McClelland v. Gronwaldt

• Decision Date: 09 September 1998
• Docket Number: No. 97-40592,97-40592
• Citation: 155 F.3d 507
• Parties: 159 L.R.R.M. (BNA) 2368 Jerry C. McCLELLAND, Plaintiff-Appellant, v. Robert C. GRONWALDT, Individually and as agent for Mobil Oil Corporation; Mobil Oil Corporation; National Union Fire Insurance Company of Pittsburgh, PA, Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 507

155 F.3d 507

159 L.R.R.M. (BNA) 2368

Jerry C. McCLELLAND, Plaintiff-Appellant, v. Robert C. GRONWALDT, Individually and as agent for Mobil Oil

Corporation; Mobil Oil Corporation; National

Union Fire Insurance Company of

Pittsburgh, PA, Defendants-Appellees.

No. 97-40592.

United States Court of Appeals, Fifth Circuit

Sept. 9, 1998.

Glen W. Morgan, Richard J. Clarkson, Reaud, Morgan & Quinn, Beaumont, TX, Edward F. Sherman, New Orleans, LA, for Plaintiff-Appellant.

Lipscomb David Norvell, Jr., Gerald W. Riedmueller, Benckenstein, Norvell & Nathan, Beaumont, TX, for Gronwaldt.

David J. Beck, Keith A. Jones, Joe W. Redden, Jr., Beck, Redden & Secrest, Houston, TX, Mark D. Wegener, John E. Heintz, Lisa Latorre, Howrey & Simon, Washington, DC, for Mobil Oil Corp.

Robert B. Wellenberger, Richard M. Mosher, Thompson, Coe, Cousins & Irons, Dallas, TX, for National Union Fire Insurance Company of Pittsburgh, Pa.

Appeal from the United States District Court for the Eastern District of Texas.

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 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 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

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 Act ⁶ (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 1974 ⁸ (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.

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 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.1997).

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

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 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...