater Cleveland Reg'l Transit Auth., 105 F.3d 252, 257
(6th Cir. 1997) (“[A] district court, after issuing an order of remand, may make an award of
attorney fees and costs in a separate order.”).

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IV.

CONCLUSION
Accordingly, for the reasons state herein, Plaintiff’s Motion to Remand to Chancery Court

[Doc. 5] is hereby GRANTED, and the action will be REMANDED to the Chancery Court of
Grainger County, Tennessee. The Plaintiff shall be awarded reasonable attorney’s fees and costs
upon further order of the Court.
ORDER ACCORDINGLY:

United States Magistrate Judge

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