Karns v. Disability Reinsurance Mgmt. Servs., Inc.

• Decision Date: 19 July 2012
• Docket Number: Case No. 4:12–CV–752–VEH.
• Citation: 879 F.Supp.2d 1298
• Parties: Robin KARNS, Plaintiff, v. DISABILITY REINSURANCE MANAGEMENT SERVICES, INC., American United Life Insurance Company, Defendants.
• Court: U.S. District Court — Northern District of Alabama

879 F.Supp.2d 1298

Robin KARNS, Plaintiff,

v.DISABILITY REINSURANCE MANAGEMENT SERVICES, INC., American United Life Insurance Company, Defendants.

Case No. 4:12–CV–752–VEH.

United States District Court,

N.D. Alabama,

Middle Division.

July 19, 2012.

Myron K. Allenstein, Rose Marie Allenstein, Allenstein & Associates, Gadsden, AL, for Plaintiff.

David P. Donahue, Michael D. Mulvaney, Tiffany T. Leonard, Maynard Cooper & Gale PC, Birmingham, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

VIRGINIA EMERSON HOPKINS, District Judge.

I. INTRODUCTION

Plaintiff Robin Karns (“Plaintiff”) originally filed this breach of contract action in the Circuit Court of Etowah County, Alabama, on February 2, 2012. (Doc. 1 ¶ 1; id. at Ex. A. at Compl. at 1). According to her complaint, Plaintiff claims that Defendants “wrongly terminated [her] long term disability benefits effective March 7, 2011.” (Doc. 1 at Ex. A., Compl. ¶ 4). Because of Defendants' alleged breach of contract, including their bad faith in failing to properly investigate her claim, Plaintiff seeks to recover long-term disability insurance benefits in a lump sum payment equal to the present value of past and future benefits. ( Id. ¶¶ 6, 11). Plaintiff identified Defendant American United Life Insurance Company as the party that issued her contract for long-term disability insurance coverage ( id. ¶ 1), and she alleged that Defendant Disability Reinsurance Management Services, Inc., served as the claims administrator of the insurance policy. ( Id. ¶ 4).

Defendants jointly removed the litigation to federal court on March 12, 2012, asserting federal question jurisdiction under 28 U.S.C. §§ 1331 and 1441 as the basis for this court's jurisdiction. (Doc. 1 at 1). Namely, Defendants contended that this case is removable because Plaintiff has asserted claims that arise under the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. On March 30, 2012, Plaintiff timely filed a Motion To Remand. (Doc. 7).¹ Defendants filed their joint opposition to the Motion on April 13, 2012. (Doc. 8). Plaintiff elected not to file a reply. The Motion To Remand is now under submission and, for the reasons explained below, it is due to be DENIED.

II. STANDARDSA. Subject Matter Jurisdiction Generally

“It is by now axiomatic that the inferior courts are courts of limited jurisdiction. They are ‘empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,’ and which have been entrusted to them by a jurisdictional grant authorized by Congress.” Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 409 (11th Cir.1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir.1994)). “Accordingly, ‘[w]hen a federal court acts outside its statutory subject-matter jurisdiction, it violates the fundamental constitutional precept of limited federal power.’ ” Univ. of S. Ala., 168 F.3d at 409 (quoting Victory Carriers, Inc. v. Law, 404 U.S. 202, 212, 92 S.Ct. 418, 425, 30 L.Ed.2d 383 (1971)). “Simply put, once a federal court determines that it is without subject matter jurisdiction, the court is powerless to continue.” Univ. of S. Ala., 168 F.3d at 410.

“A necessary corollary to the concept that a federal court is powerless to act without jurisdiction is the equally unremarkable principle that a court should inquire into whether it has subject matter jurisdiction at the earliest possible stage in the proceedings.” Id. “Indeed, it is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.” Id. (citing Fitzgerald v. Seaboard Sys. R.R., 760 F.2d 1249, 1251 (11th Cir.1985) (per curiam)).

Moreover, “[t]he jurisdiction of a court over the subject matter of a claim involves the court's competency to consider a given type of case, and cannot be waived or otherwise conferred upon the court by the parties. Otherwise, a party could ‘work a wrongful extension of federal jurisdiction and give district courts power the Congress denied them.’ ” Jackson v. Seaboard Coast Line R.R., 678 F.2d 992, 1000–01 (11th Cir.1982) (quoting American Fire & Cas. Co. v. Finn, 341 U.S. 6, 18, 71 S.Ct. 534, 95 L.Ed. 702 (1951)) (footnote omitted) (citation omitted). Furthermore, “[b]ecause removal jurisdiction raises significant federalism concerns, federal courts are directed to construe removal statutes strictly.” Univ. of S. Ala., 168 F.3d at 411 (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108–09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941)).

Lastly, Congress has decreed and the Supreme Court has confirmed that—with the express exception of civil rights cases that have been removed—orders of remand by district courts based upon certain grounds, including in particular those premised upon lack of subject matter jurisdiction, are entirely insulated from review. More specifically, § 1447(d) provides:

An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title shall be reviewable by appeal or otherwise.

28 U.S.C. § 1447(d) (emphasis added); see also Kircher v. Putnam Funds Trust, 547 U.S. 633, 642, 126 S.Ct. 2145, 165 L.Ed.2d 92 (2006) (recognizing that “ ‘[w]here the [remand] order is based on one of the grounds enumerated in 28 U.S.C. § 1447(c), review is unavailable no matter how plain the legal error in ordering the remand’ ”) (citing Briscoe v. Bell, 432 U.S. 404, 413 n. 13, 97 S.Ct. 2428, 53 L.Ed.2d 439 (1977)); Milton I. Shadur, Traps for the Unwary in Removal and Remand, 33 no. 3 Litigation 43 (2007); Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 127 S.Ct. 2411, 2418, 168 L.Ed.2d 112 (2007) (holding that when “the District Court relied upon a ground that is colorably characterized as subject-matter jurisdiction, appellate review is barred by § 1447(d)”).

B. Defendants' Burden on Removal

The burden of establishing subject matter jurisdiction for the purposes of removal to this court is on the removing defendant(s). See Williams v. Best Buy Co., 269 F.3d 1316, 1319 (11th Cir.2001) (“Because this case was originally filed in state court and removed to federal court by Best Buy, Best Buy bears the burden of proving that federal jurisdiction exists.”). “The court should determine its jurisdiction over the case ‘based upon the plaintiff's pleadings at the time of removal.’ ” Fowler v. Provident Life & Accident Ins. Co., 256 F.Supp.2d 1243, 1246 (N.D.Ala.2003).

“[B]ecause the jurisdiction of federal courts is limited, the Eleventh Circuit Court of Appeals favors remand of cases that have been removed where federal jurisdiction is not absolutely clear.” Lowe's OK'd Used Cars, Inc. v. Acceptance Ins. Co., 995 F.Supp. 1388, 1389 (M.D.Ala.1998) (citing Burns v. Windsor, 31 F.3d 1092, 1095 (11th Cir.1994)). “In fact, removal statutes are to be strictly construed, with all doubts resolved in favor of remand.” Lowe's, 995 F.Supp. at 1389 (citing Diaz v. Sheppard, 85 F.3d 1502, 1505 (11th Cir.1996)).

III. ANALYSIS

As stated above, Defendants premise their removal exclusively upon this court's federal question jurisdiction.

Under the federal question jurisdiction statute, 28 U.S.C. § 1331, a district court has subject matter jurisdiction over “all civil actions arising under the Constitution, laws, or treaties of the United States.” Whether a claim arises under federal law for purposes of 28 U.S.C. § 1331 is generally determined 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.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). A well-pleaded complaint presents a federal question where it “establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.” Franchise Tax Bd. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 27–28, 103 S.Ct. 2840 [2841], 2856, 77 L.Ed.2d 420 (1983).

Smith v. GTE Corp., 236 F.3d 1292, 1310 (11th Cir.2001). “It is the general rule that an action may be removed from state court to federal court only if a federal district court would have original jurisdiction over the claim in suit.” Jefferson County v. Acker, 527 U.S. 423, 430, 119 S.Ct. 2069, 144 L.Ed.2d 408 (1999) (citing 28 U.S.C. § 1441(a)).

Although the “vast majority” of federal question cases contain a federal law that creates the plaintiff's cause of action, see Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986), federal question jurisdiction is not limited to those cases. There are some situations in which, even though the federal law does not create the cause of action, the case depends on the resolution of a federal question sufficiently substantial to “arise under” federal law. See Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 27–28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983); see also Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199, 41 S.Ct. 243, 65 L.Ed. 577 (1921) (explaining that federal jurisdiction exists when the right to relief “depends upon the construction or application” of federal law and the claim “is not merely colorable”). Thus, to sustain federal question jurisdiction in this case, Defendant must plausibly demonstrate either (1) the existence of a federal law that potentially creates a cause of action for Plaintiff based on the allegations of Plaintiff's complaint (as amended), or (2) that disposition of the case, as alleged by Plaintiff, in her complaint, depends on the resolution of a substantial federal question.

Here, Defendants contend that federal question jurisdiction...