McClelland v. Gronwaldt , 155 F.3d 507 ( 1998 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 97-40592
JERRY C. McCLELLAND,
Plaintiff-Appellant,
versus
ROBERT C. GRONWALDT, Individually and as
agent for Mobil Oil Corporation; MOBIL OIL
CORPORATION; NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH, PA,
Defendants-Appellees.
Appeal from the United States District Court for the
Eastern District of Texas
September 9, 1998
Before GARWOOD, SMITH and EMILIO M. GARZA, Circuit Judges.
GARWOOD, Circuit Judge:
Plaintiff-appellant Jerry C. McClelland (McClelland) requested
and received certification under 28 U.S.C. § 1292(b) to appeal the
district court’s denial of his motion to remand his suit to state
court. We hold that the district court erred in denying
McClelland’s motion to remand, and we reverse the district court’s
order and direct that the case be remanded to the state court.
Facts and Proceedings Below
In 1988, McClelland was allegedly injured in the course of his
employment at a refinery located in Beaumont, Texas, and operated
by his employer, defendant-appellee Mobil Oil Corporation (Mobil).
The injury required medical attention, and McClelland subsequently
filed a related claim for workers’ compensation under the Texas
workers’ compensation act. Dissatisfied with the handling of his
claim, McClelland brought this suit in Texas state court against
Robert C. Gronwaldt, the individual who had handled his claim;
National Union Fire Insurance Company, which provided Mobil’s
workers’ compensation insurance; and Mobil.1
McClelland’s original suit, filed in December of 1992, alleged
a variety of state law causes of action arising principally out of
the manner in which his particular workers’ compensation claim had
been handled.2 McClelland subsequently amended his complaint to
allege that Mobil was violating state insurance and workers’
compensation laws by conspiring with National Union to allow
workers’ compensation claims to be adjusted by employees of a Mobil
subsidiary, rather than by independent claims adjusters as is
allegedly required under state law. He also asserted that Mobil’s
1
To the extent that there is no relevant distinction to be
made among them, the three defendants-appellees will be referred to
collectively as "Mobil" in the interest of simplicity.
2
He alleged, inter alia, breach of good faith and fair dealing
in handling of insurance claim, violations of the Texas Insurance
Code, violations of the Texas Deceptive Trade Practices Act,
negligent handling of an insurance claim, intentional infliction of
emotional distress, and breach of insurance contract.
2
purported workers’ compensation plan violated both state workers’
compensation law and state insurance law and regulations.3
Alleging that the defendant-appellees had conspired to defraud
him and similarly situated individuals of the benefits to which
they were entitled under their workers’ compensation insurance,
McClelland sought certification of a class of persons consisting
generally of all individuals employed by Mobil in the state of
Texas whose workers’ compensation claims were handled, settled, or
adjusted by a Mobil employee between 1988 and 1993. The state
trial court granted class certification on June 20, 1994.
During the time McClelland’s case was pending in the Texas
state courts, Mobil was undergoing a nationwide restructuring.
Seeking to reduce its workforce, Mobil began offering voluntary
separation benefit packages to its employees. In 1992, a uniform
plan, referred to as the "Enhanced Separation Benefits Package"
(ESBP), was offered to employees of "all impacted units." The ESBP
was eventually offered to employees of the Beaumont refinery.
The ESBP was initially available only to non-union employees
3
The gravamen of the class action suit is that Mobil conspired
with various other entities to create the impression that Mobil was
providing workers’ compensation pursuant to the laws and applicable
regulations of the state of Texas, when in fact Mobil was engaging
in an allegedly unlawful form of "self insurance" and was allowing
workers’ compensation claims to be adjusted by Mobil employees,
rather than by independent adjusters, which also allegedly violates
state law. The claims asserted include, inter alia, breach of good
faith and fair dealing, fraudulent representations regarding
coverage, negligent handling of claims, willful denial of
meritorious claims, and the handling of claims in violation of
various state insurance regulations.
3
at the Beaumont refinery. But Mobil subsequently negotiated a
Memorandum of Agreement (MOA), dated September 1, 1995, with the
Oil, Chemical, and Atomic Workers International Union (the Union),
which extended a plan analogous to the ESBP to Mobil employees in
the bargaining units represented by the Union. The ESBP and MOA
both required participating employees to sign a "Separation
Agreement" that included a broad waiver provision, releasing "all
claims" arising from both the employee’s employment and
termination. Due at least in part to the interlocutory appeal of
the class certification, many of the potential members of the class
were not promptly notified of the class action, and McClelland, as
class representative, became concerned that the broad release
included in the separation agreement could be construed to waive
those claims that were the subject of the class action.4
Consequently, McClelland filed in the state court case a motion
dated September 27, 1995, seeking an injunction prohibiting "Mobil
from continuing with this particular program [i.e., the ESBP and
MOA] to the extent it requires releasing causes of action that the
plaintiffs may have."5
4
The class certification order was affirmed by the Beaumont
Court of Appeals in a December 29, 1994, unpublished opinion, and
rehearing was denied January 19, 1995. Gronwaldt v. McClelland,
No. 09-94-238CV, 1994 WL 720018 (Tex.App.——Beaumont). Apparently,
thereafter review or relief in the Texas Supreme Court was
unsuccessfully sought.
5
On July 26, 1995, McClelland had filed in the state court a
request for, and that court had granted, a similar temporary
restraining order (TRO) which expired by its own terms ten days
4
On October 17, 1995, Mobil filed a notice of removal, alleging
that the plaintiffs’ motion for injunctive relief asserted claims
subject to "complete preemption" and therefore created federal
question jurisdiction supporting removal. Specifically, Mobil
contended that the attempt to enjoin execution of the MOA, a
collective bargaining agreement (CBA), triggered complete
preemption under the Labor Management Relations Act6 (LMRA),
section 301,7 because resolution of the plaintiffs’ claim for
injunctive relief was substantially dependent on the terms of the
MOA and would require the state court to interpret the release
provision contained in the Separation Agreement. Mobil also argued
that the plaintiffs’ motion gave rise to complete preemption under
the Employment Retirement Income Security Act of 19748 (ERISA),
asserting that the ESBP constituted an ERISA plan and,
consequently, that any attempt to enjoin the administration of the
ESBP in state court was completely preempted under ERISA and thus
constituted a federal claim sufficient to provide a jurisdictional
basis for removal.
later. McClelland’s September 27, 1995, filing also sought a TRO,
which was granted, and a temporary and permanent injunction. The
case was removed before any injunction was acted on and the TRO
apparently expired by its own terms before or a few days after
removal.
6
29 U.S.C. § 141, et seq.
7
29 U.S.C. § 185(a).
8
29 U.S.C. § 1001, et seq.
5
On October 23, 1995, McClelland filed a motion to remand the
case to state court, arguing, inter alia, that removal was
improvident because the motion for injunctive relief was so
tangential to LMRA or ERISA concerns that it was insufficient to
trigger "complete preemption" so as to provide the federal district
court with removal jurisdiction under either statute. McClelland
also pointed out that the motion upon which the removal was based
would soon become moot because the "self-nomination" period during
which employees could elect to participate in the MOA and ESBP
plans was relatively short and had already commenced. As a
consequence, McClelland asserted, unless injunctive relief were to
be granted almost immediately the plaintiffs’ request for a
"restraining order will be moot and there will be absolutely no
federal question left for this court to decide."
In a memorandum opinion dated November 16, 1995, the district
court denied the plaintiffs’ motion to remand the case to state
court. 909 F. Supp. 457 (E.D. Tex. 1995). The district court held
that the motion for injunctive relief asserted claims that were
completely preempted by both the LMRA and ERISA, thereby providing
a basis for federal question jurisdiction, and further determined
that it properly exercised supplemental jurisdiction over the
underlying state law claims.
Subsequent to the district court’s denial of the motion to
remand, the case appears to have languished in federal court with
6
little significant progress for almost a year. Then, on October 4,
1996, the district court held a hearing regarding all pending
motions. At this hearing, questions regarding the propriety of
removal and the district court’s subject matter jurisdiction were
raised and argued at some length. These proceedings prompted the
district court to note that "[s]ince the October 4, 1996 hearing it
became clear to this court that there is a substantial difference
of opinion on whether the state court’s TRO involved, and will
likely involve as a matter of law, an interpretation of a CBA or
the interpretation and administration of an ERISA plan" sufficient
to sustain its jurisdiction under a theory of complete preemption.
McClelland v. Gronwaldt, 958 F. Supp. 280, 283 (E.D. Tex. 1995).
On February 19, 1997, the district court certified its
November 16, 1995, order for interlocutory appeal pursuant to 28
U.S.C. § 1292(b), identifying three "controlling" questions of law
regarding the propriety of its continued retention of jurisdiction
over the case sub judice.9
9
The questions, as formulated by the district court, are as
follows:
"I) whether the state court's TRO and the
plaintiff's state court pleading seeking a permanent
injunction would require the state courts to interpret
and administer a CBA, thus vesting this court with
jurisdiction pursuant to 28 U.S.C. § 1331;
II) whether the state court's TRO and the
plaintiff's state court pleading seeking a permanent
injunction would require the state courts to interpret
and administer an ERISA plan, thus vesting this court
with jurisdiction pursuant to 28 U.S.C. § 1331; and
III) whether, if this court had federal question
7
Discussion
Our analysis in this appeal involves two steps and two
standards of review. First, the district court’s preemption
analysis, based upon which the court held that it had federal
question jurisdiction, is a determination of original jurisdiction
subject to de novo review. Hook v. Morrison Milling Co., 38 F.3d
776, 780 (5th Cir. 1994); Carpenter v. Wichita Falls Indep. School
Dist., 44 F.3d 362, 365 (5th Cir. 1995). Second, we review the
district court’s retention of jurisdiction of the state law claims
for abuse of discretion. Hook, 38 F.3d at 780 (citing In re Wilson
Indus., 886 F.2d 93, 95-96 (5th Cir. 1989)).10
I. Complete Preemption and Removal
Pursuant to statute, removal is generally available to the
defendant in "any civil action brought in a State court of which
the district courts of the United States have original
jurisdiction" founded on the existence of a claim or right "arising
jurisdiction pursuant to 28 U.S.C. § 1331 at the time of
removal, this court now has supplemental jurisdiction
over all state law claims under 28 U.S.C. § 1367."
McClelland v. Gronwaldt, 958 F. Supp. 280, 283 (E.D. Tex. 1995).
10
See also Jones v. Roadway Express, Inc., 936 F.2d 789, 792
(5th Cir. 1991) ("The Supreme Court has held that, under the
doctrine of pendent jurisdiction, a federal district court has
discretion to remand a properly removed case to state court when
all federal-law claims have been eliminated and only pendent state-
law claims remain.") (citation omitted); and Parker & Parsley
Petroleum Co. v. Dresser Indus., 972 F.2d 580, 585 (5th Cir. 1992)
(stating standard of review).
8
under" federal law. 28 U.S.C. § 1441(a) and (b). In the case at
bar, although no federal issue appeared on the face of the motion
for injunctive relief that provided the basis for removal, the
district court held that it had "federal question" jurisdiction
based on theories of complete preemption under both the LMRA and
ERISA. While federal courts typically ascertain the existence of
federal question jurisdiction by applying the familiar "well-
pleaded complaint" rule,11 there exists a "corollary" to this rule,
which is most frequently referred to as the doctrine of "complete
preemption." This doctrine has been used to define limited
categories of state law claims that are "completely preempted" such
that "any civil complaint raising this select group of claims is
necessarily federal in character," no matter how it is
characterized by the complainant in the relevant pleading.
Metropolitan Life Ins. Co. v. Taylor, 107 S. Ct. 1542, 1546 (1987).
In effect, the application of complete preemption "converts an
ordinary state common law complaint into one stating a federal
claim for purposes of the well-pleaded complaint rule." Id. at
1547. Because they are recast as federal claims, state law claims
that are held to be completely preempted give rise to "federal
11
Ordinarily our "arising under" analysis focuses on the
plaintiffs’ well-pleaded complaint, for "[i]t is long-settled law
that a cause of action arises under federal law only when the
plaintiff’s well pleaded complaint raises issues of federal law."
Metropolitan Life Ins. Co. v. Taylor, 107 S. Ct. 1542, 1546 (1987).
9
question" jurisdiction and thus may provide a basis for removal.12
The Supreme Court has held the doctrine of complete preemption
applicable to certain claims preempted by ERISA, as well as to
certain claims preempted by the LMRA.13
II. LMRA Preemption
We begin by addressing the district court’s first certified
question, whether the plaintiffs’ request for injunctive relief
necessarily required the state court to interpret a collective
12
We have summarized the effect of complete preemption as
follows:
"Under this doctrine, ‘Congress may so completely pre-
empt a particular area that any civil complaint raising
this select group of claims is necessarily federal in
character,’ and the case may be removed even if no
federal claim is asserted in the complaint and federal
preemption, raised as a defense, is the only issue of
federal law implicated in the case." Anderson v.
Electronic Data Systems Corp., 11 F.3d 1311, 1315 (5th
Cir. 1994) (quoting Taylor, 107 S. Ct. at 1546).
13
The Supreme Court first applied what has come to be referred
to as complete preemption in Avco Corp. v. Aero Lodge No. 735,
Int’l Assn. of Machinists, 88 S. Ct. 1235, 1237 (1968), in which the
Court not only held that a state action for breach of contract,
where the contract in question was a collective bargaining
agreement, was preempted by section 301 of the LMRA, but also held
that although the plaintiff had relied solely on state law and had
chosen to bring suit in state court, the preemptive power of the
LMRA was sufficient that the claim nevertheless "arose under"
federal law, thus creating federal question jurisdiction. The
Supreme Court subsequently explained that "the preemptive force of
§ 301 is so powerful as to displace entirely" state actions for
breach of a collective bargaining agreement. Franchise Tax Board
v. Construction Laborers Vacation Trust, 103 S. Ct. 2841, 2847
(1983). In Metropolitan Life Ins. Co. v. Taylor, 107 S. Ct. 1542
(1987), the Supreme Court extended the doctrine of complete
preemption to state actions falling within the preemptive scope of
ERISA’s civil enforcement provision, section 502(a).
10
bargaining agreement, thereby triggering complete preemption under
the LMRA.
The displacement of conflicting state laws and the provision
of a federal forum pursuant to "complete preemption" under the LMRA
function to "ensure uniform interpretation of collective-bargaining
agreements, and thus to promote the peaceable, consistent
resolution of labor-management disputes." Lingle v. Norge Div.,
Magic Chef, Inc., 108 S. Ct. 1877, 1880 (1988). See also Teamsters
v. Lucas Flour Co., 82 S. Ct. 571, 576-77 (1962). To further this
goal, "if the resolution of a state-law claim depends upon the
meaning of a collective-bargaining agreement, the application of
state law (which might lead to inconsistent results since there
could be as many state-law principles as there are States) is
preempted and federal labor-law principles——necessarily uniform
throughout the Nation——must be employed to resolve the dispute."
Lingle, 108 S. Ct. at 1881. Thus, complete preemption under the
LMRA applies when "resolution of a state law claim is substantially
dependent upon analysis of the terms of an agreement made between
parties to a labor contract." Wells v. General Motors Corp., 881
F.2d 166, 172 (5th Cir. 1989).
In the case sub judice it is uncontested that the MOA
qualified as a CBA and that the waiver provision contained in the
accompanying Separation Agreement was an integral part of that
11
agreement.14 Applying Lingle, the district court considered whether
resolution of the plaintiffs’ motion depended on the terms of a CBA
and concluded that "[t]he temporary restraining order sought by the
Plaintiffs [would] necessarily require[] the state court to make an
interpretation of the MOA and the relevant Separation Agreements."
909 F. Supp. at 463. Because resolution of the plaintiffs’ motion
would have necessitated construal of the waiver provision contained
in the Separation Agreement and possibly the interaction of that
provision with the MOA, the district court held that the
plaintiffs’ motion for an injunction triggered complete preemption,
thus creating federal question jurisdiction.
As discussed above, the fundamental rationale of LMRA
preemption is to promote uniformity in the law used to interpret
CBAs by mandating the application of federal law and by providing
a federal forum. Obviously this rationale, and consequently the
applicability of complete preemption, endure only so long as there
is a live, persisting "dispute," the resolution of which
"substantially depends" on the interpretation of a CBA. The
district court’s memorandum opinion and accompanying order are
dated November 16, 1995, and are "time stamped" as having been
14
As we held in Thomas v. LTV Corp., 39 F.3d 611 (5th Cir.
1994), to the extent that an agreement between an employer and
employee cannot be construed independently of a CBA——as for example
when the agreement seeks to limit or condition a CBA——the
purportedly separate agreement "is subject to a preemption analysis
just as if it was a CBA." Id. at 618.
12
filed with the clerk of the court at 4:24 p.m. on that day.
Pursuant to a negotiated provision of the MOA, the "self-
nomination" or "election" period for participation in that program
expired on November 17, 1995, the day after the court rendered the
order denying remand. This temporal proximity raises the threshold
question whether, at the time the district court rendered its
decision, there still existed a live issue as to the potential
interpretation of the waiver provisions by a state court. If there
was no realistic possibility that a state court could rule on the
plaintiffs’ motion for injunctive relief during the “election”
period, then the LMRA preemption issue was moot and the district
court erred in considering it as providing a basis for federal
question jurisdiction. Had the case been remanded on November 16,
1995, under the federal rules governing post-remand procedures, no
state court could have exercised jurisdiction over the case until
a certified copy of the remand order had been mailed by the clerk
of the federal district court to the clerk of the state court. See
28 U.S.C. § 1447(c).15 Given the time necessarily involved in
15
Section 1447(c) provides, in pertinent part, that upon
determination that a case should be remanded, "[a] certified copy
of the order of remand shall be mailed by the clerk to the clerk of
the State court. The State court may thereupon proceed with such
case." 28 U.S.C. § 1447(c).
It should be noted that the actual mailing of the remand order
has legal significance in determining the time at which the
district court is divested of jurisdiction. See, e.g., Browning v.
Navarro, 743 F.2d 1069, 1078-79 (5th Cir. 1984) (citing cases and
treatises generally supporting the proposition that pursuant to the
language of section 1447(c), a federal court is completely divested
13
mailing a certified copy of the remand order to the clerk of the
state court as well as the time required to schedule and recommence
proceedings, the potential for a state court to rule on the motion
for injunctive relief before the “election” period under the MOA
expired was negligible on the date that the district court rendered
its decision. Thus, while at the time the case was removed, a
state court ruling on the plaintiffs’ motion was imminent, by the
time the district court rendered its opinion, the possibility of a
state court’s interpreting the MOA had, for all practical purposes,
ceased to exist. Consequently, the issue had become effectively
moot, and the court should not have based its continuing federal
question jurisdiction on complete preemption under the LMRA.
The district court’s analysis is also subject to a second,
more fundamental, mootness problem. It is axiomatic that "[a]
request for injunctive relief remains live only so long as there is
some present harm left to enjoin."16 This is a corollary of the
more general rule that "[a] case is moot when it no longer presents
a live controversy with respect to which the court can give
meaningful relief." Pacific Ins. Co. v. General Development Corp.,
28 F.3d 1093, 1096 (11th Cir. 1994). The relief sought by the
plaintiffs was an injunction restraining Mobil from soliciting
of jurisdiction once it mails a certified copy of the order to the
clerk of the state court.).
16
Taylor v. Resolution Trust Corp., 56 F.3d 1497, 1502 (D.C.
Cir. 1995).
14
waivers under the ESBP and MOA plans from potential class members.
This relief was requested on September 27, 1995, near the beginning
of the election period under the MOA.17 By November 16, 1995, the
"harm" that the plaintiffs had sought to enjoin was virtually
complete. Irrespective of a court’s ruling on the motion, the
election period, and the concomitant harm alleged by plaintiffs,
would end the next day. Thus, no "meaningful relief" as to the MOA
remained available under the motion at the time of the district
court’s decision.18
17
The district court found that the MOA "probably became
effective September 17, 1995." 909 F. Supp. at 459.
18
We note this potential mootness problem was raised at several
points by the plaintiffs. In the motion to remand, it was asserted
that the relief sought would be effectively unavailable within a
relatively short period of time and as a consequence that
plaintiffs’ request for a "restraining order will be moot and there
will be absolutely no federal question left for the court to
decide." After the district court denied the motion to remand,
class counsel took the position that the motion had been mooted
because the "self-nomination" period had expired. In the October
4, 1996, hearing, plaintiffs’ counsel argued that the plaintiffs
had consistently, from the time of the motion to remand, taken the
position that the motion was moot, and in open court repeatedly
stated that plaintiffs were no longer seeking any type of
injunctive relief. The transcript of the October 4, 1996, hearing
indicates that counsel for the McClelland class claimed that "in
addressing the court about this issue we took the position that it
was moot, that we were no longer seeking the relief sought, because
we couldn’t get it. And if there is any question about that, then
I’ll formally request that the pleading be withdrawn at this time."
The district court noted that the plaintiffs failed to
formally amend or withdraw the motion. 958 F. Supp. at 282 n.4.
This misses the relevance of plaintiffs’ argument as to mootness.
The question we consider is not whether the plaintiffs took
sufficient steps to withdraw their motion. Rather, assuming,
arguendo, that the motion was not withdrawn, the question is
whether any court was in a position to provide the plaintiffs
meaningful relief.
15
Thus, even if——contrary to the reasoning above——there existed
some abstract possibility that a state court might rule on the
plaintiffs’ request for injunctive relief, the first day on which
it could do so would appear to have been the day on which the
election period under the MOA expired by its own terms.
Consequently, at least as it pertained to the MOA, the plaintiffs’
motion for injunctive relief had become moot by the time the
district court rendered its November 16, 1995, order.19
Accordingly, the district court erred in treating the motion as a
"live" pleading for purposes of its LMRA preemption analysis. In
sum, because the motion for injunctive relief, at least as it
related to the MOA, had become moot, and because there was no
longer any possibility that a state court would rule on the motion
19
We are not persuaded by Mobil’s argument that because it has
not relinquished the "right" to reimplement a similar program this
issue is not moot. The MOA is a collectively-bargained instrument,
and Mobil did not retain any "right" under the MOA to unilaterally
extend the election period or to reinstate the agreement. Thus,
Mobil, whatever it might have the right to do apart from Union
agreement, could not reinstitute a similar program as a part of or
pursuant to the MOA without negotiating a new agreement with the
Union. Moreover, Mobil does not even claim to have (or have had)
any specific plans to reimplement a similar separation benefits
program involving the union workers at the Beaumont refinery. Nor
does Mobil assert that it intends to pursue renegotiation with the
Union regarding the implementation of such a plan. Thus, Mobil’s
argument that it could recommence the behavior sought to be
enjoined is unsupported speculation——and self-serving speculation
at that. Mobil’s mere assertion that it might, at some point in
the future, reinstate a similar benefit containing a similar
separation agreement and waiver clause, without any specific
allegation whatsoever that it actually plans to do so, is
insufficient to prevent mootness.
16
during the MOA “election” period, we hold that the district court
erred in relying on complete preemption under the LMRA as a
continuing basis of federal question jurisdiction in its November
16, 1995, denial of plaintiffs’ motion to remand.20
III. ERISA Preemption
The second question identified by the district court in its
certifying opinion is whether the plaintiffs’ request for
injunctive relief "would require the state courts to interpret and
administer an ERISA plan, thus vesting this [district] court with
[removal] jurisdiction." 958 F. Supp. at 283. Because the district
court applied the wrong standard in determining whether the
plaintiffs’ motion for injunctive relief triggered "complete
preemption" as opposed to "ordinary preemption," we hold that the
20
Mobil argues in its brief on appeal that we must review this
case on the facts as they existed at the time of removal and that
any subsequent events are irrelevant to our review. Although Mobil
is correct that we typically review questions of subject matter
jurisdiction on the basis of the facts as they existed when the
relevant pleading was filed, our review is not similarly limited
when determining questions of mootness. "Events both before and
after the filing of a claim may render a claimant’s case moot.
Mootness doctrine requires that the controversy posed by a
complaint be present throughout the litigation process," Baccus v.
Parrish, 45 F.3d 958, 961 (5th Cir. 1995) (internal quotation marks
and citation omitted). See also Carr v. Alta Verde Industries,
Inc., 931 F.2d 1055, 1061 (5th Cir. 1991) (stating that all
questions of subject matter jurisdiction except mootness are
determined as of the date of the filing of the complaint, and
subsequent events do not deprive the court of jurisdiction). See
generally, 19 Moore’s Federal Practice § 205.02[3][a] (3d ed. 1998)
("A controversy may be or become moot at any stage of the
proceedings due to a change in circumstances that ends the harm or
resolves the dispute.") (collecting cases).
17
court erred in concluding that it had removal jurisdiction based on
ERISA preemption.
In its denial of plaintiffs’ motion to remand, the district
court framed its ERISA preemption analysis solely in terms of
whether the plaintiffs’ motion for injunctive relief sufficiently
"related to" an ERISA plan so as to be preempted, applying the
standard for determining ordinary preemption and failing to
consider the additional requirements necessary to implicate
"complete preemption." In analyzing whether the plaintiffs’ claims
"related to" an ERISA plan, the court concluded that although "the
underlying state tort claims in this case do not necessarily
implicate an ERISA plan, the Plaintiffs’ Motion for Temporary
Restraining Order seeks to enjoin the operation and implementation
of an ERISA plan by operation of state law." 909 F. Supp. at 462.
Accordingly, the court found that the plaintiffs’ motion directly
"related to" an ERISA plan and, on the basis of this determination,
held that "[t]o the extent that the Plaintiffs’ application for
state court injunctive relief would halt the administration of the
plan or the payment of benefits thereunder, the Plaintiffs’ action
now rests properly in federal court." Id. Thus, the district
court’s holding was based on the reasoning that because the
plaintiffs’ motion "related to" an ERISA plan within the meaning of
the statute’s general preemption provision, section 514(a),21 the
21
29 U.S.C. § 1144(a).
18
district court was "vested" with federal question jurisdiction and,
consequently, that removal was proper. See 909 F. Supp. at 461-62.
The error in the district court’s analysis stems from its
failure to distinguish clearly between the concepts of "ordinary"
and "complete" preemption.22 Although we have, in past decisions,
both explicitly and implicitly differentiated between these two
concepts,23 as have our sister circuits,24 the district court appears
22
The district court is certainly not the only court that has
done so. See, e.g., Jass v. Prudential Health Care Plan, Inc., 88
F.3d 1482, 1487 (7th Cir. 1996) (noting that "because the
jurisdictional doctrine of ‘complete preemption’ included the word
‘preemption,’ confusion arose between the jurisdictional doctrine
and the federal defense of preemption").
23
For example, in Hubbard v. Blue Cross & Blue Shield Assoc.,
42 F.3d 942 (5th Cir. 1995), we explained that,
"Ordinarily, preemption of state law by federal law is a
defense to a plaintiff's state law claim, and therefore
cannot support federal removal jurisdiction under the
‘well-pleaded complaint’ rule. ‘Complete preemption,’ in
contrast, exists when the federal law occupies an entire
field, rendering any claim a plaintiff may raise
necessarily federal in character." Id. at 945 n.5
(citing Franchise Tax Board, 103 S. Ct. at 2854).
See also Anderson v. Electronic Data Systems Corp., 11 F.3d 1311,
1315 (5th Cir. 1994) ("A finding that a claim is preempted does not
end our analysis, since preemption is raised as a defense and
ordinarily federal question jurisdiction is determined by the well-
pleaded complaint rule, which looks to the complaint in determining
subject matter jurisdiction.").
24
See, e.g., Toumajian v. Frailey, 135 F.3d 648, 655 (9th Cir.
1998) ("This distinction is important, for if the doctrine of
complete preemption does not apply, even if the defendant has a
defense of ‘conflict preemption’ within the meaning of § 1144(a)
because the plaintiff’s claims ‘relate to’ an ERISA plan, the
district court, being without subject matter jurisdiction, cannot
rule on the preemption issue."); Rice v. Panchal, 65 F.3d 637, 640
19
not to have properly taken account of this distinction in its
analysis. A brief discussion of the two concepts and an outline
of the analysis applicable to the determination of complete
preemption under ERISA follow.
A. Ordinary Preemption
ERISA section 514(a) provides for the general preemption of
"any and all State laws insofar as they may now or hereafter relate
to any employee benefit plan" regulated by that statute.25 29
U.S.C. § 1144(a) (emphasis added). Preemption pursuant to section
514(a), however, merely results in the displacement of state law.
Because ordinary preemption almost invariably arises as a defense,
and thus does not appear on the face of the plaintiff’s well-
pleaded complaint, section 514(a) preemption typically cannot serve
(7th Cir. 1995) ("The difference between complete preemption under
§ 502(a) and conflict preemption under § 514(a) is important
because complete preemption is an exception to the well-pleaded
complaint rule that has jurisdictional consequences."); Dukes v.
U.S. Healthcare, Inc., 57 F.3d 350, 355 (3d Cir. 1995) (emphasizing
the importance of the distinction due to the jurisdictional
consequences of its application); Warner v. Ford Motor Co., 46 F.3d
531, 535 (6th Cir. 1995) (criticizing the failure to "keep complete
preemption removal and ordinary preemption doctrine separate and
distinct").
25
As this Court has previously noted, section 514(a) was
drafted to be "deliberately expansive," broadly displacing
inconsistent state laws so as to implement "Congress’s decision to
create a comprehensive, uniform federal scheme for the regulation
of employee benefit plans" through the enactment of ERISA.
Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1329 (5th Cir.
1992). See also id. at 1328-29 (discussing the broad
interpretation of the phrase "relates to" in the context of
ordinary ERISA preemption).
20
as the basis for removal jurisdiction.26 As the Supreme Court
stated in Taylor, "ERISA pre-emption, without more, does not
convert a state claim into an action arising under federal law."27
Accordingly, the district court’s finding that the plaintiffs’
motion for injunctive relief directly "related to" the
implementation and administration of an ERISA plan was an
insufficient basis for its holding that the motion triggered
complete preemption and, consequently, the court erred in
determining that it had removal jurisdiction.
B. Complete Preemption
In contrast to ordinary preemption, complete preemption not
only displaces substantive state law, but also "recharacterizes"
preempted state law claims as "arising under" federal law for the
purposes of determining federal question jurisdiction,28 typically
making removal available to the defendant. Thus, "complete
26
Under the well-pleaded complaint rule, a cause of action
"arises under" federal law only when the plaintiff’s well-pleaded
complaint raises issues of federal law. Metropolitan Life Ins. Co.
v. Taylor, 107 S. Ct. 1542, 1546 (1987). Because "[f]ederal pre-
emption is ordinarily a federal defense to the plaintiff’s suit,"
and as such "does not appear on the face of a well-pleaded
complaint," federal preemption typically "does not authorize
removal to federal court." Id. at 1546.
27
107 S. Ct. at 1547 (citing Franchise Tax Board, 103 S. Ct. at
2854-56).
28
"[I]f a federal cause of action completely preempts a state
cause of action any complaint that comes within the scope of the
federal cause of action necessarily ‘arises under’ federal law."
Franchise Tax Board, 103 S. Ct. at 2854.
21
preemption" is less a principle of substantive preemption than it
is a rule of federal jurisdiction.29 In other words, complete
preemption principally determines not whether state or federal law
governs a particular claim, but rather whether that claim will,
irrespective of how it is characterized by the complainant, be
treated as "arising under" federal law. In sum, complete
preemption "converts an ordinary state common law complaint into
one stating a federal claim for purposes of the well-pleaded
complaint rule," generally rendering the entire case removable to
federal court at the discretion of the defendant. Taylor, 107
S. Ct. at 1547.
C. Complete Preemption Analysis
Although "ordinary" and "complete" preemption are conceptually
and functionally distinct, they are analytically related insofar as
ordinary preemption is a necessary——but obviously not a
sufficient——precondition to complete preemption in the context of
ERISA. In Hartle v. Packard Electric, we held that "ordinary"
preemption was a "prerequisite to [the] exercise of jurisdiction"
pursuant to "complete preemption."30 Accordingly, the first step
29
See, e.g., Lister v. Stark, 890 F.2d 941, 943 n.1 (7th Cir.
1989) (commenting that "[t]he use of the term ‘complete preemption’
is unfortunate, since the complete preemption doctrine is not a
preemption doctrine but rather a federal jurisdiction doctrine").
30
877 F.2d 354, 355 (5th Cir. 1989) ("A prerequisite to this
exercise of [complete preemption] jurisdiction, however, is that
the state law claims actually be preempted by ERISA.").
22
in the complete preemption analysis is to determine whether the
claim is subject to ordinary preemption under section 514(a).31
This leaves the obvious question of what more is required to bring
a claim subject to ordinary preemption within the scope of complete
preemption.
This question has been answered, at least in substantial part,
by the Supreme Court in Franchise Tax Board and Taylor. In
Franchise Tax Board, the Court suggested, but did not have occasion
to hold, that the civil remedies provided by ERISA might give rise
to complete preemption, stating that “[i]t may be that, as with
§ 301 as interpreted in Avco, any state action coming within the
scope of § 502(a) of ERISA would be removable to federal district
court, even if an otherwise adequate state cause of action were
pleaded without reference to federal law." 103 S.Ct at 2854.
Subsequently, in Taylor, the Court reached and decided this issue,
holding that section 502(a)(1)(B) of ERISA completely preempted
state law claims falling within its scope.32
In Anderson v. Electronic Data Systems, Corp., 11 F.3d 1311,
31
Our subsequent cases have followed this two-step approach.
See, e.g., Kramer v. Barney, 80 F.3d 1080, 1083 ("Having concluded
that [Plaintiff’s] state law claims are preempted, we must next
consider whether ERISA displaces those claims under the complete
preemption doctrine."); and Anderson v. Electronic Data Systems
Corp., 11 F.3d 1311, 1313 (applying two-prong analysis).
32
107 S. Ct. at 1547-48. The Court also noted that "Congress
has clearly manifested an intent to make causes of action within
the scope of § 502(a) removable to federal court." Id. at 1548.
23
1315 (5th Cir. 1994), we construed the Supreme Court’s decision in
Taylor as holding that complete preemption in the context of ERISA
applies to those claims that fall within the scope of section
502(a).33 In Kramer v. Smith Barney, 80 F.3d 1080 (5th Cir. 1996),
we construed Taylor a bit more narrowly, interpreting its specific
holding as being limited to claims falling within the scope of
section 502(a)(1). Id. at 1083. We reasoned, however, that the
Court’s analysis supported extending the scope of complete
preemption to claims falling under section 502(a)(2), and held that
"because [plaintiff’s] state law claims fall within the enforcement
provisions of section 502, they are completely preempted and the
action was properly removed to the district court." Id. at 1084.
Thus, this Court has held, in essence, that state law claims
falling within the scope of the civil enforcement provisions
contained in section 502(a) are completely preempted.34
33
Id. at 1315 (holding that plaintiff’s claim "falls within the
scope of the civil enforcement provision, and hence created removal
jurisdiction.").
34
In describing the scope of complete preemption as generally
including those claims falling within section 502(a), we note that
there exists some ambiguity in the caselaw as to whether the scope
of complete preemption is limited to only those claims falling
within section 502(a)(1)(B), or whether complete preemption
encompasses all claims falling within the scope of section 502(a).
The Supreme Court’s opinion in Taylor dealt with a claim that was
preempted by section 502(a)(1)(B), and consequently it could be
argued that the Court’s holding was limited to that subsection.
However, the Court appeared to base its conclusion regarding the
scope of complete preemption under ERISA on the "explicit direction
from Congress" that it found in the legislative history of the
statute. Taylor, 107 S. Ct. at 1547. The Court summarized this
24
Applying this two-prong analysis to the facts of the case sub
judice, we conclude that the plaintiffs’ motion for injunctive
relief did not trigger complete preemption. We begin by assuming,
arguendo only, that the district court was correct in its holding
that the motion sufficiently "related to" an ERISA plan to
implicate ordinary preemption under section 514(a), thus disposing
of the first prong of our analysis. Proceeding to the second
"explicit direction" as indicating that "Congress has clearly
manifested an intent to make causes of action within the scope of
the civil enforcement provisions of § 502(a) removable to federal
court." Id. at 1548. Thus, it is potentially unclear whether the
Court intended its holding to apply to section 502(a)(1)(B) or to
all of section 502(a).
In Kramer, we held that the Supreme Court’s reasoning, if not
its specific holding, in Taylor supported complete preemption based
on section 502(a)(2). 80 F.3d at 1083. Some courts, however,
appear to have limited complete preemption to section 502(a)(1)(B),
while others seem to anticipate that complete preemption
potentially encompasses the full range of causes of action provided
by 502(a). Compare, e.g., Lupo v. Human Affairs International,
Inc., 28 F.3d 269, 273 (2d Cir. 1994) (stating that "the § 1109
fiduciary claims discussed by [defendant-appellee] are not the §
1132(a)(1)(B) claims that provide the complete preemption necessary
to satisfy the well-pleaded-complaint rule in accordance with
[Taylor]"), with Toumajian v. Frailey, 135 F.3d 648, 654-57 (9th
Cir. 1998) (considering the possibility of complete preemption
removal based on causes of action authorized by each subsection of
section 502(a)). For other examples of the application of complete
preemption in the ERISA context, see, e.g., Rice v. Panchal, 65
F.3d 637, 640 (7th Cir. 1995); Dukes v. U.S. Healthcare, Inc., 57
F.3d 350, 355 (3d Cir. 1995), and Warner v. Ford Motor Co., 46 F.3d
531, 535 (6th Cir. 1995).
We do not intend our brief discussion of complete preemption
to be interpreted as expanding its scope under ERISA. Because it
is not essential to the determination of the case sub judice, and
because it is not clear that there is any persisting conflict
between our position and those of our sister circuits, we leave the
tasks of further exposition and more precise definition of the
scope of complete preemption under ERISA to future cases.
25
prong, we have little difficulty in determining that the
plaintiffs’ motion for an injunction does not fall within the scope
of the civil enforcement provisions of section 502(a). Initially
we note that the plaintiffs were not acting as "participants" or
"beneficiaries" in seeking injunctive relief;35 and the motion
clearly does not seek to recover benefits or enforce rights under
an ERISA plan pursuant to section 502(a)(1)(B).36 Nor does the
motion seek relief for a breach of fiduciary duty,37 or for
violations of the reporting requirements.38 In sum, the plaintiffs’
motion does not appear to assert a claim that falls within any of
35
As discussed above, the underlying class action asserts
various state claims involving Mobil’s alleged violation of
workers’ compensation law. As such, this suit implicates the
employer-employee relationship and not a relationship dependent
upon the existence of an ERISA plan. Or, in other words, this suit
is not between traditional "ERISA entities."
36
It might be argued that because in ruling on the motion a
court would necessarily construe the waiver provision, the motion
implicitly sought a clarification of rights to future benefits
under section 502(a)(1)(B). This argument, however, necessarily
fails because the plaintiffs were not acting as "participants" or
"beneficiaries" in seeking the injunctive relief that might result
in a clarification of future rights. Thus, the plaintiffs’ motion
for injunctive relief does involve the parties as traditional ERISA
entities. Furthermore, we note that our decision in Hook v.
Morrison Milling Co., 38 F.3d 776 (5th Cir. 1994), would appear to
foreclose the general argument that the construal of a waiver
provision contained in an ERISA plan, or executed in partial
consideration for benefits under an ERISA plan, gives rise to
complete preemption.
37
See 29 U.S.C. § 1132(a)(2).
38
See 29 U.S.C. § 1132(a)(4).
26
the causes of action provided by section 502(a).39
Thus, although the plaintiffs’ motion for injunctive relief
may "relate to" an ERISA plan, thereby triggering ordinary
preemption, we can find no basis for holding that the motion
asserted a claim falling within the scope of section 502(a). We
therefore hold that the district court erred in concluding that the
plaintiffs’ motion asserted a claim "arising under" federal law, so
as to provide the basis for original jurisdiction necessary to
support removal.
IV. Supplemental Jurisdiction over State Claims
The final question posed by the district court is whether it
may "now [exercise] supplemental jurisdiction over all state law
claims under 28 U.S.C. § 1367." 958 F. Supp. at 283. In
determining whether it could properly exercise supplemental
jurisdiction over the plaintiffs’ state law claims, the district
court appropriately considered the four factors enumerated in
section 1367(c). 909 F. Supp. at 464. Concluding that the case did
not involve novel issues of state law, that the state claims did
not predominate over the federal claims, and that there existed no
39
We note that our analysis may seem somewhat terse. Our
brevity, however, is occasioned by the failure of the parties to
give detailed attention to this issue on appeal. We decline to
attempt to anticipate and resolve every possible argument that
Mobil could have, but did not, make on appeal. Nonetheless, we
have reviewed the provisions of section 502(a) and our caselaw, and
it does not appear to us that the plaintiffs’ motion falls within
any of the causes of action provided by section 502(a), so as to be
completely preempted.
27
"other compelling reasons" for declining jurisdiction, the district
court held that retaining the state law claims was appropriate.
Id. The court did not consider the factor stated in section
1367(c)(3), the dismissal of all federal claims, to be relevant
because of its holdings regarding complete preemption.
We review the district court’s decision to retain jurisdiction
over pendent state law claims for abuse of discretion. Parker &
Parsley Petroleum Co. v. Dresser Industries, 972 F.2d 580, 585 (5th
Cir. 1992). Our review is guided by the relevant statutory
provisions governing the exercise of supplemental jurisdiction, see
28 U.S.C. § 1367(c), as well as the Supreme Court’s articulation of
the scope and nature of district courts’ discretion in exercising
jurisdiction over pendent state law claims. See, e.g., Carnegie-
Mellon Univ. v. Cohill, 108 S. Ct. 614, 618-20 (1988), and United
Mine Workers v. Gibbs, 86 S. Ct. 1130, 1138-39 (1966).
In the case sub judice, it seems appropriate to begin by
noting that when all federal claims are dismissed or otherwise
eliminated from a case prior to trial, we have stated that our
"general rule" is to decline to exercise jurisdiction over the
pendent state law claims. Wong v. Stripling, 881 F.2d 200, 204
(5th Cir. 1989). This general rule, however, is not always
mandatory or absolute. See Newport Ltd. v. Sears, Roebuck and Co.,
941 F.2d 302, 307 (5th Cir. 1991). Thus, while our determination
that the district court erred in concluding that the case before it
28
included judiciable federal claims provides "a powerful reason to
choose not to continue to exercise jurisdiction," Cohill, 108 S. Ct.
at 619, no single factor is dispositive in this analysis. Parker
& Parsley, 972 F.2d at 587. Thus, we review the district court’s
decision in light of the specific circumstances of the case at bar,
beginning with the factors enumerated in 28 U.S.C. § 1367(c).40
With regard to the first of the section 1367(c) factors, it
appears that this case may involve at least one "novel or complex"
issue of state law. Although it is not entirely clear from the
briefs on appeal, the class claims regarding Mobil’s noncompliance
with state insurance regulations may raise novel issues both as to
the interpretation and applicability of these regulations and as to
whether they give rise to a private right of action. Turning to
the second and third statutory factors, our analysis above mandates
that the only two federal claims alleged, i.e., the complete
40
28 U.S.C. § 1367(c) provides that
"[t]he district courts may decline to exercise
supplemental jurisdiction over a claim under subsection
(a) if——
(1) the claim raises a novel or complex issue
of State law,
(2) the claim substantially predominates over
the claim or claims over which the district
court has original jurisdiction,
(3) the district court has dismissed all
claims over which it has original
jurisdiction, or
(4) in exceptional circumstances, there are
other compelling reasons for declining
jurisdiction. “
29
preemption claims, must be "dismissed." Consequently, the state
law claims now clearly predominate over the (now nonexistent)
federal claims. Finally, we find no "exceptional circumstances"
that would make the fourth section 1367(c) factor relevant. Thus,
our section 1367(c) analysis results in the conclusion that remand
is appropriate.
Furthermore, as noted above, not only have we stated that it
is our "general rule" to remand cases when all federal claims are
disposed of prior to trial, but the Supreme Court has counseled
that the dismissal of all federal claims weighs heavily in favor of
declining jurisdiction. See Gibbs, 86 S. Ct. at 1139, and Cohill,
108 S. Ct. at 619. The Supreme Court has also provided additional
guidance regarding review of the discretionary retention of pendent
state law claims. In Cohill, the Supreme Court discussed the
seminal case of United Mine Workers v. Gibbs, 86 S. Ct. 1130 (1966),
specifically focusing on the considerations appropriate to the
exercise of jurisdiction over pendent state law claims after all
federal claims had been eliminated from a case. 108 S. Ct. at 618-
19. The Court counseled that, pursuant to the reasoning and
holding of Gibbs, "a federal court should consider and weigh in
each case, and at every stage of the litigation, the values of
judicial economy, convenience, fairness, and comity in order to
decide whether to exercise jurisdiction over a case brought in that
court involving pendent state-law claims." Cohill, 108 S. Ct. at
30
619. The Court went on to state that when a "balance of these
factors indicates that a case properly belongs in state court, as
when the federal-law claims have dropped out of the lawsuit in its
early stages and only state-law claims remain, the federal court
should decline the exercise of jurisdiction." Id. (footnote and
internal citation omitted). Thus, both our "general rule" and the
reasoning contained in Gibbs and Cohill indicate that remand is the
correct disposition in the case at bar.
Finally, based on a case presenting issues somewhat analogous
to those under consideration here, this Court held that remand was
mandated due to concerns of comity and the Congressional intent
that cases involving workers’ compensation issues be resolved in
state courts. In Jones v. Roadway Express, Inc., 931 F.2d 1086
(5th Cir. 1991), we construed 28 U.S.C. § 1445(c), which bars the
removal of workers’ compensation cases, as indicating that
"Congress intended that all cases arising under a state’s workers’
compensation scheme remain in state court." Id. at 1092.
Accordingly, after the complete preemption claim asserted by the
defendant was eliminated on appeal, we held that "the case must be
remanded to state court." Id. (emphasis added). We concluded that
remand was required "in order to satisfy Congress’ dictate that, to
the extent possible, workers’ compensation cases remain in state
court." Id. On petition for rehearing, we stated that the
principal issue on appeal in Roadway Express had been "whether to
31
remand the case to state court when only a state-law claim
remained," the question we consider in the case sub judice. Jones
v. Roadway Express, Inc., 936 F.2d 789, 792 (5th Cir. 1991).41 We
went on to clearly restate our prior holding that "[g]iven the
discretion vested in the court to remand pendent state-law claims
to state court, we believe that the intent of Congress——that,
whenever feasible, state workers’ compensation claims be resolved
in state court——favors remand to state court." Id.42
The factors enumerated in 28 U.S.C. § 1367(c), a "balancing"
of the Gibbs "values" as articulated in Cohill, and our holding in
Roadway Express all lead to the conclusion that this case properly
belongs in the state court where it began. We can find no
significant factor that would justify retaining jurisdiction rather
than remanding, while the statutory, Supreme Court, and circuit law
and analyses relevant to review of the case at bar each weigh
heavily in favor of declining to exercise jurisdiction over the
remaining removed state law claims. Accordingly, we hold that
41
Of course, section 1445(c) applies only to cases commenced
in state court, and it does not govern, expressly or by analogy,
cases properly commenced in federal court. St. Paul Ins. Co. v.
Trejo, 39 F.3d 585 (5th Cir. 1994).
42
We are not suggesting that any of the state law claims in
this case are ones “arising under the workmen’s compensation laws”
of Texas for purposes of section 1445(c). See Patin v. Allied
Signal, Inc., 69 F.3d 1 (5th Cir. 1995). Clearly, however, Texas
workers’ compensation laws are significantly implicated in many of
the claims. What we are addressing is, and is only, remand under
section 1367(c) and the Gibbs and Cohill factors.
32
retaining jurisdiction over, rather than remanding, the state law
claims in this case would constitute an abuse of discretion.
Conclusion
Because the district court erred in determining that it had
federal question jurisdiction pursuant to complete preemption under
the LMRA at the time that it rendered its order, and also erred in
determining that it had removal jurisdiction pursuant to ERISA
complete preemption, we hold that the district court’s continued
exercise of jurisdiction would constitute an abuse of discretion.
Accordingly, we reverse the district court’s denial of plaintiffs’
motion to remand and direct the district court, pursuant to our
holding herein, to remand the case to the state court from which it
was removed.
REVERSED and REMANDED
33