Austin v. American General Finance, Inc., Civ. A. No. 95-D-660-E.

• Decision Date: 13 September 1995
• Docket Number: Civ. A. No. 95-D-660-E.
• Citation: 900 F. Supp. 396
• Parties: Oscar AUSTIN, et al., Plaintiffs, v. AMERICAN GENERAL FINANCE, INC., et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

900 F. Supp. 396

Oscar AUSTIN, et al., Plaintiffs, v. AMERICAN GENERAL FINANCE, INC., et al., Defendants.

Civ. A. No. 95-D-660-E.

United States District Court, M.D. Alabama, Eastern Division.

September 13, 1995.

Jere L. Beasley, Thomas J. Methvin, Montgomery, AL, for plaintiffs.

T. Thomas Cottingham, Robert S.W. Given, Robert H. Rutherford, Richard C. Keller, Birmingham, Alabama, for defendants.

MEMORANDUM OPINION AND ORDER

DE MENT, District Judge.

Before the court is the plaintiffs' motion filed July 13, 1995 to remand this action to the Circuit Court of Macon County, Alabama, whence it was removed. The defendant responded in opposition on August 22, 1995.¹

In the four-count complaint, the plaintiffs aver that in connection with certain loan transactions, defendants Lisa Short and Becky Ledbetter, while acting as agents for defendant American General Corp., made certain fraudulent statements and further fraudulently failed to disclose certain items. Further, the plaintiffs contend that defendant American General Finance, Inc., defendant American General Corp. and defendant Yosemite Insurance Co. entered into a scheme to defraud the plaintiffs by taking a security interest in the plaintiffs' household goods. Thereafter, the defendants removed this action, asserting federal-question jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1441.²

The defendants contend that the plaintiffs' claim for relief involves the application of the Federal Trade Commission Act (hereafter "FTCA"), 15 U.S.C. § 46, and its implementing regulations, 16 C.F.R. §§ 4.11 and 4.12. In essence, the defendants contend that while the plaintiffs have not pleaded a violation of the FTCA, the FTCA controls in this action. Specifically, the defendants state that the cause of action has been composed in terms of the FTCA. The plaintiffs assert, however, that they are seeking relief only under state law, thus, precluding removal based upon federal laws and regulation.

Whether the complaint states a federal question must be determined by examining the face of the complaint.³ As stated by the Supreme Court of the United States:

only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant. Absent diversity of citizenship, federal-question jurisdiction is required. 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. The rule makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law.

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987) (internal footnotes omitted). The "well-pleaded complaint" rule, applies to a defendant's right to removal, with the determinative factor being whether the plaintiff's complaint and not the removal petition presents a federal question. Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 10 n. 9, 103 S.Ct. 2841, 2847 n. 9, 77 L.Ed.2d 420 (1983). Since the plaintiff is the master of the claim, he or she has the prerogative to rely on state law alone although both state and federal law may give him or her a cause of action. Williams, 482 U.S. at 392, 107 S.Ct. at 2429. Therefore, the fact that the plaintiffs in this case have selected to pursue their claims under state law alone, does not justify removal even if the plaintiffs also have an unpursued claim under federal law.

The defendants also contend that plaintiffs' theory under count IV has no basis in state law, and therefore, the plaintiffs will not be able to claim relief under state law. This identical argument has been rejected by White v. American General Finance, Inc., No. 95-T-664-N, (M.D.Ala.1995) (consolidated with Smith v. American General Finance, Inc., No. 95-T-666-N, (M.D.Ala.1995)). The court finds persuasive the conclusion set forth in White which states that the defendants contention that the count has no basis in state law may be true, "but this will be a basis for the state court to dismiss plaintiffs' state-law claim as to count IV, not for this federal court to assume removal jurisdiction over that count."

Further, the defendants contend that the plaintiffs' claim in count IV presents a substantial federal question because the count will involve a construction of federal law. The court notes that it is not sufficient that a federal issue may arise. The Supreme Court of the United States in Gully v. First Nat'l Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936), stressed that the federal question must be a "genuine and present controversy, not merely a possible or conjectural one" and "must be disclosed upon the face of the complaint." Id. at 113, 57 S.Ct. at 97. Also, the Supreme Court of the United States in Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986), held that the fact that a state claim necessarily turns on a federal issue, or involves construction of a federal law, does not necessarily give rise to a federal question and confer removal jurisdiction on a federal court. Id. at 816-17, 106 S.Ct. at 3235-36. Thus, the fact that federal law may be the source or basis of the plaintiffs' state-law claims does not support removal. Gully, 299 U.S. at 109, 57 S.Ct. at 96 (where plaintiff seeks to enforce state statute, fact that federal law laid basis for statute does not confer removal jurisdiction on federal court); Stone v. Williams, 792 F.Supp. 749, 755 (M.D.Ala.1992) ("Although the source of the state-court judgment may lie in federal constitutional law, it is still the state court's judgment, and not federal law, that plaintiff seeks to have enforced."). As a result of the foregoing precedent, the court finds that even if the plaintiffs' state-law claims would give rise to a federal issue, removal would still be inappropriate.

The court recognizes that the preemptive force of some federal statutes can provide a legal basis for removal of a case from state to federal court even if a plaintiff has framed the complaint to allege violations of only state law. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 1547, 95 L.Ed.2d 55 (1987). For example, the Supreme Court of the United States has determined that issues involving the Labor Management Relations Act, 29 U.S.C. § 1001, et seq., and the Employment Retirement Income Security Act, 29 U.S.C. § 185, et seq., transform state-law claims into ones arising under federal law for purposes of the well-pleaded complaint rule. Caterpillar, Inc., 482 U.S. at 393-94, 107 S.Ct. at 2429-30.

This "complete preemption" doctrine, however, does not apply to the FTCA. The FTCA does not contain a civil enforcement provision that requires complete preemption of law, nor is there any other manifestation that Congress intended preemption. In fact, there is no private cause of action under the Federal Trade Commission to enforce a violation of its rules. See Holloway v. Bristol-Myers Corp., 485 F.2d 986 (D.C.Cir.1973); Fulton v. Hecht, 580 F.2d 1243 (5th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1789, 60 L.Ed.2d 241 (1979)⁴; Days Inn of America Franchising, Inc. v. Windham, 699 F.Supp. 1581 (N.D.Ga.1988).

The court finds that absent "complete preemption" of state causes of action, the defendant cannot establish that a federal court has original jurisdiction by arguing preemption as a defense:

Ordinarily, federal pre-emption is raised as a defense to the allegations in a plaintiff's complaint. Before 1887, a federal defense such as preemption could provide a basis for removal, but, in that year, Congress amended the removal statute. We interpret that amendment to authorize removal only where original federal jurisdiction exists.

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