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finding PREP Act did not apply to plaintiff's state-law claims for wrongful death, survival action negligence, negligence per se, and breach of contract, and thus, "[could not] serve as a substantial question to create subject matter jurisdiction"
Summary of this case from Champion v. Billings Skilled Nursing Facility, LLCOpinion
Civil Action No. 21-cv-0472-PAB
2021-05-07
Jacqueline GWILT, individually and as the authorized representative of the Estate of Robert Quentin Sharpe, Plaintiff, v. HARVARD SQUARE RETIREMENT & ASSISTED LIVING, and Watermark Retirement Communities, Defendants.
Arron Burt Nesbitt, Miah Marie Brouhard, Whitcomb Selinsky PC, Nicole Kim Griffard, Hustead Law Firm PC, Denver, CO, for Plaintiff. Elizabeth C. Moran, Rodrigo Lugo, Catherine O'Brien Crum, Nixon Shefrin Ogburn Drew, P.C., Greenwood Village, CO, for Defendants.
Arron Burt Nesbitt, Miah Marie Brouhard, Whitcomb Selinsky PC, Nicole Kim Griffard, Hustead Law Firm PC, Denver, CO, for Plaintiff.
Elizabeth C. Moran, Rodrigo Lugo, Catherine O'Brien Crum, Nixon Shefrin Ogburn Drew, P.C., Greenwood Village, CO, for Defendants.
ORDER TO SHOW CAUSE
PHILIP A. BRIMMER, Chief United States District Judge
This matter is before the Court sua sponte on the Notice of Removal [Docket No. 1]. Defendants state that the Court has both federal-question and diversity jurisdiction pursuant to 280 U.S.C. §§ 1331, 1332. Docket No. 1 at 1.
In every case and at every stage of the proceeding, a federal court must satisfy itself as to its own jurisdiction, even if doing so requires sua sponte action. See Citizens Concerned for Separation of Church & State v. City & Cnty. of Denver , 628 F.2d 1289, 1297 (10th Cir. 1980). Absent an assurance that jurisdiction exists, a court may not proceed in a case. See Cunningham v. BHP Petroleum Gr. Brit. PLC , 427 F.3d 1238, 1245 (10th Cir. 2005). Courts are well-advised to raise the issue of jurisdiction on their own, regardless of parties’ apparent acquiescence. First, it is the Court's duty to do so. Tuck v. United Servs. Auto. Ass'n , 859 F.2d 842, 844 (10th Cir. 1988). Second, regarding subject matter jurisdiction, "the consent of the parties is irrelevant, principles of estoppel do not apply, and a party does not waive the requirement by failing to challenge jurisdiction." Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee , 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982) (internal citations omitted). Finally, delay in addressing the issue only compounds the problem if, despite much time and expense having been dedicated to the case, a lack of jurisdiction causes it to be dismissed. See U.S. Fire Ins. Co. v. Pinkard Constr. Co. , No. 09-cv-00491-PAB-MJW, 2009 WL 2338116, at *3 (D. Colo. July 28, 2009).
"The party invoking federal jurisdiction bears the burden of establishing such jurisdiction as a threshold matter." Radil v. Sanborn W. Camps, Inc. , 384 F.3d 1220, 1224 (10th Cir. 2004). "Federal district courts must strictly construe their removal jurisdiction." Envtl. Remediation Holding Corp. v. Talisman Capital Opportunity Fund, L.P. , 106 F. Supp. 2d 1088, 1092 (D. Colo. 2000). "[A]ll doubts are to be resolved against removal." Fajen v. Found. Reserve Ins. Co., Inc. , 683 F.2d 331, 333 (10th Cir. 1982). Thus, the Court presumes that no jurisdiction exists absent an adequate showing by the party invoking federal jurisdiction. Lorentzen v. Lorentzen , No. 09-cv-00506-PAB, 2009 WL 641299, at *1 (D. Colo. Mar. 11, 2009). The Court first considers defendants’ arguments that the Court has federal-question jurisdiction before turning to defendants’ diversity jurisdiction arguments.
I. FEDERAL-QUESTION JURISDICTION
Defendants assert that the Court has federal-question jurisdiction to hear their case on removal pursuant to 28 U.S.C. § 1331. Docket No. 1 at 3, ¶ 7. Under § 1331, "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. "Under the longstanding well-pleaded complaint rule ... a suit ‘arises under’ federal law only when the plaintiff's statement of his own cause of action shows that it is based upon federal law." Vaden v. Discover Bank , 556 U.S. 49, 60, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009) (quoting Louisville & Nashville R.R. Co. v. Mottley , 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908) ) (internal quotation marks and alteration marks omitted). In other words, "[a]s a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim." Beneficial Nat'l Bank v. Anderson , 539 U.S. 1, 6, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). For removal jurisdiction, "the required federal right or immunity must be an essential element of the plaintiff's cause of action, and ... the federal controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal." Fajen , 683 F.2d at 333 (internal quotation marks omitted); see also Gully v. First Nat'l Bank , 299 U.S. 109, 113, 57 S.Ct. 96, 81 L.Ed. 70 (1936). It "takes more than a federal element to open the ‘arising under’ door" of § 1331. Empire Healthchoice Assurance, Inc. v McVeigh , 547 U.S. 677, 701, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006).
Here, the initial pleading in state court was the complaint. Docket No. 1-15. Therefore, the Court must analyze the complaint to determine whether it is based on federal law. See, e.g. , King v. United Way of Central Carolinas, Inc. , 2009 WL 2432699, at *3 (W.D.N.C. June 16, 2019) ; Butts v. Hansen , 650 F. Supp. 996, 998 (D. Minn. 1987) ; Perimeter Lighting, Inc. v. Karlton , 456 F. Supp. 355, 358 (N.D. Ga. 1978).
According to the complaint, plaintiff's father was a resident of defendant Harvard Square Retirement & Assisted Living ("HSR") at the time of his death. Docket No. 1-15 at 2, ¶ 3. Plaintiff alleges that HSR "improperly re-used personal protective equipment and moved COVID-positive patients to a unit with residents who were COVID-negative." Id. at 5, ¶ 27. This led Mr. Sharpe to contract COVID-19 and, after he developed "respiratory distress," HSR took him to the Medical Center of Aurora, where he ultimately died. Id. , ¶¶ 28–29, 32. According to the complaint, the lawsuit
arises out of (1) Defendants’ gross negligence and reckless misconduct in failing to comply with Colorado Public Health Order 20-20 ("Order 20-20") and Federal Law CFR 483.68; and (3) [sic] Defendants’ breach of contract when they failed to inform [Jacqueline Gwilt], as Mr. Sharpe's daughter and legal representative, that Mr. Sharpe had been admitted to the Medical Center of Aurora, where he ultimately passed away, after contracting COVID-19 due to Defendants’ negligence.
Id. at 3, ¶ 13. Plaintiff pleads four state-law claims – wrongful death, survival action negligence, negligence per se, and breach of contract. Id. 6–10.
Defendants argue that plaintiff's claims are "completely pre[-]empted" by the Public Readiness and Emergency Preparedness Act ("PREP Act"), 42 U.S.C. § 247d-6d and "thus arise under federal law," giving the Court federal-question subject matter jurisdiction. Docket No. 1 at 5, ¶ 14. Defendants also state that "federal jurisdiction is appropriate as this action raises substantial federal issues and therefore ‘arises under’ federal law." Id. Defendants are mistaken. Because the PREP Act does not apply to this case, the doctrine of complete preemption, to the extent it even exists under the PREP Act, does not permit removal. Nor does resolution of plaintiff's claims raise substantial federal issues or a serious federal interest in the claims.
The doctrine of complete preemption is an exception to the well-pled complaint rule. See Devon Energy Prod. Co. v. Mosaic Potash Carlsbad, Inc. , 693 F.3d 1195, 1204 (10th Cir. 2012). "Complete preemption is a rare doctrine" that has only been recognized in a handful of areas. Id. at 1204–05 (quoting Cmty. State Bank v. Strong , 651 F.3d 1241, 1260 n.16 (11th Cir. 2011) ). It is not to be lightly invoked. Id. at 1205 ; Connolly v. Union Pac. R.R. Co. , 453 F. Supp. 2d 1104, 1109 (E.D. Mo. 2006) ("Courts have cautioned against an expansive application of the exception."). Complete preemption is not a statement of the breadth of a statute's preemptive power, "but rather as a description of the specific situation in which a federal law not only preempts a state law to some degree but also substitutes a federal cause of action for the state cause of action, thereby manifesting Congress's intent to permit removal." Devon Energy Prod. , 693 F.3d at 1205 (quoting Schmeling v. NORDAM , 97 F.3d 1336, 1342 (10th Cir. 1996) ). Only complete preemption, not express preemption, which is an affirmative defense that a plaintiff's state-law claim has been preempted by a federal statute, supports removal. Felix v. Lucent Techs. , 387 F.3d 1146, 1153–1158 (10th Cir. 2004)
The Supreme Court has endorsed complete preemption with respect to only four statutes: § 301 of the Labor Management Relations Act, § 502(a)(1)(B) of the Employee Retirement Income Security Act, the National Bank Act, and the Federal Deposit Insurance Act. Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists and Aerospace Workers , 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968) ; Metro. Life Ins. Co. v. Taylor , 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ; Beneficial Nat'l Bank v. Anderson , 539 U.S. 1, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003) ; Vaden v. Discover Bank , 556 U.S. 49, 129 S.Ct. 1262, 173 L.Ed.2d 206 (2009).
"[A] claim of complete preemption demands a two-part analysis: first, we ask whether the federal regulation at issue preempts the state law relied on by the plaintiff; and second, whether Congress intended to allow removal in such a case, as manifested by the provision of a federal cause of action to enforce the federal regulation." Devon Energy Prod. , 693 F.3d at 1205. "For reasons of comity and prudence," courts begin with the second prong of the test, as the "analysis under the complete preemption doctrine is jurisdictional and therefore preliminary to any consideration of the merits." Schmeling , 97 F.3d at 1343. Importantly, the claims at issue must fall within the scope of the relevant federal statute for complete preemption to apply. See Beneficial Nat'l Bank , 539 U.S. at 8, 123 S.Ct. 2058 ("When the federal statute completely pre-empts the state-law cause of action, a claim which comes within the scope of that cause of action, even if pleaded in terms of state law, is in reality based on federal law.").
The PREP Act applies to the administration or use of "covered countermeasures" and is invoked when the Secretary of Health and Human Services (the "Secretary") determines that a disease or other health condition constitutes a public health emergency. See 42 U.S.C. § 247d-6d(b)(1). If the Secretary makes such a determination, he or she "may make a declaration, through publication in the Federal Register, recommending ... the manufacture, testing, development, distribution, administration, or use of one or more covered countermeasures, and stating that [ 42 U.S.C. § 247d-6d(a) ] is in effect with respect to the activities so recommended." Id. The Secretary issued such a declaration regarding the COVID-19 pandemic. See Declaration Under the Public Readiness and Emergency Preparedness Act for Medical Countermeasures Against COVID-19, 85 Fed. Reg. 15,198 (Mar. 10, 2020) ("Declaration"). Once the Secretary issues a declaration, the PREP Act provides immunity for certain claims against certain covered individuals. "[A] covered person shall be immune from suit and liability under Federal and State law with respect to all claims for loss caused by, arising out of, relating to, or resulting from the administration to or the use by an individual of a covered countermeasure." 42 U.S.C. § 247d-6d(a)(1). This immunity "applies to any claim for loss that has a causal relationship with the administration to or use by an individual of a covered countermeasure, including a causal relationship with the design, development, clinical testing or investigation, manufacture, labeling, distribution, formulation, packaging, marketing, promotion, sale, purchase, donation, dispensing, prescribing, administration, licensing, or use of such countermeasure." Id. at § 247d-6d(a)(2)(B). A "covered countermeasure" is a drug, biological product, or device that is a "qualified pandemic or epidemic product" or a "security countermeasure," or is authorized for emergency use under the Federal Food, Drug, and Cosmetic Act. Id. at § 247d-6d(i)(1). Other terms are further defined in the Act.
Ultimately, "the PREP Act creates immunity for all claims of loss causally connected to the administration or use of covered countermeasures, which are certain drugs, products, or devices." Robertson v. Big Blue Healthcare, Inc., 523 F.Supp.3d 1271, 1279–80 (D. Kan. Feb. 26, 2021). "Exceptions to immunity exist for claims proximately caused by willful misconduct, but suit must be brought in the United States District Court for the District of Columbia. All other claims for injuries directly caused by the administration or use of a covered countermeasure must be pursued through the Covered Countermeasure Process Fund." Id.
At least a dozen courts around the country have determined that where a plaintiff's claim is premised on a failure to take preventative measures to stop the spread of COVID-19, as here, and where none of the alleged harm was causally connected to the administration or use of any counter-measure, which is the focus of the PREP Act, the PREP Act does not apply. See id. , at 1980–82 (collecting cases). The consensus in these cases is that the plaintiffs’ allegations did not fall within the Act because Act was "designed to address claims arising from the administration or use of covered countermeasures, rather than claims alleging a failure to act in the face of the threat of COVID-19 altogether." Saunders v. Big Blue Healthcare, Inc., 522 F.Supp.3d 946, 960–61 (D. Kan. Feb. 26, 2021) (citing Jackson v. Big Blue Healthcare, Inc. , 2020 WL 4815099, at *6 (D. Kan. Aug. 19, 2020) ). In this case, plaintiff alleges that HSR "improperly re-used personal protective equipment and moved COVID-positive patients to a unit with residents who were COVID-negative" and failed to contact plaintiff when her father contracted COVID-19, developed respiratory distress, was admitted to the Medical Center of Aurora, and died. See Docket No. 1 at 5, ¶¶ 27–32. None of these allegations is based on defendants’ use of covered counter measures. The Court finds that plaintiff's allegations in this case also do not fall within the Act.
The Declaration, however, has since been amended. Defendants cite to the Fourth Amendment to the Declaration, 85 Fed. Reg. 79,190 (December 3, 2020) ("Fourth Amendment"), Docket No. 1 at 9, ¶ 24, which more specifically defines covered countermeasures as:
(a) Any antiviral, any drug, any biologic, any diagnostic, any other device, any respiratory protective device, or any vaccine manufactured, used, designed, developed, modified, licensed, or procured:
i. To diagnose, mitigate, prevent, treat, or cure COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom; or
ii. to limit the harm that COVID-19, or the transmission of SARS-CoV-2 or a virus mutating therefrom, might otherwise cause;
(b) a product manufactured, used, designed, developed, modified, licensed, or procured to diagnose, mitigate, prevent, treat, or cure a serious or life-threatening disease or condition caused by a product described in paragraph (a) above;
(c) a product or technology intended to enhance the use or effect of a product described in paragraph (a) or (b) above; or
(d) any device used in the administration of any such product, and all components and constituent materials of any such product.
85 Fed. Reg. at 79,196. Any countermeasure, however, must still meet the definition of "covered countermeasure" in the PREP Act itself. Id. The Fourth Amendment states, "[w]here there are limited Covered Countermeasures, not administering a Covered Countermeasure to one individual in order to administer it to another individual can constitute ‘relating to ... the administration to ... an individual’ under 42 U.S.C. [§] 247d-62." 85 Fed. Reg. at 79,197. But the Fourth Amendment does not make the PREP Act any more relevant to plaintiff's case. Even if the Fourth Amendment provides support that the PREP Act applies to inaction or failure, there are no allegations that plaintiff or her father suffered any loss from the "prioritization or purposeful allocation" of a countermeasure. There are also no allegations in this case that the loss was caused by the non-use or non-administration of covered countermeasures linked to the use or administration of that countermeasure to another person instead. See Lyons v. Cucumber Holdings, LLC , 2021 WL 364640, at *4 (C.D. Cal. Feb. 3, 2021) ("Although the HHS Secretary's December 3, 2020 Amendment makes clear that an ‘inaction claim’ is not necessarily beyond the scope of the PREP Act, such claims only fall under the scope of the PREP Act where: (1) there are limited covered countermeasures; and (2) there was a failure to administer a covered countermeasure to one individual because it was administered to another individual.").
Other courts that have considered this issue have come to a similar conclusion. See, e.g. , Robertson, 523 F.Supp.3d at 1283–85 ; Grohmann v. HCP Prairie Village KS OPCO LLC, 516 F.Supp.3d 1267, 1279 (D. Kan. Jan. 29, 2021) ("The court nonetheless concludes that the Declaration's emphasis on causation in the context of non-administration claims reinforces our court's causation analysis in related PREP Act cases."); Hatcher v. HCP Prairie Village KS OPCO LLC, 515 F.Supp.3d 1152, 1162 (D. Kan. Jan. 27, 2021) ("Plaintiffs’ allegations do not appear to claim that decedent's death was caused by a decision to ration a covered product or allocate a covered countermeasure to some but not others."); Lyons, 520 F.Supp.3d at 1286 ("Indeed, even assuming that Plaintiff's allegations could be construed as alleging the administration of covered countermeasures, she does not allege that Decedent's death resulted from Defendants’ decisions to administer those covered countermeasures to other individuals."); Dupervil v. Alliance Health Operations, LLC, 516 F.Supp.3d 238, 255 (E.D.N.Y. Feb. 2, 2021) ("[T]he crux of Plaintiff's claims is that his father died because Defendants failed to take certain steps.... These alleged failures cannot be said to be administering – or even prioritizing or purposefully allocating – a drug, biological product, or device to an individual within the meaning of the PREP Act such that Plaintiffs’ claims are completely preempted."). Accordingly, the Fourth Amendment does not alter the Court's conclusion that the PREP Act does not apply to plaintiff's claims.
Defendants cite to a more recent advisory opinion published by the General Counsel of Department of Health and Human Services, Advisory Opinion 21-01 on the Public Readiness and Emergency Preparedness Act Scope of Preemption Provision, Jan. 8, 2021 ("AO 21-01"). Docket No. 1 at 9, ¶ 25. AO 21-01 states that the PREP Act is a " ‘complete preemption’ statute." Defendants argue that "AO 21-01 is binding on this court" and that "Advisory Opinions have the same ‘controlling weight’ as the Declaration and the PREP Act itself." Docket No. 1 at 10–11, ¶ 28. Because the Court has determined that the PREP Act does not apply to cases like plaintiff's, the Court need not determine whether complete preemption applies to the PREP Act and would thereby permit removal. Nor do defendants’ other authorities suggest a different outcome.
The court in Dupervil confronted this same issue and determined that AO 21-01 was not binding on the court. See 516 F.Supp.3d at 252–53. The court explained that, although the Declaration "must be construed in accordance with the Advisory Opinions of the Office of the General Counsel," 85 Fed. Reg. 79,194 –95, AO 21-01 itself "expressly states that it ‘does not have the force or effect of law.’ " 516 F.Supp.3d at 252 (quoting AO 21-01 at 5). Therefore, "even assuming that Congress intended to delegate authority to the [the Secretary and General Counsel of Health and Human Services] ‘generally to make rules carrying the force of law,’ the [AO 21-01] interpretation relied upon by Defendants here explicitly was not ‘promulgated in the exercise of that authority’ and is not entitled to ... deference" under Chevron U.S.A., Inc. v. Nat'l Res. Def. Council, Inc. , 467 U.S. 837, 843 n.9, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). Dupervil, 520 F.Supp.3d at 252–53 (citing United States v. Mead Corp. , 533 U.S. 218, 226–27, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (deciding that no Chevron deference is due where an agency's rule or opinion was not "promulgated in the exercise of" any delegated congressional authority)). The Court finds this reasoning persuasive.
Defendants cite to the "Statement of Interest of the United States" filed in Bolton v. Gallatin Ctr. for Rehabilitation & Healing , No. 3:20-cv-00683, 2021 WL 1561306 (M.D. Tenn. 2021), and the recent decision denying remand in Garcia v. Welltower OpCo Group LLC, 522 F.Supp.3d 734 (C.D. Cal. 2021). As to the Statement of Interest, the Court finds that it largely focuses on whether the PREP Act is a complete-preemption statute; however, the Court has already determined that the PREP Act does not apply to this case. As to the decision in Garcia , the Court notes that it is the only decision in this line of cases not to remand.
As an alternative to their PREP Act preemption arguments, defendants claim that this action " ‘arises under’ federal law and raises a substantial federal issue." Docket No. 1 at 14, ¶ 37 (citing Grable & Sons Metal Prods., Inc. v. Darue Eng. & Mfg. , 545 U.S. 308, 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) ). Again, defendants rely on the Fourth Amendment to the Declaration, which states that "there are substantial federal legal and policy issues, and substantial federal legal and policy interests within the meaning of Grable ." Id. at 14–15, ¶ 39 (quoting 85 Fed. Reg. at 19194 ). The Court also considers whether plaintiff's citations to "CFR 483.68" are sufficient to meet this test.
The "substantial question" test applies when a state-law claim invokes a substantial federal question such that the state-law claim can be considered to arise under federal law for jurisdictional purposes. See Becker v. Ute Indian Tribe of the Uintah & Ouray Rsrv. , 770 F.3d 944, 947 (10th Cir. 2014). Under this test, "federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn v. Minton , 568 U.S. 251, 258, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013). The Tenth Circuit has cautioned that "this branch of arising-under jurisdiction is a slim one." Gilmore v. Weatherford , 694 F.3d 1160, 1171 (10th Cir. 2012). For instance, the "mere need to apply federal law in a state-law claim" will not "suffice to open the ‘arising under’ door." Grable , 545 U.S. at 313, 125 S.Ct. 2363. Federal jurisdiction demands "not only a contested federal issue, but a substantial one, indicating a serious federal interest in claiming the advantages though to be inherent in a federal forum. Id.
The mere fact that a federal issue may be implicated is not enough to create a substantial question. Becker , 770 F.3d at 947. Rather, the federal question must be an essential element of a plaintiff's claim. Gilmore , 694 F.3d at 1173. Nor does a federal defense create jurisdiction. Becker , 770 F.3d at 947 ; see also Grable , 545 U.S. at 312, 125 S.Ct. 2363 (stating "that in certain cases federal-question jurisdiction will lie over state-law claims that implicate significant federal issues").
As discussed above, the Court has determined that plaintiff's state-law claims are not brought under the PREP Act and that the PREP Act is not an essential element of plaintiff's claims. Thus, the PREP Act cannot serve as a substantial question to create subject matter jurisdiction in this case. See Gilmore , 694 F.3d at 1173 ; see also Dupervil, 516 F.Supp.3d at 257–59. Aside from Fourth Amendment and AO 21-01, defendants cite no other federal law that could serve this purpose. Given this, there is no basis to conclude that plaintiff's claims contain an embedded federal question sufficient to justify removal. Moreover, while defendants assert the PREP Act as a defense, see Docket No. 1 at 15, ¶ 40 ("[Plaintiff's] claims by their nature arise out of and relate to Defendants’ administration and use of covered countermeasures and invoke the PREP Act."), this is not sufficient. See Devon Energy Prod. , 693 F.3d at 1210–12 (stating that Grable requires that the federal question be a necessary element of a plaintiff's claim, and the possibility that it will be raised as a defense is not sufficient). This is consistent with other courts’ treatment of similar jurisdictional arguments in cases like these. See, e.g. , Robertson, 523 F.Supp.3d at 1286–87 ; Lyons, 520 F.Supp.3d at 1288 (rejecting the existence of an embedded federal question because "the federal issue raised relates to Defendants’ defense, not the claims alleged by Plaintiff"); Dupervil, 516 F.Supp.3d at 255 ("In fact, there is a growing consensus among courts across the country that state-law claims of negligence and wrongful death brought against a nursing home for failure to protect against the spread of COVID-19, like those that Plaintiff alleges, are not properly characterized as federal-law claims under the PREP Act.").
While the Fourth Amendment states that "there are substantial federal legal and policy issues, and substantial federal legal and policy interests within the meaning of [Grable ] in having a unified, whole-of-nation response to the COVID-19 pandemic among federal, state, local, and private-sector entities" and "in having a uniform interpretation of the PREP Act," 85 Fed. Reg. at 79,194, the significance of the COVID-19 pandemic and the importance of uniform interpretation of the PREP Act does not create federal question jurisdiction. See Robertson, 523 F.Supp.3d at 1286–87.
The Court reaches a similar conclusion after considering plaintiff's citations to "CFR 483.68." See Docket No. 1-15 at 3, ¶ 13; id. at 4, ¶ 26; id. at 6, ¶¶ 40, 42; id. at 8, ¶ 64. Plaintiff does not provide the title number for these citations, so the Court cannot be certain what plaintiff is referring to. Defendants assume plaintiff means 42 C.F.R. § 438.65, which, defendants state, concerns infection control measures in long-term care facilities. See Docket No. 1 at 6, ¶ 17. This seems unlikely, as § 438.65 pertains to specialized rehabilitative services. Even if plaintiff meant to cite to 42 C.F.R. § 438.80, which is the infection control regulation, these citations are not a sufficient ground for federal jurisdiction. At most, these citations show that a federal issue may be implicated, but mere implication is not enough to create a substantial question. See Becker , 770 F.3d at 947. Rather, the federal question must be an essential element of a plaintiff's claim. Gilmore , 694 F.3d at 1173. These few citations to the Code of Federal Regulations are not essential elements of any of plaintiff's state-law claims. The Court therefore finds defendants’ federal-question jurisdiction arguments not well-pled.
II. DIVERSITY JURISDICTION
Defendants also assert that this Court has diversity jurisdiction under 28 U.S.C. § 1332. Docket No. 1 at 3, ¶ 6. Pursuant to that statute, "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different States." 28 U.S.C. § 1332(a). "For purposes of federal diversity jurisdiction, an individual's state citizenship is equivalent to domicile." Smith v. Cummings , 445 F.3d 1254, 1259 (10th Cir. 2006). "To establish domicile in a particular state, a person must be physically present in the state and intend to remain there." Id. at 1260. While, at the pleading stage, the Court takes as true all "well-pled (that is, plausible, conclusory, and non-speculative) facts," Dudnikov v. Chalk & Vermilion Fine Arts , 514 F.3d 1063, 1070 (10th Cir. 2008), the allegations regarding defendants’ citizenship are not well-pled.
The notice of removal states that defendant Watermark Harvard Square, LLC ("Watermark Harvard Square") is a "Delaware limited liability company domiciled in Tucson, Arizona." Docket No. 1 at 3, ¶ 9. Watermark Harvard Square has one member, Watermark Aqua Operator, LLC ("Watermark Aqua Operator"), "which is also a Delaware limited liability company domiciled in Delaware." Id. Watermark Aqua Operator has two members, Aqua Operations NT-HCI, LLC ("Aqua Operations NT-HCI"), which is "domiciled in Delaware," and Watermark Aqua Investments, LLC ("Watermark Aqua Investments"), which is also "domiciled in Delaware." Id. Aqua Operations NT-HCI has one member, TRS NT-HCI LLC ("TRS NT-HCI"), which is "domiciled in Delaware." Id. TRS NT-HCI has one member, Northstar Health Income Operating Partnership, LP ("Northstar Income Operating Partnership"), a "Delaware limited partnership domiciled in Delaware" that has "essentially two members, a collective of ‘other limited partners’ (< 1%) and Northstar Healthcare Income, Inc. (>99%), a Maryland corporation with a principal place of business in Baltimore, MD." Id. at 3-4, ¶ 9. Watermark Aqua Investments has one member, Watermark Aqua Holdings, LLC, which is "domiciled in Delaware" and which has two members, the Barnes Family Revocable Trust ("Barnes Trust") and TFG Holdings X, LLC, which is "domiciled in Delaware." Id. at 4, ¶ 9. TFG Holdings X, LLC has one member, the Diana and David Freshwater Living Trust ("Freshwater Trust"). Id. The "co-settlors and co-trustees" of the Barnes Trust are David N. Barnes and Lisa R. Barnes, who are "domiciled in both Arizona and Wyoming." Id. The "co-trustmakers and co-trustees" of the Freshwater Trust are David J. Freshwater and Diana B. Freshwater, who are "domiciled in both Arizona and Wyoming." Id.
Defendants state that defendant Watermark Retirement Communities, LLC ("Watermark Retirement Communities") is a "Delaware limited liability company domiciled in Tucson, Arizona." Id. , ¶ 10. Its members are Watermark Investments Manager, LLC ("Watermark Investments Manager"), which is "a Delaware limited liability company domiciled in Delaware," and Keppel Capital Senior Living, LLC ("Keppel Capital Senior Living"), which is "a Delaware LLC domiciled in Delaware." Id. Keppel Capital Senior Living has one member, Keppel Capital US Holdings, Inc. ("Keppel Capital Holdings"), which is "a Delaware corporation domiciled in Delaware." Id. Watermark Investments Manager has two members, the Barnes Trust and the Freshwater Trust. Id.
The citizenship of an LLC and other unincorporated association is determined not by its state of organization or principal place of business, but by the citizenship of all of its members. See Siloam Springs Hotel, LLC v. Century Sur. Co. , 781 F.3d 1233, 1237-38 (10th Cir. 2015) ("[I]n determining the citizenship of an unincorporated association for purposes of diversity, federal courts must include all the entities’ members."). Defendants, as the proponents of federal jurisdiction, must specifically identify and state the citizenship of each member of each unincorporated association. See Den 8888, LLC v. Navajo Express, Inc. , No. 21-cv-00321-STV, 2021 WL 463623, at *3 (D. Colo. Feb. 9, 2021) ; U.S. Advisor, LLC v. Berkshire Prop. Advisors, LLC , No. 09-cv-00697-PAB-CBS, 2009 WL 2055206, at *2 (D. Colo. July 10, 2009) (citing Hicklin Eng'g, L.C. v. Bartell , 439 F.3d 346, 347 (7th Cir. 2006) ); Alphonse v. Arch Bay Holdings, L.L.C. , 618 F. App'x 765, 768 (5th Cir. 2015) (unpublished) ("[W]e have observed that the appropriate tests for citizenship involve tracing [entities’] citizenships down the various organizational layers where necessary." (internal citation omitted)); Underwriters at Lloyd's, London v. Osting-Schwinn , 613 F.3d 1079, 1092 (11th Cir. 2010) (remanding case in which party invoking the court's diversity jurisdiction did not disclose the identity and citizenship of each member of an unincorporated entity); Delay v. Rosenthal Collins Grp., LLC , 585 F.3d 1003, 1005 (6th Cir. 2009) ("When diversity jurisdiction is invoked in a case in which a limited liability company is a party, the court needs to know the citizenship of each member of the company. And because a member of a limited liability company may itself have multiple members – and thus may itself have multiple citizenships – the federal court needs to know the citizenship of each ‘sub-member’ as well."); Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C. , 374 F.3d 1020, 1022 (11th Cir. 2004) ("[A] party must list the citizenships of all the members of the limited liability company."); Prospect Funding Holdings, LLC v. Fennell , 2015 WL 4477120, at *2 (S.D.N.Y. July 15, 2015) (collecting New York district court decisions holding that a limited liability company must "plead facts establishing their citizenship including, ... the identity and citizenship of their members" in order to invoke diversity jurisdiction). A negative allegation of citizenship is not sufficient. See, e.g. , D.B. Zwirn Special Opportunities Fund, L.P. v. Mehrotra , 661 F.3d 124, 125–26 (1st Cir. 2011) (holding that allegations of LLC's citizenship in the negative are insufficient to establish diversity jurisdiction); see also 13E Charles A. Wright et al., Fed. Prac. & Proc. § 3611 (3d ed. 2009) (updated Oct. 2020) ("Neither is a negative statement that a party is not a citizen of a particular state usually sufficient.").
Thus, allegations about the "domiciles" of the LLCs are not relevant. Moreover, defendants’ allegations with respect to defendant Watermark Harvard Square are not well-pled. First, defendants have failed to identify and state the citizenship of each limited partner of Northstar Income Operating Partnership. See Carden v. Arkoma Assocs. , 494 U.S. 185, 192, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990) ("We have never held that an artificial entity, suing or being sued in its own name, can invoke the diversity jurisdiction of the federal courts based on the citizenship of some but not all of its members.").
Second, defendants’ allegations concerning the Barnes Trust and the Freshwater Trust are not well-pled. In Americold Realty Trust v. ConAgra Foods, Inc. , the Supreme Court held that the citizenship of a real estate investment trust, like the citizenship of other unincorporated entities, depends on the citizenship of all its members. 577 U.S. 378, 136 S. Ct. 1012, 1016, 194 L.Ed.2d 71 (2016). "[W]hen a trustee files a lawsuit in her name, her jurisdictional citizenship is the State to which she belongs – as is true of any natural person." Id. Thus, Americold appears to establish rules for determining a party's citizenship depending on whether the party is a trustee or the trust itself. However, the Court further explained:
Americold's confusion regarding the citizenship of a trust is understandable and widely shared. The confusion can be explained, perhaps, by tradition. Traditionally, a trust was not considered a distinct legal entity, but a "fiduciary relationship" between multiple people. Such a relationship was not a thing that could be haled into court; legal proceedings involving a trust were brought by or against the trustees in their own name. And when a trustee files a lawsuit or is sued in her own name, her citizenship is all that matters for diversity purposes. For a traditional trust, therefore, there is no need to determine its membership, as would be true if the trust, as an entity, were sued. Many States, however, have applied the "trust" label to a variety of unincorporated entities that have little in common with this traditional template.... So long as such an entity is unincorporated, we apply our "oft-repeated rule" that it possesses the citizenship of all its members. But ... this rule [does not] limit[ ] an entity's membership to its trustees just because the entity happens to call itself a trust.
Id. (internal citations omitted). Although this language is open to interpretation, this Court has adopted the interpretation of at least six circuits that Americold establishes, "in contrast to a business trust, the citizenship of a traditional trust is determined solely by the citizenship of its trustees." Woodward, Inc. v. ZHRO Solutions, LLC , No. 18-cv-01468-PAB, 2018 WL 4697324, at *2 (D. Colo. June 26, 2018) (citing GBForefront, L.P. v. Forefront Mgmt. Grp., LLC , 888 F.3d 29, 34 (3d Cir. 2018) ); see also Alliant Tax Credit 31, Inc. v. Murphy , 924 F.3d 1134, 1143 (11th Cir. 2019) ; Bank of New York Mellon as Tr. for Benefit of Certificate Holders of CWABS, Inc., Asset Backed Certificates, Series 2004-2 v. Thunder Properties, Inc. , 778 F. App'x 488, 488 (9th Cir. 2019) (unpublished); Doermer v. Oxford Fin. Grp., Ltd. , 884 F.3d 643, 647 (7th Cir. 2018) ; Raymond Loubier Irrevocable Trust v. Loubier , 858 F.3d 719, 729 (2d Cir. 2017) ; Wang ex rel. Wong v. New Mighty U.S. Trust , 843 F.3d 487, 494 (D.C. Cir. 2016). Thus, in order to demonstrate a trust's citizenship, a party must allege facts demonstrating that the trust is either a traditional trust or a business trust. If the trust is a traditional trust, the party must then trace the citizenship of all of its trustees; if the trust is a business trust, the party must trace the citizenship of all of its members. Here, the amended complaint lacks information from which the Court could properly analyze whether the trusts are "business trusts" or "traditional trusts." Thus, the Court is unable to determine the citizenship of the trusts.
There are two principal distinctions between a traditional trust and a business trust. See Woodward , 2018 WL 4697324, at *2 (citing GB Forefront , 888 F.3d at 40–41 ). First, "a traditional trust exists as a fiduciary relationship," while a business trust is treated as a distinct legal entity. GB Forefront , 888 F.3d at 40. Second, "a traditional trust facilitates a donative transfer, whereas a business trust implements a bargained-for exchange." Id. The Ninth Circuit has identified additional factors to consider when defining a trust, including "the nature of the trust as defined by the applicable state law, whether the trust has or lacks juridical person status, whether the trustee possesses real and substantial control over the trust's assets, and the rights, powers, and responsibilities of the trustee, as described in the controlling agreement." Demarest v. HSBC Bank USA, N.A. as Tr. for registered holders of Nomura Home Equity Loan, Inc., Asset-Backed Certificates, Series 2006-HE2 , 920 F.3d 1223, 1229–30 (9th Cir. 2019) (internal citations omitted).
Furthermore, to the extent defendants identify the trustees of the Barnes and Freshwater Trusts, defendants’ allegations regarding the trustees’ citizenship are not well pled. Defendants state that Mr. Barnes, Ms. Barnes, Mr. Freshwater, and Ms. Freshwater are all "domiciled in both Arizona and Wyoming." Docket No. 1 at 4, ¶ 9. "For purposes of federal diversity jurisdiction, an individual's state citizenship is equivalent to domicile." Smith , 445 F.3d at 1259. "To establish domicile in a particular state, a person must be physically present in the state and intend to remain there." Id. at 1260. Therefore, because one cannot be physically present and intend to remain in two states at once, it is not possible for one to be domiciled in two states simultaneously. Cf. Williamson v. Osenton , 232 U.S. 619, 624–26, 34 S.Ct. 442, 58 L.Ed. 758 (1914) (a person has only one domicile at a time, even though the person may have multiple residences); see also Valentin v. Hospital Bella Vista , 254 F.3d 358, 367 (1st Cir. 2001) ; In re Johnson , 184 B.R. 141, 144 (Bankr. D. Wyo. 1995). A party's citizenship is determined by a number of factors. Dumas v. Warner Literary Grp., LLC , No. 16-cv-00518-RM-NYW, 2016 WL 10879185, at *2 (D. Colo. Apr. 29, 2016) (stating that courts consider a number of factors in determining a party's citizenship, including "voter registration and voting practices; ... location of brokerage and bank accounts; membership in unions, fraternal organizations, churches, clubs, and other associations; ... driver's license and automobile registration; [and] payment of taxes"). Courts are to consider the "totality of the circumstances" to determine a party's domicile. Middleton v. Stephenson , 749 F.3d 1197, 1200–01 (10th Cir. 2014). Defendants provide no factual allegations that would enable the Court to determine the citizenship of the Barneses or the Freshwaters.
Finally, defendants’ allegations with respect to Watermark Retirement Communities are also not well-pled. Defendants state that Keppel Capital Holdings is "a Delaware corporation domiciled in Delaware." Docket No. 1 at 4, ¶ 10. For the purposes of subject matter jurisdiction, a corporation is deemed "a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business." 28 U.S.C. § 1332(c)(1). A corporation may be incorporated in many states, but it has just one principal place of business: the corporation's "nerve center," or "the place where the corporation's high level officers direct, control, and coordinate the corporation's activities." Hertz Corp. v. Friend , 559 U.S. 77, 80-81, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010). Defendants have not identified the principal place of business of Keppel Capital Holdings and, as such, the Court is unable to determine the corporation's citizenship and, therefore, the citizenship of Watermark Retirement Communities.
Because the allegations are presently insufficient to allow the Court to determine whether it has jurisdiction, see United States ex rel. General Rock & Sand Corp. v. Chuska Dev. Corp. , 55 F.3d 1491, 1495 (10th Cir. 1995) ("The party seeking the exercise of jurisdiction in his favor must allege in his pleading the facts essential to show jurisdiction." (quotations omitted)), it is
ORDERED that, on or before May 25, 2021 , defendants shall show cause why this case should not be dismissed due to the Court's lack of subject matter jurisdiction.
ORDER
This matter is before the Court on Defendants’ Response to Order to Show Cause [ECF 24] [Docket No. 25]. The Court issued an order to show cause on May 7, 2021 because it found that defendants’ allegations regarding subject matter jurisdiction were not well pled. See generally Docket No. 24.
The notice of removal alleged that the Court has subject matter jurisdiction based on federal question, 28 U.S.C. § 1331, and diversity, 28 U.S.C. § 1332. Docket No. 1 at 1. However, the Court found that defendants’ allegations were not sufficient to establish jurisdiction under either statute. Docket No. 24 at 14, 22. Defendants now withdraw their assertion of diversity jurisdiction because they have learned that a "corporation in the ownership structure" has a principal place of business in New York, which defeats complete diversity, as plaintiff is also a New York Citizen. Docket No. 25 at 2 n.1. Defendants "reiterate" all arguments that they presented in the notice of removal and assert only federal-question jurisdiction in their response. Id. at 2.
Defendants do not indicate which defendant's "ownership structure" is at issue.
Defendants restate many of the same arguments that the Court found insufficient in the order to show cause, including that the Court has federal-question jurisdiction over the case because plaintiff's claims fall within the "purview" of the Public Readiness and Emergency Preparedness Act ("PREP Act") since the claims "arise from and relate to" defendants’ actions taken to prevent the spread of COVID-19, and that the PREP Act is a complete preemption statute. Id. The Court need not consider these arguments again. Defendants also ask for jurisdictional discovery to "further elucidate how Plaintiff's claims fit within the scope of the PREP Act's immunity." Id. at 12.
The Court previously declined to determine whether the PREP Act affords complete preemption and would thereby permit removal because the Court determined that the PREP Act did not apply to plaintiff's claims. Docket No. 24 at 6, 11. Defendants’ response to the show cause order does not change this conclusion. However, even if defendants had shown that the PREP Act applied to plaintiff's allegations, the Court would find that the Act does not completely preempt state law and therefore that removal is improper. The only additional authority that defendants provide on the PREP Act is Rachal v. Natchitoches Nursing & Rehab. Ctr. LLC , 2021 U.S. Dist. LEXIS 105847, at *4 n.3 (W.D. La. Apr. 30, 2021). Rachal appears to be one of only two cases out of dozens to have found that the PREP Act provides complete preemption. See Schleider v. GVDB Operations, LLC , 2021 WL 2143910, at *3 (S.D. Fla. May 24, 2021) (collecting cases and explaining that only one other court found that the PREP Act provides complete preemption).
Only complete preemption, not express preemption, which is an affirmative defense that a plaintiff's state-law claim has been preempted by a federal statute, supports removal. Felix v. Lucent Techs. , 387 F.3d 1146, 1153–1158 (10th Cir. 2004).
The Court joins the majority of courts finding that the PREP Act is not a complete preemption statute, as discussed in the order to show cause. See Docket No. 24 at 5–6 (noting that the Supreme Court has endorsed complete preemption with respect to only four statutes, § 301 of the Labor Management Relations Act, § 502(a)(1)(B) of the Employee Retirement Income Security Act, the National Bank Act, and the Federal Deposit Insurance Act).
Complete preemption occurs where "the pre-emptive force of a statute is so ‘extraordinary’ that it ‘converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.’ " Caterpillar Inc. v. Williams , 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (quoting Metro. Life Ins. Co. v. Taylor , 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) ). As the Court previously noted, complete preemption is not to be lightly invoked. Devon Energy Prod. Co. v. Mosaic Potash Carlsbad, Inc. , 693 F.3d 1195, 1205 (10th Cir. 2012) ; Connolly v. Union Pac. R.R. Co. , 453 F. Supp. 2d 1104, 1109 (E.D. Mo. 2006) ("Courts have cautioned against an expansive application of the exception."). For a statute to completely preempt, it must "provide[ ] the exclusive cause of action for the claim asserted and also set forth procedures and remedies governing that cause of action." Beneficial Nat'l Bank v. Anderson , 539 U.S. 1, 8, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003).
Courts almost unanimously hold that the PREP Act does not provide the exclusive cause of action for claims that fall within its scope. See, e.g. , Dupervil v. Alliance Health Operations, LLC, 516 F.Supp.3d 238, 250–51 (E.D.N.Y. Feb. 2, 2021). This is because the PREP Act does not provide a cause of action, but is an "immunity statute; it does not create rights, duties, or obligations." Id. (citing 42 U.S.C. § 247d-6d(a)(1) ). In providing immunity to "certain covered persons for certain types of claims, the PREP Act confers primary jurisdiction over most claims within its scope not to the federal courts but to the Secretary [of Health and Human Services ("HHS")], who has the sole authority to administer and provide compensation from a ‘Covered Countermeasure Process Fund.’ " Id. at 251 (citing 42 U.S.C. §§ 247d-6e(a), 247d-6e(b) ). Even with PREP Act claims involving "willful misconduct," which must be brought in the United States District Court for the District of Columbia, a plaintiff must first exhaust administrative remedies and may chose to accept compensation from the Covered Countermeasure Process Fund instead of filing suit in federal court. Id. (citing 42 U.S.C. §§ 247d-6e(d)(1), 247d-6e(d)(5), 247d-6d(d)(1), 247d-6d(e)(1) ).
Defendants appear to concede the exhaustion point in their motion to dismiss. Defendants argue that, once the Court discharges the show cause order, the case should be dismissed because plaintiff has failed to "exhaust the exclusive administrative remedies available to her under the PREP Act before filing this lawsuit." Docket No. 12 at 3; see also Dupervil, 516 F.Supp.3d at 251 (noting that defendants "ma[de] plain their purpose in removing: ‘[T]his Court must retain jurisdiction, and thereafter, it should conclude that the PREP Act applies for dismissal of this case.’ "). As in the notice of removal, defendants rely on the January 8, 2021 Advisory Opinion by HHS Office of General Counsel, AO 21-01. See, e.g. , Docket No. 1 at 9–11, ¶¶ 25–28, Docket No. 25 at 7–8. AO 21-01 provides no help, however, as it states that it "does not have the force or effect of law." See Dupervil, 516 F.Supp.3d at 252 (quoting AO 21-01 at 5, available at https://www-hhs-gov.ezproxy.brunel.ac.uk/guidance/sites/default/files/hhs-guidance-documents/2101081078-jo-advisory-opinion-prep-act-complete-preemption-01-08-2021-final-hhs-web.pdf (last visited May 28, 2021)). Thus, courts have found that, even assuming that Congress intended to delegate authority to the Secretary and General Counsel of HHS "generally to make rules carrying the force of law," AO 21-01 was not "promulgated in the exercise of that authority," is not entitled to deference, and lacks the "power to persuade." See, e.g. , id. (citing United States v. Mead Corp. , 533 U.S. 218, 226–27, 235, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001) (deciding that no deference is due where an agency's rule or opinion was not "promulgated in the exercise of" any delegated congressional authority)); Thomas v. Watson Woods Healthcare Inc. , 2021 WL 1862432, at *1 (D. Ariz. May 10, 2021) ; Golbad v. GHC of Canoga Park , 2021 WL 1753624, at *3 (C.D. Cal. May 4, 2021) ; Shapnik v. Hebrew Home for the Aged at Riverdale, 535 F.Supp.3d 301, 317–19 (S.D.N.Y. Apr. 26, 2021) ; Bolton v. Gallatin Ctr. for Rehab. & Healing, LLC, 535 F.Supp.3d 709, 721–22 (M.D. Tenn. Apr. 21, 2021) ; Mitchell v. Advanced HCS, LLC , 2021 WL 1247884, at *4 (N.D. Tex. Apr. 5, 2021). The Court thus finds that the PREP Act does not completely preempt plaintiff's state-law claims such that those claims are actually removable federal-law claims.
Defendants also request limited discovery so that they can "further elucidate how Plaintiff's claims fit within the scope of the PREP Act." Docket No. 25 at 12. Defendants state that if this request for discovery is denied, they will face prejudice "as they would be forced to defend this action despite their entitlement to immunity." Id. The Court will deny the request. A district court has the authority to permit discovery in order for a party to prove diversity jurisdiction, yet such discovery is discretionary. See Nancy P. Assad Trust v. Berry Petroleum Co. , No. 13-cv-00544-PAB, 2013 WL 1151912, at *2 (D. Colo. Mar. 20, 2013) (citing Abrego Abrego v. The Dow Chem. Co. , 443 F.3d 676, 691 (9th Cir. 2006) (where party invoking federal jurisdiction has "failed to present to the district court any pleading, evidence, or admission that establishes that it is more likely than not that jurisdiction lies," it is "well within the court's discretion to remand to state court rather than ordering jurisdictional discovery, with the knowledge that later-discovered facts may prompt a second attempt at removal" (internal citations omitted))); see also Budde v. Ling-Temco-Vought, Inc. , 511 F.2d 1033, 1035 (10th Cir. 1975) ("An appellate court will not interfere with the trial court's exercise of its discretion to control its docket and dispatch its business except upon the clearest showing that the procedures have resulted in actual and substantial prejudice to the complaining litigant." (ellipsis removed)). While "refusal to grant discovery constitutes an abuse of discretion if the denial results in prejudice to a litigant," Sizova v. Nat.’l Inst. of Standards & Tech. , 282 F.3d 1320, 1326 (10th Cir. 2002), "the burden of demonstrating a legal entitlement to jurisdictional discovery – and the related prejudice flowing from the discovery's denial – [is] on the party seeking the discovery." Breakthrough Mgmt. Grp., Inc. v. Chukchansi Gold Casino and Resort , 629 F.3d 1173, 1189 n.11 (10th Cir. 2010).
Here, there is no evidence of prejudice because defendants may make these same arguments and seek to dismiss plaintiff's claims in state court. See Nancy P. Assad Trust , 2013 WL 1151912, at *3 (noting that "there is no indication that dismissing this case will prejudice plaintiff by depriving it of a forum in which to assert[ ] its claims"); see also Lowery v. Ala. Power Co. , 483 F.3d 1184, 1216 (11th Cir. 2007) ("[T]he court [will] not reserve ruling on the motion to dismiss in order to allow the plaintiff to look for what the plaintiff should have had – but did not – before coming through the courthouse doors, even though the court would have the inherent power to do so.").
Moreover, it is unclear what evidence defendants believe will be uncovered in limited discovery. See Robertson v. Big Blue Healthcare, Inc., 523 F.Supp.3d 1271, 1287–88 (D. Kan. Feb. 26, 2021) (denying jurisdictional discovery request in PREP Act case for this reason); Saunders v. Big Blue Healthcare, Inc., 522 F.Supp.3d 946, 965–66 (D. Kan. Feb. 26, 2021) (same). The Court finds plaintiff's allegations sufficient to determine that it does not have subject matter jurisdiction over this case. See Nava v. Parkwest Rehab. Ctr. LLC , 2021 WL 1253577, at *4 (C.D. Cal. Apr. 5, 2021). Finally, granting such a request would undermine the well-established rule that "[t]he party invoking federal jurisdiction bears the burden of establishing such jurisdiction as a threshold matter." See Foremost Signature Ins. Co. v. Am. Emergency Response & Recovery Co., LLC , No. 20-cv-00299-PAB, 2020 WL 3469699, at *2 (D. Colo. June 25, 2020) (quoting Radil v. Sanborn W. Camps, Inc. , 384 F.3d 1220, 1224 (10th Cir. 2004) ).
Because it does not appear from the face of plaintiff's complaint that plaintiff's claims arise under federal law, see Warner Bros. Records, Inc. v. R. A. Ridges Distrib. Co., Inc. , 475 F.2d 262, 264 (10th Cir. 1973) (no right to removal on face of plaintiff's complaint, which "[did] not invoke any federal laws," "[made] no mention of a federal law," and did not "allege that the cause [arose] under any such law"), the Court does not have jurisdiction pursuant to 28 U.S.C. § 1331.
It is therefore
ORDERED that this case is REMANDED to the District Court for the City and County of Denver, Colorado, where it was originally filed as Case No. 2021CV30261. It is further
ORDERED that Defendants’ Motion to Dismiss Verified Complaint and Jury Demand [Docket No. 12] is DENIED as moot .
DATED June 30, 2021.