Berera v. Mesa Med. Grp., PLLC, 14–5054.

• Citation: 779 F.3d 352
• Decision Date: 19 February 2015
• Docket Number: No. 14–5054.,14–5054.
• Parties: Tammy BERERA, Individually and on behalf of all others similarly situated, Plaintiff–Appellant, v. MESA MEDICAL GROUP, PLLC, Defendant–Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

779 F.3d 352

Tammy BERERA, Individually and on behalf of all others similarly situated, Plaintiff–Appellant

v.MESA MEDICAL GROUP, PLLC, Defendant–Appellee.

No. 14–5054.

United States Court of Appeals, Sixth Circuit.

Feb. 19, 2015.

Rehearing En Banc Denied April 27, 2015.

ON BRIEF:J. Dale Golden, Justin S. Peterson, Golden & Walters, PLLC, Lexington, Kentucky, for Appellant. Daniel E. Danford, Stites & Harbison, PLLC, Lexington, Kentucky, for Appellee.

Before: KEITH, MOORE, and STRANCH, Circuit Judges.

OPINION

DAMON J. KEITH, Circuit Judge.

The basic issue in this case is whether Plaintiff Tammy Berera asserted state-law claims for unpaid wages or a federal claim for a refund of taxes under the Federal Insurance Contribution Act (“FICA”). See generally 26 U.S.C. §§ 3101 –3128. FICA imposes a 7.65% tax on the wages of employees to fund Social Security and Medicare. See 26 U.S.C. § 3101. Employers must collect this tax from their employees' wages. Id. § 3102(a). FICA also imposes a matching tax on employers equal to the 7.65% tax imposed on employees' wages. See 26 U.S.C. § 3111. Berera asserts that her employer, Defendant Mesa Medical Group, PLLC (“Mesa”), wrongfully collected both her share and Mesa's share of the FICA tax from her wages.

Applying the artful-pleading doctrine, the district court held that the plaintiff's purported state-law claims were FICA claims in disguise. Consequently, the district court dismissed the plaintiff's claims under 26 U.S.C. § 7422(a), which requires parties seeking a refund of federal taxes to file a claim with the IRS before bringing a federal tax refund suit. Because we agree that the plaintiff's purported state-law claims are truly FICA claims, we AFFIRM, as modified, the district court's judgment.

I. BACKGROUND

Mesa is a health care organization. Berera worked at Mesa as a nurse practitioner from July 2011 to February 2013. After Berera's employment ended, she allegedly discovered that the wages on her W–2 did not reflect the amount of wages that Mesa owed her.

On June 25, 2013, Berera filed a class-action Complaint against Mesa in Kentucky state court. Berera alleged that the class consisted of current and former employees whom Mesa “forced to pay [Mesa's] share of payroll taxes and other taxes and withholdings.” R. at 21, ¶ 4.¹ Berera further alleged that this “forced payment resulted in the employees receiving less money than they earned and were entitled to as wages.” Id. Likewise, Berera alleged that Mesa paid its current and former employees “an amount less than the wages and overtime compensation to which the employees were entitled....” R. at 22, ¶ 14. The Complaint contained no additional substantive allegations. Based on these allegations, Berera asserted: (1) an unpaid wages claim under section 337.385 of the Kentucky Revised Statutes ; and (2) a negligence claim under Kentucky law. Berera twice amended her Complaint, adding (1) a claim for conversion under Kentucky law and (2) Katisha Kabalen as a class member. See R. at 51, 178.²

Mesa filed a motion for a more definitive statement, arguing that the nature of Berera's claims was unclear. On August 9, 2013, while this motion was pending, Mesa's counsel, Hunter Hughes, wrote Berera's counsel, Dale Golden, a letter. R. at 303. In the letter, Hughes refers to a conversation with Golden on August 8, 2013. During this conversation, Hughes allegedly asked Golden to clarify the factual basis of Berera's claims. According to Hughes, Golden responded that Hughes might be able to identify the basis of Berera's claims by reviewing company records of employee complaints to the IRS. Hughes further states that this conversation “led [him] to conclude that the conduct at issue related to federal withholding matters.” Id. Thus, Hughes declares that Mesa would assume that the Complaint contained at least one FICA claim unless Golden notified him otherwise by August 13, 2013. R. at 304.

On August 14, 2013, Berera's counsel responded to the letter via email. R. at 87. The email stated, without further elaboration, that Berera's counsel disagreed with the “characterizations and assumptions contained within the letter.” R. at 87.

On August 26, 2013, Mesa's counsel met with Berera's counsel to discuss a potential settlement. At this meeting, Mesa produced a sample of Berera's payroll documents for the month of October 2011. The sample consists of: (1) a document showing hours, hourly wages, gross wages, and adjustments to gross wages (“Wage Table”); (2) a check stub; and (3) an employer copy of Berera's W–2. R. at 380, 722–23.

The Wage Table indicates that, in October 2011, Berera worked a total of 227 hours at an hourly rate of $45.00. Thus, Berera's total, unadjusted compensation was $10,215 (227 x $45). We refer to Berera's total, unadjusted compensation of $10,215 as “Total Gross Wages.” Further, the Wage Table shows that Mesa made two adjustments totaling $1,328.76 to the Total Gross Wages of $10,215. One of these adjustments, the “Benefits Adjustment,” is $648.96. The Benefits Adjustment represents the cost of Berera's benefits (e.g., health insurance).³ The other adjustment, the “First Adjustment,” is $679.80.

Berera asserts that the First Adjustment of $679.80 is an excessive withholding of her wages. Berera's check stub for October 2011 shows that Mesa paid her $8,886.24. This payment of $8,886.24, the “Adjusted Gross Wages,” is the difference of the Total Gross Wages minus the Benefits Adjustment and First Adjustment ($10,215–[$648.96 + $679.80] ). But the check stub shows that Mesa withheld an additional $502.77 from the Adjusted Gross Wages of $8,886.24. R. at 722. This additional adjustment of $502.77, the “Second Adjustment,” reflects the amount of FICA taxes that Berera owed in 2011. For, while employees currently must pay 7.65% of their wages in FICA taxes, Congress lowered the FICA tax on employees to 5.65% in 2011–12.^{4 5} Berera contends that, because Mesa made the Second Adjustment equaling her share of the FICA tax, it had no basis to make the First Adjustment of $679.80. Thus, Berera concludes that the First Adjustment is an improper withholding of her wages.

On August 30, 2013, the state court held a hearing on Mesa's motion for a more definitive statement. See R. at 214. Attorney Justin Peterson represented Berera at this hearing. Peterson conceded at the hearing that the allegedly improper First Adjustment of $679.80 corresponded to Mesa's share of the FICA tax. See Hearing Tr., 15:9–15, 16:2–3, 16:18–25, 18:7–14, Doc. No. 1–7.⁶

On September 11, 2013, Mesa removed the case to the United States District Court for the Eastern District of Kentucky. See R. at 1. In its Notice of Removal, Mesa asserted that it removed the case within thirty days of receiving “other papers” under 28 U.S.C. § 1446(b)(3) that first demonstrated the presence of federal question jurisdiction under FICA and the Class Action Fairness Act (“CAFA”). R. at 6. According to Mesa, these “other papers” (i.e., court documents) included the transcript of the August 30 hearing.

On October 11, 2013, Berera filed a Motion to Remand. See R. at 454. Berera made three primary arguments in her Motion to Remand. First, Berera argued that her claims were state-law claims for unpaid wages and, hence, there was no basis on which to remove the case to federal court. Second, Berera argued that Mesa's Notice of Removal was untimely because Mesa filed it more than 30 days after receiving notice of the supposed federal nature of her claims. See generally 28 U.S.C. § 1446(b). Third, Berera argued that there was no basis on which to remove the case under CAFA.

On December 6, 2013, the district court issued an opinion and order denying Berera's Motion to Remand and ordering her to show cause why it should not dismiss her claims for failure to state a claim. See R. at 681. The district court held that Berera's purported state-law claims amounted to a federal tax refund suit. The district court reasoned that the record clearly showed that Berera was attempting to recover FICA taxes that Mesa wrongfully withheld from her paycheck. See R. at 684, 686, 694. In so holding, the district court relied primarily on two factors: (1) the Complaint's allegation that Mesa forced Berera to pay Mesa's “share of payroll taxes and other taxes and withholdings”; and (2) Berera's counsel's concession at the August 30 hearing that the First Adjustment “was equal to [Mesa's] obligation under FICA.” R. at 686–87. Further, the district court concluded that, even if Mesa did not remit the withheld wages to the IRS, the suit was still a tax refund suit because Mesa “collected [the wages] as a tax.” R. at 688. Given its determination that Berera asserted a FICA claim and that federal question jurisdiction existed, the district court declined to consider Mesa's alternative argumentthat jurisdiction was proper under CAFA. R. at 695 n.4.

The district court also addressed Berera's argument that Mesa untimely filed its Notice of Removal. Based on the August 9, 2013 letter, the district court suggested that Mesa lacked adequate notice that it could remove the case until August 13, 2013. See R. at 694 n.3. The district court then noted that Mesa filed the Notice of Removal on September 11, 2013, which is within 30 days after August 13. Therefore, the district court concluded that the Notice was timely under § 1446(b).

After concluding that Berera truly asserted FICA claims, the district court held that taxpayers seeking a refund of FICA taxes must file an administrative claim with the IRS before bringing an action in federal court. R. at 696. Accordingly, as Berera failed to file a claim with the IRS, the district court ordered her to show cause why it should not dismiss her claims under Federal Rule of Civil Procedure 12(b)(6). R. at 697. On December 19, 2013, Berera responded to the show cause order. Unconvinced by the response, the district court dismissed Berera's Complaint, with prejudice, in an order filed on ...