Hill v. Wayne State Univ.

• Decision Date: 14 October 2021
• Docket Number: 5:21-cv-11409
• Court: U.S. District Court — Eastern District of Michigan
• Parties: STEPHANIE HILL, Plaintiff, v. WAYNE STATE UNIVERSITY, Defendant.

STEPHANIE HILL, Plaintiff,
v.
WAYNE STATE UNIVERSITY, Defendant.

No. 5:21-cv-11409

United States District Court, E.D. Michigan, Southern Division

October 14, 2021

Judith E. Levy, Judge

REPORT AND RECOMMENDATION TO GRANT PLAINTIFF'S MOTION TO REMAND (ECF No. 7)

KIMBERLY G. ALTMAN United States Magistrate Judge

I. Introduction

This is an employment discrimination case. Plaintiff Stephanie Hill (Hill) filed suit in state court, asserting claims under Michigan's Elliott-Larsen Civil Rights Act (ELCRA), M.C.L. § 37.2101 et sec, regarding non-renewal of her AmeriCorps contract by defendant Wayne State University (WSU). (ECF No. 1, PageID.23). WSU removed the case to federal court based on the federal question and/or preemption presented by the National Community Service Act (NCSA), the federal statute governing AmeriCorps volunteers. See, e.g., 42 U.S.C. § 12636(f)(2); 45 C.F.R. § 2540.230(c).

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Hill now moves to remand the case to state court. (ECF No. 7). The motion has been referred to the undersigned (ECF No. 8) and is fully briefed (ECF Nos. 9, 10). A hearing was held on October 7, 2021. (ECF No. 12). For the reasons that follow, the undersigned RECOMMENDS that Hill's motion to remand be GRANTED, that her request for attorney fees be DENIED, and that this matter be REMANDED to the Wayne County Circuit Court for further proceedings.

II. Background

On February 19, 2020, Hill sued WSU in the Wayne County Circuit Court alleging employment discrimination and retaliation under the ELCRA. (ECF No. 1, PageID.1-2). Hill initially alleged that she was terminated by WSU on the basis of her age and retaliated against for her related complaints. (Id., PageID.16-21).

On April 9, 2020, WSU filed a motion for summary disposition, arguing that Hill failed to exhaust Michigan Court of Claims notice requirements. The circuit court denied the motion. WSU filed a notice of appeal to the Michigan Court of Appeals; however, WSU later stipulated to dismiss the appeal, which was entered on February 19, 2021. (ECF No. 7, PageID.83; ECF No. 9, PageID.139). The case returned to the circuit court.

Almost a year later, on April 1, 2021, WSU filed a second motion for summary disposition, this time arguing that “Plaintiff's claims are time-barred under Plaintiff's AmeriCorps member agreement and the National and Community

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Service Act (NCSA).” (ECF No. 7, PageID.83; ECF No. 9, PageID.140). In addition to responding to the motion, Hill moved to amend the complaint, clarifying that rather than being terminated, she was refused a contract renewal for a third term of AmeriCorps service by WSU. (ECF No. 7, PageID.84). WSU contends that Hill moved to amend in an attempt to circumvent the terms of her employment agreement. (ECF No. 1, PageID.8).

On May 24, 2021, the circuit court denied WSU's second motion for summary disposition without prejudice and granted Hill's motion to amend. (ECF No. 7, PageID.86; ECF No. 9, PageID.140). Hill filed the amended complaint the next day. (Id.).

Following the filing of the amended complaint, on June 15, 2021, WSU removed the case to federal court. (ECF No. 1). WSU acknowledges that Hill's allegations do not arise under federal law but argues that two exceptions to the well-pleaded complaint rule apply, providing federal jurisdiction to Hill's state law claims. Hill contends that neither exception applies and that WSU's removal is untimely. These arguments will be considered below.

III. Legal Standard

Federal courts are courts of limited jurisdiction conferred by Article III of the United States Constitution and the Acts of Congress. Gross v. Hougland, 712 F.2d 1034, 1036 (6th Cir. 1983). Actions brought before the state court may be

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removed to the federal court only if the suit could have been originally brought before the federal court. 28 U.S.C. § 1441; See Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983). Section 1441 must at all times be strictly construed out of regard for the “rightful independence” of state courts. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941).

In reviewing a motion to remand, the court must be mindful of the scope of the federal jurisdictional statutes and the overriding constitutional limits to federal district court jurisdiction. The removing party has the burden to prove that the federal district court has jurisdiction. Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994). Courts construe removal statutes narrowly, resolving uncertainties in favor of remand. Her Majesty the Queen of Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989).

28 U.S.C. § 1331 provides that the district courts “have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” This Court may exercise such federal-question jurisdiction only if the well-pleaded allegations of the complaint, not any potential defenses, arise under federal law - this is the so-called well-pleaded complaint rule. Mikulski v. Centerior Energy Corp., 501 F.3d 555, 560 (6th Cir. 2007) (internal citations omitted). As both parties note, there are two relevant exceptions to the well-pleaded complaint rule. One provides that federal-question jurisdiction exists

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“where the vindication of a right under state law necessarily turn[s] on some construction of federal law.” Id. (internal quotation omitted). Another exception provides that jurisdiction exists “when a federal statute wholly displaces the state-law cause of action through complete pre-emption.” Id. (internal citation omitted). The undersigned will analyze these exceptions in turn below.

IV. Analysis

A. Timeliness

At the onset, the undersigned shall address Hill's contention that WSU's removal under 28 U.S.C. § 1446 was not timely. Under 28 U.S.C. § 1446(b)(3), “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.”

WSU states that the removal, which was effected on June 15, 2021, was timely, as it was within 30 days of the amended complaint that Hill filed on May 25, 2021. By the text of the statute, which requires removal within 30 days of “receipt by the defendant … of a copy of an amended pleading…” removal would appear unquestionably timely.

Hill, however, relies on an interpretation of 28 U.S.C. § 1446(b)(3) in an unpublished Sixth Circuit case which states that the 30-day period begins to run

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“from the date that a defendant has solid and unambiguous information that the case is removable, even if that information is solely within its own possession.” Holston v. Carolina Freight Carriers Corp., 936 F.2d 573 (6th Cir. 1991) (unpublished) (Table). Hill contends that, having sought a state court determination on NCSA preemption in state court on April 1, 2021, WSU was on notice of the supposed grounds for removal from at least that date. See ECF No. 7-2, PageID.116-118.

The undersigned first notes that the rule in Holston has not aged favorably. In a subsequently published Sixth Circuit case, the court noted: “For several reasons, we respectfully disagree with Holston's rule, and decline to follow it here. Holston is unpublished, and is accordingly not binding precedent.” Graiser v. Visionworks of Am., Inc., 819 F.3d 277, 283 (6th Cir. 2016).^[1] Id. at 283 n.3. The Graiser court went on to state that “Holston's rule is also not administrable. Determining the date upon which a defendant ascertained removability through ‘receiving' necessary documents within its exclusive possession-documents that the defendant may have possessed from the beginning of litigation but only

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‘reviewed' at a later point in time-requires guesswork and involves ambiguity.” Id. at 283.

Furthermore, on review of WSU's arguments in their second motion for summary disposition in state court, (ECF No. 7-2), there is much more emphasis on preemption of Hill's claims due to the member agreement that she signed than due to federal law, and removal jurisdiction would be difficult to substantiate on those bases. The filing of Hill's amended complaint, which changed the alleged violation from a termination to a denied renewal, squarely removed the member agreement as an issue and left federal law as WSU's major defense to Hill's claims. This also raised the potentially substantial federal question of whether NCSA regulations apply to applicants, as well as the potential for complete preemption, both of which are examined below. Believing this to be cause for removal, the undersigned concludes that WSU timely removed within 30 days of the amended complaint and therefore recommends that remand not be made based on timeliness.

B. Substantial Federal Question

1. General

“Under the substantial-federal-question doctrine, a state law cause of action may actually arise under federal law, even though Congress has not created a private right of action, if the vindication of a right under state law depends on the

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validity, construction, or effect of federal law.” Mikulski, 501 F.3d at 565. “The mere presence of a federal issue in a state law cause of action does not automatically confer federal question jurisdiction, either originally or on removal. Such jurisdiction remains exceptional and federal courts must determine its availability, issue by issue.” Id. As the Supreme Court has clarified, “federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress.” Gunn v. Minton, 568 U.S. 251, 258...