Opinion
Civil Action No. 04-1028, Section: I/4.
June 28, 2004
ORDER AND REASONS
Before the Court is a motion, filed on behalf of plaintiff, Object Technology Information Specialists Corporation ("OTIS"), to remand this action to the Orleans Parish Civil District Court on the ground that federal question jurisdiction does not exist. Defendants, Science Engineering Associates, Inc., SEA Information Services, Inc. and Robert Savoie (collectively "SEA"), oppose the motion. For the following reasons, plaintiff's motion to remand is GRANTED.
Rec. Doc. No. 5.
BACKGROUND
This action arises out of the alleged wrongful termination of a subcontract between OTIS, a government subcontractor, and SEA, a prime government contractor. Pursuant to the subcontract between SEA and OTIS, OTIS was to perform certain work for the Space Naval Warfare Command OTIS filed this action in state court alleging only state law causes of action related to the termination of the contract. SEA removed this action pursuant to 28 U.S.C. § 1441(b), alleging that OTIS's action was one founded on a claim or right arising under the laws of the United States. See § 1441(b) Defendants contend that because OTIS's petition raised the issue of whether the Contract Dispute Act, 41 U.S.C. § 601, et seq. ("CDA"), applies to this action, plaintiffs petition raised a federal question that confers subject matter jurisdiction in federal court. See 28 U.S.C. § 1331.OTIS's state court petition includes allegations that the provisions of the CDA are unenforceable and not applicable to its various state law claims. Subsequent to removal, SEA filed a motion to dismiss contending that the administrative remedial scheme of the CDA preempts state court jurisdiction over OTIS's claims and, moreover, that the CDA precludes this Court's jurisdiction over plaintiffs claims. Nonetheless, defendant contends that removal was proper because federal question jurisdiction exists with respect to the issues of whether OTIS's state law claims fall within the scope of the CDA and, if so, whether the administrative remedies provided for by the CDA preclude both state court and federal district court jurisdiction over OTIS's claims.
Pl. pet. at ¶ VIII(4) (5).
See Rec. Doc. No. 10, motion to dismiss, at 2.
LAW AND ANALYSIS
As the United States Supreme Court has explained:
A civil action filed in a state court may be removed to federal court if the claim is one "arising under" federal law. § 1441(b). To determine whether the claim arises under federal law, we examine the "well pleaded" allegations of the complaint and ignore potential defenses: "a suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution. It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States." Louisville Nashville R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908); see Taylor v. Anderson, 234 U.S. 74, 34 S.Ct. 724, 58 L.Ed. 1218 (1914). Thus, a defense that relies on the preclusive effect of a prior federal judgment, Rivet v. Regions Bank of La., 522 U.S. 470, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998), or the pre-emptive effect of a federal statute, Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), will not provide a basis for removal. As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim.Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 6, 123 S.Ct. 2058, 2062, 156 L.Ed.2d 1 (2003).
Neither party contends that diversity jurisdiction exists in this case.
"Thus, a federal court does not have original jurisdiction over a case in which the complaint presents a state-law cause of action, but also asserts that federal law deprives the defendant of a defense he may raise, or that a federal defense the defendant may raise is not sufficient to defeat the claim" Franchise Tax Bd. of State of Cal. v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 10, 103 S.Ct. 2841, 2846-47, 77 L.Ed.2d 420 (1983). A defendant may not remove on the basis of an anticipated or even inevitable federal defense, but instead must show that a federal right is "an element, and an essential one, of the plaintiffs cause of action." Gully v. First Nat'l Bank, 299 U.S. 109, 111, 57 S.Ct. 96, 97, 81 L.Ed. 70 (1936). The well-pleaded complaint rule precludes federal question jurisdiction even when "both parties admit that the only question for decision is raised by a federal preemption defense." Franchise Tax Bd., 463 U.S. at 12, 103 S.Ct. at
"A corollary to the well-pleaded complaint doctrine `is that Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'" Johnson v. Baylor Univ., 214 F.3d 630, 632 (5th Cir. 2000) (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542 (1987)). "`Complete preemption,' which creates federal removal jurisdiction, differs from more common `ordinary preemption' . . . which does not." Id. Complete preemption is a narrow exception to the well-pleaded complaint rule and exists only where, the federal statute "so forcibly and completely displace state law that the plaintiff's cause of action is either wholly federal or nothing at all." Hoskins v. Bekins Van Lines, 343 F.3d 769, 773 (5th Cir. 2003) (citing Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 366 (5th Cir. 1995) Avco Corp. v. Aero Lodge No. 735, Int'l Assn. of Machinists, 390 U.S. 557, 559, 88 S.Ct. 1235, 1237, 20 L.Ed.2d 126 (1968). Another exception to the well-pleaded complaint rule exists where Congress has expressly provided for removal of actions governed by the federal statute in question. See Beneficial, 539 U.S. at 7, 123 S.Ct. at 2062 (describing the unusual preemption provision of the Price-Anderson Act that provides for removal of tort actions arising out of nuclear accidents even when the state court complaint asserts only state law claims).
In order to demonstrate complete preemption over a plaintiffs otherwise purely state law claims, a defendant must show (1) the statute contains a civil enforcement provision that creates a cause of action that both replaces and protects the analogous area of state law; (2) there is a specific jurisdictional grant to the federal courts for enforcement of the right; and (3) there is a clear Congressional intent that the federal cause of action be exclusive. Hoskins, 343 F.3d at 775-76 (modifying the analysis set forth in Baylor Univ., 214 F.3d at 632). In undertaking this analysis, "it is the cause of action, and not a remedy, that must be preempted." Carpenter, 44 F.3d at 367 n. 2.
Considering the complaint, it is clear that OTIS's allegations pertaining to the applicability of the CDA were made in anticipation of a jurisdictional preemption defense, based upon the CDA, that OTIS expected SEA to raise. As expected, SEA has raised that defense in its motion to dismiss. Such a preemption defense, even when it is anticipated in a plaintiff's state court petition, is insufficient to confer removal jurisdiction. Franchise Tax Bd., 463 U.S. 1, 10, 103 S.Ct. at 2846-47. Furthermore, SEA cannot demonstrate the second requirement for complete preemption, i.e., that the CDA contains a specific jurisdictional grant to the federal district courts for enforcement of a federal right. To the contrary, courts have held that the exclusive administrative scheme set forth in the CDA for resolution of claims pertaining to government contracts precludes federal court jurisdiction over such claims. See e.g., RMI Titanium Co. v. Westinghouse Elec. Corp., 78 F.3d 1125, 1142 (6th Cir. 1996) (concluding that because the plaintiff-subcontractor's claims fell within the scope of the CDA, "federal court jurisdiction over the claims does not exist"); AS Council Oil Co., Inc. v. Lader, 56 F.3d 234, 242 (D.C. Cir. 1995) (same). Finally, Congress has not included a provision in the CDA expressly providing for removal of claims falling within the scope of the CDA to federal district court.
It is of no moment that OTIS devotes its motion to remand to arguing the merits of SEA's jurisdictional defense. The well pleaded complaint rule governs the subject matter jurisdiction of this Court. See Franchise Tax Bd., 463 U.S. at 12, 103 S.Ct. at 2848. "No authority need be cited for the long-established rules that personal, but not subject matter, jurisdiction can be waived; that [a federal court will] examine subject matter jurisdiction throughout a proceeding, concomitantly raising the issue sua sponte if need be; and that [a federal court will] freely review jurisdictional questions." United States v. Muhammad, 165 F.3d 327, 330 (5th Cir. 1999) (emphasis in original) (alterations supplied).
Because the CDA appears in this action by way of a federal defense to the adjudication of OTIS's state law claims, SEA's removal of this action was improper and this Court lacked subject matter jurisdiction upon removal. Therefore, this Court does not have jurisdiction to consider the merits of SEA's CDA defense raised in its motion to dismiss. The preemptive force of the CDA is properly addressed to the state court. The decision by this Court that the CDA does not completely preempt OTIS's state law claims does not preclude SEA from raising an "ordinary preemption" defense in state court, nor does it prejudge the merits of such a defense. See Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d 306, 316 (3d Cir. 1994). "State courts are competent to determine whether state law has been preempted by federal law, and absent complete preemption, they must be permitted to perform that function with regard to state law claims brought before them." Id. (internal quotations and citation omitted).
Accordingly, for the above and foregoing reasons,
IT IS ORDERED that the motion of plaintiff, Object Technology Information Specialists Corporation ("OTIS"), to remand this action to the Orleans Parish Civil District Court is GRANTED and, pursuant to 28 U.S.C. § 1447(c), this action is REMANDED to the Orleans Parish Civil District Court for lack of subject matter jurisdiction.