Cal. Shock Trauma Air Rescue v. State Comp. Ins. Fund
| Decision Date | 31 March 2011 |
| Docket Number | Nos. 09–16810,09–16874.,s. 09–16810 |
| Citation | 636 F.3d 538 |
| Parties | CALIFORNIA SHOCK TRAUMA AIR RESCUE, Plaintiff–Appellant,v.STATE COMPENSATION INSURANCE FUND; Zurich American Insurance Company; Zenith Insurance Company; Redwood Fire & Casualty Insurance Company; Seabright Insurance Company; Allied Property and Casualty Insurance Company; Employers Direct Insurance Company; XL Specialty Insurance Company; Applied Underwriters, Inc.; National Liability & Fire Insurance Company; Aims Insurance Services; Arch Insurance Company; Broadspire Services, Inc.; Church Mutual Insurance Company; Alaska National Insurance Company; Employers Insurance Company of Wausau; Insurance Company of the West; Employers Compensation Insurance Company; Florists' Mutual Insurance Company; Safeco Insurance Company of America; Safety National Casualty Corporation; Ace American Insurance Company; Cypress Insurance Company; Sierra Pacific Industries, Inc.; Fire Association Self–Insurance System; Contra Costa County Schools Insurance Group; California State Association of Counties Excess Insurance Authority; Protected Insurance Programs for Schools; Norcal Waste Systems, Inc.; Special District Risk Management Authority; Manpower, Inc.; Redwood Empire Municipal Insurance Fund; East Bay Regional Park District; Trindel Insurance Fund; County of Marin; Barrett Business Services, Inc.; Northern California Special Districts Insurance Authority; City of Monterey; County of Solano; Lake Valley Fire Protection District; County of Santa Barbara; 99 Cent Only Stores; County of El Dorado; City of Pleasanton; County of Stanislaus; Municipal Pooling Authority; the Davey Tree Expert; Ace Property and Insurance Company; ConocoPhillips Company; ABC Supply Company Inc.; Labor Ready Southwest Inc.; City of Watsonville; Lowe's HIW, Inc.; Agrium U.S. Inc.; American Casualty Company of Reading, Pennsylvania; Irwin Industries, Inc.; Waste Connections, Inc., Defendants–Appellees.California Shock Trauma Air Rescue, Plaintiff–Appellant,v.AIG Domestic Claims, Inc.; AIG Insurance Services, Inc.; AIG Indemnity Insurance Company; State Farm General Insurance Company; State Farm Employees Activities Assn.; Regents of the University of California; MCM Construction, Inc.; Endurance Reinsurance Corporation of America; Environmental Alternatives; American Home Assurance Company; National Union Fire Insurance Company of Pittsburgh, PA; Commerce and Industry Insurance Company; Mainstay Business Solutions; Monterey County Local Agencies Insurance Authority; E.I. Du Pont De Nemours and Company; Cambridge Integrated Services Group, Inc.; Schools Insurance Authority; Schools Insurance Group; Pebble Beach Company, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
OPINION TEXT STARTS HERE
Kathryn Doi (argued) and John E. Fischer of Murphy Austin Adams Schoenfeld LLP, Sacramento, CA, for appellant California Shock Trauma Air Rescue.Moe Keshavarzi (argued), Frank Falzetta, and James F. McShane of Sheppard Mullin Richter & Hampton LLP, Los Angeles, CA; Peter Roan and Ronald D. Kurtz of Locke Lord Bissell & Liddell LLP, Los Angeles, CA; Larry M. Golub and Sandra I. Weishart of Barger & Wolen LLP, Los Angeles, CA; Steven H. Frankel and Sean McEneaney of Sonnenschein Nath & Rosenthal LLP, San Francisco, CA, for appellees State Compensation Insurance Fund et al.Appeal from the United States District Court for the Eastern District of California, Morrison C. England, District Judge, Presiding. D.C. Nos. 2:09–cv–00090–MCE–JFM, 2:09–cv–00759–MCE–JFM.Before: J. CLIFFORD WALLACE, JOHN T. NOONAN, and BARRY G. SILVERMAN, Circuit Judges.
These consolidated appeals arise from two separate actions that involve California Shock Trauma Air Rescue (CALSTAR). Both actions turn on the same jurisdictional question: is the expectation of a federal defense, without more, sufficient to establish federal jurisdiction over a state-law claim? Despite CALSTAR's arguments to the contrary, we reiterate that the well-pleaded complaint rule precludes the exercise of federal subject matter jurisdiction over purely state-law causes of action, like the one raised here.
CALSTAR provides air-ambulance rescue services to employees injured in the course of their employment, and whose employers are either self-insured or have purchased workers' compensation insurance. CALSTAR alleges that these employers and various insurance companies (collectively, Employers) have underpaid CALSTAR for its services. Rather than pay the amount billed by CALSTAR, Employers have paid a lesser amount as specified under the California's workers' compensation statute. See Cal.Code Regs. tit. 8 § 9789.70 ().
In 2009, CALSTAR filed its actions in the Eastern District of California, alleging state-law claims of quantum meruit, unjust enrichment, and open book account. CALSTAR also sought a declaratory judgment that the state statute regulating air-ambulance rates is pre-empted by federal law. In the 1970s, the federal government adopted legislation—the Federal Aviation Act of 1958 (FAA), as amended by the Airline Deregulation Act of 1978, codified at 49 U.S.C. § 41713(b)(1)—to increase airline competition and lower air-fare prices. According to CALSTAR, the FAA preempts the workers' compensation statute at issue.
The FAA preemption question is the sole basis on which CALSTAR attempts to have its actions adjudicated in federal court. Relying on Federal Rule of Civil Procedure 12(e)(1), the district court concluded that subject matter jurisdiction was lacking and dismissed CALSTAR's claims. CALSTAR now appeals. We review the district court's dismissal for lack of subject matter jurisdiction de novo, Kildare v. Saenz, 325 F.3d 1078, 1082, 1085 (9th Cir.2003), and we affirm.
Under 28 U.S.C. § 1331, federal courts have jurisdiction over those actions “arising under the Constitution, laws, or treaties of the United States.” While plaintiffs usually invoke section 1331 jurisdiction for violations of federal law, they also may invoke it over certain state-law claims. Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005).
In determining whether a federal district court has “arising under” jurisdiction over a claim, we must keep in mind “the basic principle marking the boundaries of the federal question jurisdiction of the federal district courts”: the well-pleaded complaint rule. Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). Under the well-pleaded complaint rule, we must determine whether “a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action.” See Gully v. First Nat'l Bank, 299 U.S. 109, 112, 57 S.Ct. 96, 81 L.Ed. 70 (1936).
We thus are required to consider whether CALSTAR's complaints satisfy the well-pleaded complaint rule. CALSTAR is suing Employers under various state-law theories. CALSTAR anticipates that Employers will respond by asserting, as a defense, that they correctly paid CALSTAR pursuant to California's air-ambulance rate regulation. In response to that defense, CALSTAR anticipates arguing that the state's air-ambulance rate regulation is inapplicable because the FAA preempts the state regulation. It is evident that CALSTAR's federal preemption argument is not necessary to its state-law claims—it is merely a potential response to a defense. Because CALSTAR's preemption issue cannot satisfy the well-pleaded complaint rule, there is no basis for federal question jurisdiction.
Any doubt about our analysis is removed by Phillips Petroleum Co. v. Texaco, Inc., 415 U.S. 125, 94 S.Ct. 1002, 39 L.Ed.2d 209 (1974) (per curiam). There, Texaco brought an action in federal court for quantum meruit, arguing that Phillips Petroleum underpaid for helium contained in the natural gas that Texaco sold to Phillips Petroleum. Id. at 125–26, 94 S.Ct. 1002. If the action had gone forward, Phillips Petroleum would have argued that it made payments pursuant to the terms of the parties' contract. Id. at 128, 94 S.Ct. 1002. In response, Texaco was prepared to argue that the federal statute governing helium sales required further payment for helium trapped within natural gas. Id. Thus, “[t]o the extent that the [federal statutes] may bear on th[e] action for the recovery of the reasonable value of constituent helium in natural gas, it is clear that their effect is no more than to overcome a potential defense to the action.” Id. at 129, 94 S.Ct. 1002(emphasis added). The Court then ruled that it “cannot be said that this suit ‘arises under the Constitution, laws, or treaties of the United States.’ ” Id., quoting 28 U.S.C. § 1331(a). Based on Phillips Petroleum, which contained facts functionally identical to those at issue here, federal subject matter jurisdiction cannot arise from CALSTAR's complaint raising mere state-law claims.
Ignoring Phillips Petroleum, CALSTAR invokes the Supreme Court's decision in Grable and argues that a federal court may entertain any action if it involves “significant federal issues.” 545 U.S. at 312, 125 S.Ct. 2363. Grable, however, does not support CALSTAR's position. There, a plaintiff filed a state common law quiet title action alleging superior title to a parcel of land previously seized by the Internal Revenue Service (IRS). Id. at 311, 125 S.Ct. 2363. The basis of Grable's argument for superior title, as alleged in his complaint, was the IRS's failure to serve notice pursuant to 26 U.S.C. § 6335(a). Id. The defendant “removed the case to Federal District Court as presenting a federal question, because the claim of title depended on the interpretation of ... federal tax law.” Id. The Court observed that jurisdiction was proper because, “federal-question...
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