Copling v. Container Store, Inc.

• Citation: 174 F.3d 590
• Decision Date: 06 May 1999
• Docket Number: No. 98-10042,98-10042
• Parties: Andre L. COPLING, Plaintiff-Appellee, v. THE CONTAINER STORE, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 590

174 F.3d 590

Andre L. COPLING, Plaintiff-Appellee, v. THE CONTAINER STORE, INC., Defendant-Appellant.

No. 98-10042.

United States Court of Appeals Fifth Circuit.

May 6, 1999.

Andrew Ross Korn, Keller & Korn, Brad Jackson, Jackson & Matthews, Dallas, TX, for Plaintiff-Appellee.

Allan G. King, Steven R. McCown, Paulo B. McKeeby, Littler Mendelson, Dallas, TX, Richard Charles Rybicki, Littler Mendelson, Santa Rosa, CA, for Defendant-Appellant.

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

Before DAVIS, SMITH and WIENER, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

The Container Store appeals the remand of Andre Copling's breach of contract claim. Because Congress has denied us jurisdiction over appeals from such remands, we dismiss the appeal.

I.

Copling was an employee of The Container Store, Inc. ("the Store"), which had established a plan that provides employees and their dependants with medical benefits, one of which is a "flexible benefit" that allows employees to deduct pretax dollars from their paycheck to cover eligible medical expenses. The deducted money is placed in a healthcare reimbursement account, from which the employee may draw funds for eligible expenses. In compliance with tax regulations, any unused funds in the account at the end of the plan year must be forfeited.

Copling informed the Store that he planned to have some orthodontic work performed. The Store alleges that he entered into a flexible benefit plan providing for the Store to deduct $1,500 from his salary to fund unreimbursed medical and dental expenses; Copling signed a form, entitled "The Container Store 1995 Flexible Benefit Enrollment Form," authorizing these deductions and providing that any contributions not used during the plan year are forfeited. Copling was paid $300 from the account for orthodontic expenses.

Copling argues that he was not informed that any unused funds would be forfeited. He thought he bargained for a simple payroll deduction to fund unreimbursed medical expenses, but the Store gave him an ERISA ¹ health care reimbursement account instead. The Store contends that Copling forfeited the remainder of the money pursuant to the terms of the plan.

Copling filed a breach of contract action in state court. The Store removed to federal court and sought summary judgment. The district court granted Copling's motion to remand.

II.

The Store seeks reversal on the ground that Copling's claim is not subject to the doctrine of conflict preemption. Because we conclude that the district court remanded because it decided that it was without subject matter jurisdiction, we have no appellate jurisdiction and thus cannot reach the merits of the conflict preemption issue.

A.

We must examine the basis of our appellate jurisdiction, sua sponte if necessary. See Castaneda v. Falcon, 166 F.3d 799, 801 (5th Cir.1999); Jones v. Collins, 132 F.3d 1048, 1051 (5th Cir.1998). Likewise, a district court must inquire into its jurisdiction, even if the parties have not questioned it. See Free v. Abbott Labs., Inc., 164 F.3d 270, 272 (5th Cir.1999). A well-pleaded complaint raising a federal question provides one basis for subject matter jurisdiction. ²

B.

As we recently explained in McClelland v. Gronwaldt, 155 F.3d 507 (5th Cir.1998), there are two types of preemption under ERISA. First, ERISA may occupy a particular field, resulting in complete preemption under § 502(a), 29 U.S.C. § 1132(a). See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987); McClelland, 155 F.3d at 516-17. ³ This functions as an exception to the well-pleaded complaint rule; "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life, 481 U.S. at 64-65, 107 S.Ct. 1542. Section 502, by providing a civil enforcement cause of action, completely preempts any state cause of action seeking the same relief, regardless of how artfully pled as a state action.

Furthermore, because such a claim presents a federal question, it provides grounds for a district court's exercise of jurisdiction on removal from a state court. ⁴ If the plaintiff moves to remand, all the defendant has to do is demonstrate a substantial federal claim, e.g., one completely preempted by ERISA, and the court may not remand. Once the court has proper removal jurisdiction over a federal claim, it may exercise supplemental jurisdiction over state law claims, see 28 U.S.C. § 1367, even if it dismisses or otherwise disposes of the federal claim or claims.

C.

At issue here, however, is conflict preemption, also known as ordinary preemption, under § 514. See 29 U.S.C. § 1144. "State law claims which fall outside the scope of ERISA's civil enforcement provision, § 502, even if preempted by § 514(a), are still governed by the well-pleaded complaint rule and, therefore, are not removable under the complete-preemption principles established in Metropolitan Life." Dukes v. U.S. Healthcare, Inc., 57 F.3d 350, 355 (3d Cir.1995). ⁵

Conflict preemption simply fails to establish federal question jurisdiction. Rather than transmogrifying a state cause of action into a federal one, as occurs with complete preemption, conflict preemption serves as a defense to a state action. ⁶ "When the doctrine of complete preemption does not apply, but the plaintiff's state claim is arguably preempted under § 514(a), the district court, being without removal jurisdiction, cannot resolve the dispute regarding preemption. It lacks power to do anything other than remand to the state court where the preemption issue can be addressed and resolved." Dukes, 57 F.3d at 355 (citing Franchise Tax Bd., 463 U.S. at 27-28, 103 S.Ct. 2841). ⁷

Hence, when a complaint raises state causes of action that are completely preempted, the district court may exercise removal jurisdiction; but when a complaint contains only state causes of action that the defendant argues are merely conflict preempted, the court must remand for want of subject matter jurisdiction. When a complaint raises both completely preempted claims and arguably conflict preempted claims, the district court may exercise removal jurisdiction over the completely preempted claims and supplemental jurisdiction over the remaining claims. ⁸

D.

The Store contends only that ERISA conflict-preempts Copling's claim. It nowhere cites § 502, but does cite to § 514(a) and relies on conflict-preemption arguments and authority. ⁹ Because conflict preemption does not function as an exception to the well-pleaded complaint rule, the district court had no federal claims before it at any time. It never had valid subject matter jurisdiction. It had an obligation, therefore, to remand immediately. See § 1447(c).

The court did not remand immediately; instead, it commented that ERISA conflict-preempted none of the claims and then remanded. ¹⁰ Nonetheless, the district court did remand pursuant to § 1447(c) because it lacked subject matter jurisdiction. Copling's remand motion explicitly seeks remand pursuant to § 1447(c). Furthermore, the district court noted that it could hear the motion, untimely filed more than thirty days after removal, only because it was based on a lack of subject matter jurisdiction. It stated no other ground for the remand.

E.

Given this background, we must decide whether we have jurisdiction to review the order of remand. We begin with 28 U.S.C. § 1447(d), which provides, "An order remanding a case to State court from which it was removed is not reviewable on appeal or otherwise...." Interpreted in pari materia with § 1447(c), this indicates that an appellate court lacks jurisdiction to review a remand under § 1447(c); conversely, remands on other grounds may be reviewed. ¹¹ Reviewable non-s 1447(c) remands constitute a narrow class of cases, meaning we will review a remand order only if the district court "clearly and affirmatively" relies on a non-s 1447(c) basis. See Soley, 923 F.2d at 409; see also Tillman v. CSX Transp., Inc., 929 F.2d 1023, 1027 (5th Cir.1991).

Under § 1447(d), we may not review a § 1447(c) remand, based on a putative want of jurisdiction, even if the district court's remand is plainly erroneous. See Thermtron, 423 U.S. at 351, 96 S.Ct. 584; Angelides, 117 F.3d at 836; Tillman, 929 F.2d at 1028; Soley, 923 F.2d at 408. We refuse to review even erroneous remands, "to prevent delay through protracted litigation of jurisdictional issues." Id. Although the district court, however briefly and without preclusive effect, mistakenly felt compelled to address conflict preemption, it also properly remanded for want of jurisdiction. We cannot review this § 1447(c) remand under § 1447(d). ¹²

F.

The Store seeks to avoid § 1447(d) by arguing that we can review the merits as separable from, and collateral to, the remand. We cannot. In Angelides, we explained that an order is separable, and hence appealable notwithstanding § 1447(d), if two conditions are satisfied: "First, it must precede the order of remand in logic and in fact, so as to be made while the district court had control of the case. Second, the order sought to be separated must be conclusive. An order is conclusive if it will have the preclusive effect of being functionally unreviewable in the state court." Angelides, 117 F.3d at 837 (citations and quotations omitted); see also Soley, 923 F.2d at 409-10.

The instant order meets neither condition. As we held in Soley when we dismissed the same argument:

[T]he rejection of an ERISA preemption defense does not "in logic and in fact" precede a remand order because, under the "well-pleaded complaint" rule, a defense does not confer removal jurisdiction. Instead, if the district court considered the preemption defense, it did so only because of an erroneous belief that the defense was relevant to the jurisdictional issue.... In this case, ... because...