Bierman v. Commissioner of Social Security Administration

Filing 10

ORDER signed by Judge Pamela Pepper on 8/8/2018 DENYING 2 Defendant's Motion to Dismiss and ORDERING Defendant to File an Answer No Later Than September 7, 2018. (cc: all counsel and copy sent to the plaintiff by US Mail on 8/8/2018) (kgw)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
SOPHIA BIERMAN,
Plaintiff,
v.

Case No. 16-cv-1389-pp

COMMISSIONER OF THE
SOCIAL SECURITY ADMINISTRATION,
Defendant.
ORDER DENYING DEFENDANT’S MOTION TO DISMISS (DKT. NO. 2) AND
ORDERING DEFENDANT TO FILE ANSWER NO LATER THAN SEPTEMBER
7, 2018
Plaintiff Sophia Bierman, who is representing herself, filed a complaint in
Waukesha County Circuit Court in September 2016, suing the Social Security
Administration (“SSA”). Dkt. No. 1-1. The defendant removed the case to federal
court and filed a motion to dismiss the case on the doctrine of derivative
jurisdiction, arguing that the plaintiff could not proceed in federal court
because the law required her to file the case in federal court—instead of state
court—in the first instance. Dkt. No. 2. The court ordered the plaintiff to file a
response to the motion, but the court then lost track of the case in its case
management system. The delay is the court’s fault, and the court’s alone—the
court apologizes to both parties for its error. The court will deny the
defendant’s motion to dismiss and order the case to proceed.

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I.

Background
On September 15, 2016, the plaintiff filed a complaint in Waukesha

County Circuit Court. Dkt. No. 1-1. The complaint alleged that under 26 U.S.C.
§6702, which the plaintiff described as “tax code submitting inaccurate
information to the IRS,” the SSA submitted an inaccurate 1099 form to the IRS
for tax year 2009. Id. at 3. The plaintiff alleged that in tax year 2009, the SSA
reported to the IRS that the plaintiff received $51,280 in disability payments,
when she had received only $22,900 that year. Id. She asserted that she had
been asking the defendant to give her a corrected 1099, so that she could file
an amended 2009 tax return. Id. The plaintiff alleges that since 2009, the IRS
has “been adding fines, penalties and late fees,” doubling the amount of money
that the defendant claims to have paid the plaintiff. Id. at 4. She says that,
while the defendant’s own statement says that she repaid $22,990, it also says
that “a check was returned to [SSA] that [the plaintiff] never received and a 2nd
checked [sic] was sent to [the plaintiff] that I did receive in the amount of
$22,900.” Id. The plaintiff alleged that because of the SSA’s error, the IRS had
been trying to collect $28,000 from her. She seeks damages for emotional
distress under Wis. Stat. §895.443, contributory neglect under §895.045,
punitive damages under §893.043 as well as damages from the Wisconsin
Department of Revenue. Id. at 4.
On October 17, 2016, the defendant filed a notice of removal, alleging
that 28 U.S.C. §1346 gave the United State District Courts (the federal courts)
original jurisdiction over any civil cases brought against the United States,
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founded on any Act of Congress or any regulation of an executive department.
Id. at 1. The defendant asserted that “Title 28 U.S.C. §§ 1441, 1442(a)(1) allows
the Defendant to remove this action to the United States District Court for the
Eastern District of Wisconsin.” Id. at 2. That same day, the defendant filed a
motion to dismiss the case under Federal Rule of Civil Procedure 12(b)(1). Dkt.
No. 2. The motion claims that “a federal court’s § 1442 removal jurisdiction is
derivative” of the state court’s jurisdiction, and because the state court did not
have subject matter jurisdiction over the plaintiff’s claims, this court did not
have jurisdiction after removal. Id. at 2. The defendant argued that the state
court did not have jurisdiction because “judicial review of the [SSA’s] actions is
available exclusively under 42 U.S.C. § 408(g),” which requires a plaintiff to see
such judicial review in federal court. Id. The defendant also asserted that, to
the extent that the plaintiff was trying to recover “personal-injury-type
damages” from the SSA, the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b)(1),
2671-80, gave federal courts exclusive jurisdiction over personal injury claims
against the government. Id. Finally, the defendant argued that if the plaintiff
was trying to allege that the SSA violated her civil rights, the state court did not
have jurisdiction over such claims because the United States has sovereign
immunity. Id. at 2-3.
The court issued an order instructing the plaintiff to respond to the
motion to dismiss, dkt. no. 7, and the plaintiff the plaintiff filed a brief in
opposition, dkt. no. 8. The plaintiff repeated that she was suing the SSA under
26 U.S.C. §6702, id. at 1, and attached exhibits in support of her claim, dkt.
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nos. 8-1 through 8-3. In her opposition, she asked the court to order the
defendant to file a corrected Form-1099 for her to present to the IRS. Dkt. No.
8 at 5. The defendant did not file a reply.
II.

Motion To Dismiss (Dkt. No. 2)
A.

Defendant’s Argument

In the SSA’s motion to dismiss, it argues that the court must dismiss the
case under the doctrine of derivative jurisdiction. Dkt. No. 2 at 2. The
defendant says that the “derivative jurisdiction” doctrine provides that “[i]f the
state court where an action was initially filed lacked subject matter jurisdiction
over the action, a federal court acquires none upon removal, even if the federal
court would have had jurisdiction if the case were originally brought in federal
court.” Id. at 2 (citing Edwards v. U.S. Dep’t of Justice, 43 F.3d 312, 316 (7th
Cir. 1994). The defendant asserts that the doctrine remains appropriate for
removals under 28 U.S.C. §1442(a), and that the plaintiff’s claims fall under
the Federal Tort Claims Act (“FTCA”) which granted exclusive jurisdiction to the
federal district courts for such personal injury claims. Id. at 2. Because the
federal courts have exclusive jurisdiction over the plaintiff’s claims, the
defendant argues, the Waukesha County Circuit Court would not have had
jurisdiction over the case, which means that this court does not have
jurisdiction on removal, which means that the court must dismiss the case. Id.
at 2-3.

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B.

Analysis
1.

Plaintiff’s Claims

The plaintiff filed a case in state court, alleging that the SSA provided
incorrect information to the IRS regarding the amount of disability payments
she received in tax year 2009. She sued under 26 U.S.C. §6702.
Congress titled 26 U.S.C. §6702 “Frivolous tax submissions.” The statute
allows the Secretary of the IRS to assess a $5,000 penalty against a person
who files a frivolous tax return. 26 U.S.C. §6702. This section, read together
with 26 U.S.C. §6671, does not provide a right for a private citizen to sue the
person who allegedly filed the frivolous return; it is the Secretary of the
Treasury who may assess and collect the penalty under §6702.
The law, however, requires courts to “liberally construe” claims filed by a
person who is representing herself. See, e.g., Erickson v. Pardus, 551 U.S. 89,
94 (2007). The plaintiff’s claim that the SSA provided false information to the
IRS could implicate a cause of action under 26 U.S.C. §7434, “Civil damages
for fraudulent filing of information returns.” Subsection (a) of that statute says
that “[i]f any person willfully files a fraudulent information return with respect
to payments purported to be made to any other person, such other person may
bring a civil action for damages against the person for so filing such return.” 26
U.S.C. §7434(a). The plaintiff’s allegations fit: She says that for tax year 2009,
the SSA reported that she received a disability payment of $51,280 on her 1099
form. She claims that this information was inaccurate, because she received

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only $22,900 in disability payments in tax year 2009, and she implies that the
defendant knew this.
2.

Removal

When a plaintiff files a case in state court, Congress grants defendants
the right to “remove” the case to federal court if the defendant can show that it
meets certain statutory requirements. Defendants commonly rely on either 28
U.S.C. §1441—known as the “general removal” statute—or 28 U.S.C.
§1442(a)—known as the “federal agency or officer removal” statute. Section
1441 allows for removal based on the type of case; in other words, it allows a
defendant to remove a case to federal court if the plaintiff could have brought
the case in federal court originally, but instead chose to file the case in state
court. Section 1442(a)(1) allows for removal based on the particular defendant
that a plaintiff sues; it allows “[t]he United States or any agency thereof or any
officer (or any person acting under that officer) of the United States or of any
agency thereof” to remove a case to federal court, if the case is “for or relating
to any act under color of such office or on account of any right, title or
authority claimed under Act of Congress for the apprehension or punishment
of criminals or the collection of the revenue.” 28 U.S.C. §1442(a)(1). Here, the
defendant alleges that it removed the plaintiff’s case under both 28 U.S.C.
§1441 and §1442(a).
For removal to be proper under §1441, the federal court would have to
have had “original jurisdiction” over the plaintiff’s case. Stripped of legalese,
this means that the law would have had to authorize the federal court to hear
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the case if the plaintiff had filed it in federal court to begin with. Section §1331
of Title 28 says that “[t]he district courts shall have original jurisdiction of all
civil actions arising under the Constitution, laws, or treaties of the United
States.” Liberally construing the plaintiff’s claim as a claim that the defendant
violated 26 U.S.C. §7434, the plaintiff has brought a case under the laws of the
United States—the tax code is a “law of the United States”—and therefore the
federal district courts had original jurisdiction to hear the plaintiff’s case. The
defendant properly removed this case under §1441.
Similarly, for the defendant’s removal to be proper under §1442(a), the
defendant would have to show that the plaintiff brought the case against “the
United States or any agency thereof,” for actions that the defendant took
“under color of office.” 28 U.S.C. §1442(a)(1). The SSA is an agency of the
United States, and arguably, the SSA reported the plaintiff’s disability
payments to the IRS under the color of its office. The defendant properly
removed this case under §1442(a).
3.

Doctrine of Derivative Jurisdiction

In Rodas v. Seidlin, 656 F.3d 610, 615 (7th Cir. 2011), the Seventh
Circuit Court of Appeals explained the doctrine of derivative jurisdiction:
when a case is removed from state to federal court, the jurisdiction
of the latter is said in a limited sense to derive from the former.
Accordingly, where the state court lacks jurisdiction of the subject
matter or of the parties, the federal court acquires none, although
in a like suit originally brought in federal court it would have had
jurisdiction.
Rodas v. Seidlin, 656 F.3d 610, 615 (7th Cir. 2011) (internal citations and
quotations omitted). The Rodas court noted that the doctrine “has been
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criticized a great deal over the course of many years.” Id. at 619. (citing
Washington v. Am. League of Prof’l Baseball Clubs, 460 F.2d 654, 658-59 (9th
Cir. 1972); 14B Charles Alan Wright, et al., FEDERAL PRACTICE AND
PROCEDURE §3722, at 339-42 (4th ed.2009)). The Rodas court observed that,
while the doctrine applied to removals under §1442, Congress had done away
with the doctrine for removals under §1441. Id. at 618. The court pointed to 28
U.S.C. §1441(f), which specifically states that “[t]he court to which a civil action
is removed under this section is not precluded from hearing and determining
any claim in such civil action because the State court from which such civil
action is removed did not have jurisdiction over that claim.”
In its notice of removal, the defendant cited both §1441 and §1442. Dkt.
No. 2 at 2 (“Title 28 U.S.C. §§ 1441, 1442(a)(1) allows the Defendant to remove
this action to the United States District Court for the Eastern District of
Wisconsin.”) In its motion to dismiss, however, the defendant stated that “the
United States Attorney removed this action under 28 U.S.C. § 1442(a) . . . .”
Dkt. No. 2 at 1. While the defendant acknowledged in the motion that Congress
did away with the doctrine of derivative jurisdiction for §1441 removals, the
defendant based its entire argument on the doctrine of derivative jurisdiction—
apparently believing that it had removed the case only under §1442.
The defendant did not acknowledge in the motion to dismiss that it had
cited §1441. Nor did it explain why the court should ignore that fact, and
analyze the motion to dismiss as if the defendant had not cited §1441. In
describing the derivative jurisdiction statute, the defendant cited a case,
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however, in which another judge in this district dismissed a case on derivative
jurisdiction grounds, despite the SSA having cited both §§1441 and 1442(a). In
Norwood v. Colvin, Case No. 15-CV-217 (E.D. Wis. 2015), Magistrate Judge
Nancy Joseph considered the identical situation to the one presented here: the
SSA had cited both §1441 and §1442(a) in the notice of removal, but had
argued derivative jurisdiction required dismissal under §1442(a). Id. at Dkt. No.
9, page 2 (April 21, 2015 order dismissing case). Judge Joseph stated that,
[d]espite [the SSA Commissioner’s] citation to both statutes, it
appears the Commissioner intended to invoke § 1442(a), as the body
of the removal papers asserts removal in relation to actions brought
in state court against the United States and its agencies and
employees. Further, in her motion to dismiss, the Commissioner
asserts that the action was removed under § 1442(a). Thus, I will
construe the Commissioner’s removal papers as invoking § 1442(a)
as her basis for removal.
Id.
The Norwood decision is not binding on this court, and this court will not
construe the defendant’s notice of removal as being limited to §1442(a). The
defendant cited both provisions, and removal was proper under both
provisions. If the defendant had cited only §1442(a) in its removal notice, the
derivative jurisdiction doctrine would have deprived this court of jurisdiction.
But removal was proper under §1441, and the court will deny the motion to
dismiss on that basis.
C.

Next Steps

The court has not acted in this case in a very long time. The court has no
excuse for the delay, but it can offer an explanation, for whatever it is worth.
Two years ago, one of the four Milwaukee district court judges passed away,
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and the President has not appointed his replacement. There are now three
district judges doing the work of four. This heavier case load has resulted in
some cases falling through the cracks, and this is one of those cases. The court
can only apologize to the parties, and take steps now to move the case forward
expeditiously.
III.

Conclusion
The court DENIES the defendant’s motion to dismiss the case. Dkt. No.

2.
The court ORDERS that the defendant shall answer or other respond to
the complaint by the end of the day on September 7, 2018. Once the
defendant responds to the complaint, the court will contact the parties to
discuss the next steps.
Dated in Milwaukee, Wisconsin this 8th day of August, 2018.
BY THE COURT:
_____________________________________
HON. PAMELA PEPPER
United States District Judge

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