Bearden v. PNS Stores, Inc.

• Decision Date: 31 May 1995
• Docket Number: No. CV-S-94-397-HDM-(RJJ).,CV-S-94-397-HDM-(RJJ).
• Citation: 894 F. Supp. 1418
• Parties: Jack BEARDEN and Cindy Bearden, Plaintiffs, v. PNS STORES, INC., a California corporation dba MacFrugal's Bargains, Close-Outs, Defendant.
• Court: U.S. District Court — District of Nevada

894 F. Supp. 1418

Jack BEARDEN and Cindy Bearden, Plaintiffs, v. PNS STORES, INC., a California corporation dba MacFrugal's Bargains, Close-Outs, Defendant.

No. CV-S-94-397-HDM-(RJJ).

United States District Court, D. Nevada.

May 31, 1995.

Randall M. Rumph, Shinehouse & Duesing, Las Vegas, NV, for plaintiffs.

Stephanie M. Smith, & Elissa F. Cadish, Jolley, Urga, Wirth & Woodbury, Las Vegas, NV, for defendant.

ORDER

JOHNSTON, United States Magistrate Judge.

This matter was submitted to the undersigned Magistrate Judge on Plaintiffs' Motion For Remand Pursuant to 28 U.S.C. § 1445(c). (# 23).¹

BACKGROUND

Plaintiffs, Jack and Cindy Bearden (the Beardens), originally filed this action in the Eighth Judicial District Court for the State of Nevada. The Beardens brought several claims for relief including a state tort action for retaliatory discharge for filing a worker's compensation claim.

On April 29, 1994, Defendant, PNS Stores (PNS), removed this action to federal court pursuant to the federal diversity jurisdiction provisions of 28 U.S.C. § 1441(b). Over the next six months, both parties filed various pleadings with this court. In particular, the Beardens filed an amended complaint, a joint status report, a motion to strike affirmative defenses and submitted numerous interrogatories and requests for production of documents to the Defendant.

On October 21, 1994, the Beardens filed this motion to remand (# 23) pursuant to 28 U.S.C. § 1445(c), which provides that a civil action arising under the workers' compensation laws of a state may not be removed to federal court. The Beardens assert that Section 1445(c) applies to the instant case because their retaliatory discharge claim arises under Nevada's workers' compensation laws. PNS opposes this motion, arguing that: 1) section 1445(c) does not apply because the Beardens' claim of retaliatory discharge does not arise under the workers' compensation laws of Nevada; 2) the Beardens waived their right to remand by failing to bring this motion within the 30-day limit prescribed by 28 U.S.C. § 1447(c); and 3) the Beardens waived their right to remand by "purposefully availing" themselves of this federal court. Both parties also seek an award for attorneys' fees and costs.

DISCUSSION

I. APPLICATION OF 28 U.S.C. § 1445(c)

The Beardens argue that their retaliatory discharge claim arises under Nevada's workers' compensation laws and that removal is therefore improper under 28 U.S.C. § 1445(c). PNS disagrees, arguing that section 1445(c) is inapplicable because retaliatory discharge is a state tort claim independent from Nevada's workers' compensation statute.

Section 1445(c) provides that:

A civil action in any State court arising under the workmen's compensation laws of such State may not be removed to any district court of the United States.

The phrase "arising under," as used in section 1445(c), has been broadly defined to include all actions which are part of a state's workers' compensation scheme. Jones v. Roadway Express, Inc., 931 F.2d 1086, 1092 (5th Cir.1991); Thompson v. Cort Furniture Rental Corp., 797 F.Supp. 618, 620 (W.D.Tenn.1992). This broad definition has been adopted to further "Congress's intent that `all cases under a state's workers' compensation scheme remain in state court.'" Thompson, 797 F.Supp. at 620, citing Jones, 931 F.2d at 1092. Thus, "it is clear that where a cause of action is specifically enumerated in a state's workmen's compensation statute, it `arises under'" that state's workmen's compensation laws. Thompson, 797 F.Supp. at 620.

A more difficult question arises however, where, as in the instant case, the retaliatory discharge action has not been explicitly provided for in the workmen's compensation statute, but, rather, has been "judicially recognized" in order to give effect to the statute. In such cases, the vast majority of district courts have held that the retaliatory discharge claim does, indeed, "arise under" the state's workmen's compensation law. See e.g., Jones, 931 F.2d at 1092; Thompson, 797 F.Supp. at 619-24; Wallace v. Ryan-Walsh Stevedoring Co., Inc., 708 F.Supp. 144 (E.D.Tex.1989); Kilpatrick v. Martin K. Eby Construction Co., Inc., 708 F.Supp. 1241 (N.D.Ala.1989); Orsini v. Echlin, Inc., 637 F.Supp. 38 (N.D.Ill.1986); Alexander v. Westinghouse Hittman Nuclear Inc., 612 F.Supp. 1118 (N.D.Ill.1985); Roberts v. Citicorp Diners Club, Inc., 597 F.Supp. 311 (D.Md.1984); Thomas v. Kroger Co., 583 F.Supp. 1031 (S.D.W.Va.1984); Kemp v. Dayton Tire & Rubber Co., 435 F.Supp. 1062 (W.D.Okla.1977). These rulings have been based upon the fact that, in each respective case, a "substantive right to be free from retaliatory discharge had been statutorily-created, even though the remedy was provided by the courts in the form of a tort rather than by a statutory provision creating a private right of action." Gonzales v. City of Mesa, 779 F.Supp. 1050, 1052-53 (D.Ariz. 1991), citing, Alexander, 612 F.Supp. at 1121, Kilpatrick, 708 F.Supp. at 1243, Wallace, 708 F.Supp. at 147. Therefore, although a private cause of action for retaliatory discharge may not be explicitly provided for under a workers' compensation statute, it may, nonetheless, arise under that statute if: 1) the statute prohibits retaliatory discharge; and 2) the private cause of action has been judicially recognized in order to give effect to the statute. See, Thompson, 797 F.Supp. at 619-24.

A. Nevada's Workers' Compensation Law

Retaliatory discharge is a cause of action which arises under Nevada's workers' compensation statute. Nevada's workers' compensation statute prohibits retaliatory discharge; and, a private cause of action for retaliatory discharge has been recognized to give effect to this statutory prohibition.

1. Nevada's Statutory Prohibition Against Retaliatory Discharge

The Nevada workers' compensation statute, entitled the "Nevada Industrial Act" (N.R.S. §§ 616.010-616.750), prohibits retaliatory discharge. Specifically, Subsection 616.265(1)(b) of the Act provides:

A contract of employment, insurance, relief benefit, indemnity, or any other device, having for its purpose the waiver or modification of the terms or liability created by this chapter is void.

(Emphasis added).

This provision is substantially similar to those found in other states (See Thompson, 797 F.Supp. at 621-22, citing, Clanton v. Cain-Sloan Co., 677 S.W.2d 441, 444-45 (Tenn.1984); Frampton v. Central Indiana Gas Co., 260 Ind. 249, 297 N.E.2d 425, 428 (1973)) and prohibits the implementation of "any device" which would waive or modify an employer's obligation under the state's workers' compensation laws. Although Nevada courts have not explicitly defined the term "device," other jurisdictions with substantially similar statutes have held that this term encompasses retaliatory discharge.

We believe that ... discharge ... is a `device' within the framework of the statute, and hence, in clear contravention of public policy....

Retaliatory discharge for filing a workmen's compensation claim is a wrongful, unconscionable act and should be actionable in a court of law....

Frampton, 297 N.E.2d at 428.

The Nevada Supreme Court has specifically adopted the rationale and conclusion of Frampton in Hansen v. Harrah's, 100 Nev. 60, 675 P.2d 394 (1984). In doing so, the Nevada Supreme Court also recognized a private cause of action for retaliatory discharge.

Failure to recognize the cause of action of retaliatory discharge for filing a workmen's compensation claim would only undermine Nevada's Act and the strong public policy behind its enactment. The Supreme Court of Indiana first recognized this rationale and created a cause of action in Frampton v. Central Indiana Gas Company, 260 Ind. 249, 297 N.E.2d 425, 427 (1973).

The Act created a duty in the employer to compensate employees for work-related injuries (through insurance) and a right in the employee to receive such compensation. But in order for the goals of the Act to be realized and for public policy to be effectuated, the employee must be able to exercise his right in an unfettered fashion without being subject to reprisal. If employers are permitted to penalize employees for filing workmen's compensation claims, a most important public policy will be undermined. The fear of being discharged would have a deleterious effect on the exercise of a statutory right. Employees will not file claims for justly deserved compensation — opting, instead, to continue their employment without incident. The end result, of course, is that the employer is effectively relieved of his obligation.

Many other states, as a result of similar reasoning, have also adopted or recognized a public policy exception to the at-will rule making retaliatory discharge for filing a workmen's compensation claim actionable in tort.

We know of no more effective way to nullify the basic purposes of Nevada's workmen's compensation system than to force employees to choose between a continuation of employment or the submission of an industrial claim.... It would not only frustrate the statutory scheme, but also provide employers with an inequitable advantage if they were able to intimidate employees with the loss of their jobs upon the filing of claims for insurance benefits as a result of industrial injuries.

Hansen, 100 Nev. at 63-64, 675 P.2d 394 (citations omitted).

Retaliatory discharge for filing a workmen's compensation claim is a device which, if freely used, would "nullify the basic purposes of Nevada's workmen's compensation system." The use of this device is clearly prohibited under N.R.S. § 616.265(1)(b).

2. Cause of Action for Retaliatory Discharge Recognized to Give Statute Effect

Because retaliatory discharge is a device which would frustrate the worker's compensation scheme by effectively relieving an employer of its obligations under the statute, the Nevada Supreme Court has recognized a private cause of action as a remedy against its use.

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