Kittle v. Prudential Ins. Co. of America

• Decision Date: 19 January 2000
• Docket Number: No. IP98-1273 CB/S.,IP98-1273 CB/S.
• Citation: 102 F.Supp.2d 1029
• Court: U.S. District Court — Southern District of Indiana
• Parties: Robert KITTLE, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA and Darrell Kemmerer, as General Manager and Agent of the Prudential Insurance Company of America, Defendants.

102 F.Supp.2d 1029

Robert KITTLE, Plaintiff, v. The PRUDENTIAL INSURANCE COMPANY OF AMERICA and Darrell Kemmerer, as General Manager and Agent of the Prudential Insurance Company of America, Defendants.

No. IP98-1273 CB/S.

United States District Court, S.D. Indiana, Indianapolis Division.

January 19, 2000.

G Terrence Coriden, Columbus, IN, for plaintiff.

Paul R Brockmeyer, Seyfarth Shaw Fairweather & Geraldso, Chicago, IL, Edwin L Gagnon, Gagnon Diehl & Spilker, Indianapolis, IN, for defendants.

ORDER REMANDING ACTION TO STATE COURT FOR LACK OF SUBJECT MATTER JURISDICTION

BARKER, Chief Judge.

Plaintiff, Robert Kittle ("Kittle"), originally filed this fraud action in Bartholomew Circuit Court. Kittle contends that defendants, The Prudential Insurance Company of America ("Prudential"), and its general manager and agent, Darrell Kemmerer ("Kemmerer"), induced him to terminate his previous employment as a police officer by allegedly falsely representing that Prudential would hire him as a life insurance agent servicing a specific sales territory, "Agency 68." Defendants removed the state action to this court, invoking federal-question jurisdiction pursuant to § 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Defendants contend that after Kittle began working at Prudential, a collective bargaining agreement ("CBA") vested Prudential with the discretion to assign Kittle accounts from any sales territory of its choosing, which ultimately did not include all the accounts from the Agency 68 territory. Therefore, Prudential asserts that the resolution of Kittle's state law fraud claims requires interpretation of the CBA, which, if true, results in the LMRA's complete preemption of the state law claim and provides this court with original jurisdiction over the removed action. Accordingly, defendants move for summary judgment on the removed claims, contending that Kittle failed to exhaust his administrative remedies under the CBA. For the reasons discussed below, we find that Kittle's state law claims stand independently of the CBA and remand this action to state court for lack of subject matter jurisdiction.

Background

Robert Kittle was a police officer in Columbus, Indiana, prior to the start of his employment with Prudential in March 1997. See Compl. ¶¶ 4-6 Kittle contends that while so employed as a police officer in 1996, Darrell Kemmerer approached him on behalf of Prudential and attempted to induce him to leave that position and to join Prudential as a life insurance agent. Id. Kittle alleges that Kemmerer intentionally misrepresented that if Kittle resigned his police position and accepted employment at Prudential, Kittle would function as the exclusive servicing agent for the territory known as Agency 68. Id. ¶¶ 7, 8. Kittle alleges that at the time Kemmerer made these promises in 1996, and up to the time in 1997 when Kittle resigned his employment with the City of Columbus and became an agent for Prudential, the defendants knew that these inducements were false and that Kittle had relied upon them. Id. ¶¶ 8, 9. Kittle asserts that Prudential never intended to assign him to Agency 68, even though Kemmerer lead him to believe so.

Kittle joined Prudential as a part-time insurance agent in March 1997 and became a full-time agent on August 23, 1997. See Pre-Summ. J. Statement ¶¶ 1-2. Prudential apparently had assigned a number of Agency 68 accounts to another employee before Kittle became a full-time agent. Id. ¶ 6. When Kittle became a full-time agent in August, Prudential designated him as a canvassing agent for Agency 417 and apparently failed to provide him with any Agency 68 accounts. See Alston Decl. (Apr. 13, 1999) ¶ 6. Eventually, Kittle received some Agency 68 accounts when agent Michael McCraken retired, although the parties fail to assess the significance of those accounts. However, it is clear that Kittle did not receive exclusive responsibility over sales territory Agency 68 and that he continued servicing Agency 417. We suspect that the Agency 68 accounts that Kittle actually received comprised only a small portion of the total territory business, as Kittle resigned his employment less than six months later, on February 13, 1998. Id. ¶ 8.

The parties do not dispute that a CBA existed between Prudential and the United Food & Commercial Workers International Union (AFL-CIO & CLC) ("the Union"). The CBA purports to cover the Union's representation of Prudential employees regarding "rates of pay, wages, hours of employment, or other conditions of employment." Alston Decl. (Apr. 13, 1999) (Ex. A, CBA). We presume that Kittle was a member of the Union when he began working as a life insurance representative for Prudential, as neither party suggests that he was not so qualified by virtue of his employment. The CBA, Article 7, Section 2, provided that Prudential may transfer business accounts to its employees "in its sole discretion, which may include assignment to any Prudential Representative of the Employer's choosing." Id.

The CBA, Articles 24 and 25, also provided for mandatory grievance and arbitration procedures for disagreements concerning the "interpretation or application of any provision of the Agreement or the application of any rule, regulation, or practice of the Employer now or hereafter in force." Id. It is undisputed that Kittle has not exhausted these administrative remedies by filing a grievance with the Union regarding assignments or accounts he received from Prudential. See Pre-Summ. J. Statement ¶ 9.

Discussion

The threshold jurisdictional issue before us is whether Kittle's state law claims are completely preempted by federal labor law. If the state law claims are founded directly upon rights created by the CBA, or if the claims are substantially dependant on analysis of the CBA in question, the state claims are completely preempted for jurisdictional purposes and the defendants properly removed the case to federal court. However, if the state claims stand independently of the CBA based solely on Kittle's well-pleaded complaint, the lack of complete preemption mandates that we remand this action to state court. In that event, the state court must assess the merits of Kittle's claims, including any federal preemption defenses that Prudential may advance before that court.

A. The Removal Standard and "Jurisdictional" Preemption

Federal district courts have original jurisdiction over civil cases concerning a "federal question," that is, actions "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331; Speciale v. Seybold, 147 F.3d 612, 614 (7th Cir.1998). Only state court actions that originally could have been filed in federal court may be removed to federal court by the defendant. See 28 U.S.C. § 1441(a). Because the parties to the present action are not of diverse citizenship, subject matter jurisdiction depends entirely on whether we have federal-question jurisdiction over this action.¹ The presence or absence of federal-question jurisdiction is governed by the "well-pleaded complaint rule," which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429-30, 96 L.Ed.2d 318 (1987). This rule makes the plaintiff the master of the complaint, allowing the plaintiff to avoid federal jurisdiction by pleading only state law claims. Federal issues that arise solely as a defense to a state law action (sometimes referred to as "conflict preemption" or "defensive preemption") do not confer federal-question jurisdiction. Atchley v. Heritage Cable Vision Assocs., 101 F.3d 495, 498 (7th Cir.1996). Thus, as long as the plaintiff's well-pleaded complaint is confined to a state law claim, the Supreme Court has recognized that subject matter jurisdiction escapes a federal district court even if a defense of federal preemption exists:

Ordinarily federal pre-emption is raised as a defense to the allegations in a plaintiff's complaint.... Thus, it is now well settled that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue.

Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430; accord Louisville & N R Co. v. Mottley, 211 U.S. 149, 152-54, 29 S.Ct. 42 43-44, 53 L.Ed. 126 (1908) (an anticipated federal defense to state law claims fails to provide subject matter jurisdiction necessary for proper removal).

However, an exception to the well-pleaded complaint rule exists, known as the "complete preemption" doctrine. See Atchley, 101 F.3d at 498. On occasion, the Supreme Court has concluded that the preemptive force of a federal statute is so extraordinary that it converts a state common-law complaint into one stating a federal claim for purposes of subsequently applying the well-pleaded complaint rule to determine jurisdiction. See Caterpillar, 482 U.S. at 393, 107 S.Ct. at 2430 (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987)).

The Labor Management Relations Act ("LMRA") and ERISA represent the two, primary statutes where courts have applied the complete preemption doctrine. "[T]he pre-emptive force of § 301 [of the LMRA] is so powerful as to displace entirely any state cause of action `for violation of contracts between an employer and a labor organization.'" Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 23, 103 S.Ct. 2841, 2853-54, 77 L.Ed.2d 420 (1983); 29 U.S.C. § 185. The most prominent rationale for the complete preemption doctrine lies in an attempt to ensure uniformity in the interpretation of collective bargaining agreements. See Lingle v. Norge Div....