McAteer v. Silverleaf Resorts, Inc.

• Citation: 514 F.3d 411
• Decision Date: 15 January 2008
• Docket Number: No. 06-41725.,06-41725.
• Parties: Le Ann McATEER, Plaintiff-Appellant, v. SILVERLEAF RESORTS, INC.; Silverleaf Club, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

514 F.3d 411

Le Ann McATEER, Plaintiff-Appellant, v. SILVERLEAF RESORTS, INC.; Silverleaf Club, Defendants-Appellees.

No. 06-41725.

United States Court of Appeals, Fifth Circuit.

January 15, 2008.

Rex A. Nichols, Jr., Nichols & Nichols, Andrew George Khoury (argued), Law Offices of Andrew G. Khoury, Longview, TX, for Plaintiff-Appellant.

Lawrence Edward Ackels, Jr., Ackels & Ackels LLP, Dallas, TX, for Silverleaf Resorts.

Chris Marie Heffelbower, Larkin, Hoffman, Daly & Lindgren, Bloomington, MN, for Silverleaf Resorts and Silverleaf Club.

Bruce J. Douglas (argued), Larkin, Hoffman, Daly & Lindgren, Bloomington, MN, for Silverleaf Club.

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

Before BENAVIDES, CLEMENT and PRADO, Circuit Judges.

PRADO, Circuit Judge:

At issue in this appeal is the continued validity of our precedent regarding whether the Employee Retirement Income Security Act of 1974 ("ERTSA"), 29 U.S.C. §§ 1001-1461, preempts state law claims of negligence for failing to maintain a safe work environment. Because the Supreme Court has not reversed our prior decision on this point and because the plaintiff did not make her argument moot by adding an ERISA claim to her case, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

I. FACTUAL BACKGROUND

Defendant-Appellee Silverleaf Resorts, Inc. ("Silverleaf") employed Plaintiff-Appellant Le Ann McAteer ("McAteer") as a Landscaper at the Holly Lake Ranch from August 19, 2004, to August 2, 2005. Silverleaf is a non-subscriber to Texas workers' compensation insurance, choosing instead to provide benefits to its employees through the Silverleaf Club Employee Injury Benefit Plan ("the Plan"), which is governed by ERISA. The Plan gives nofault benefits to employees in the event of a job-related injury and requires arbitration of any disputes regarding benefits. McAteer enrolled in the Plan and signed an agreement that the Plan would provide the exclusive avenue of relief for on-thejob injuries.

McAteer claims she suffered a job-related injury on July 11, 2005, when she tripped over a cement parking stop while using a weedeater in a parking lot. She landed with her back on the weedeater and was subsequently diagnosed with a herniated disk that required surgery. McAteer did not report this injury to Silverleaf until September 2005, which was after her employment with Silverleaf ended. At that time, McAteer completed an injury claim form and submitted it to the Plan, where it was reviewed by the Plan's administrator, Providence Risk Services, Inc. ("Providence"). Providence issued an initial determination denying McAteer's claim because she had not timely reported her injury, had not sought advance approval for her medical treatment, and had not used a Plan-approved physician. McAteer did not pursue an administrative appeal.

II. PROCEDURAL HISTORY

McAteer filed suit against Silverleaf in Texas state court on January 19, 2006, alleging that Silverleaf acted negligently by (1) failing to provide McAteer with a safe place to work, (2) failing to properly secure the parking stop, (3) assigning McAteer to work in the parking lot when it knew the parking stops were hazardous, (4) failing to warn McAteer of the improperly secured parking stops, and (5) failing to implement procedures for employee safety that would have prevented the accident.

Silverleaf timely removed the suit on February 17, 2006, asserting that federal subject matter jurisdiction existed because ERISA completely preempted McAteer's causes of action. McAteer filed a motion to remand and argued that ERISA did not preempt her causes of action because she had brought only state law negligence claims. Silverleaf then filed a motion to dismiss and compel arbitration based on the arbitration agreement contained in the Plan. On May 1, 2006, the district court denied McAteer's motion to remand, concluding that the Supreme Court had overruled the Fifth Circuit's precedent regarding ERISA's preemption of state law negligence claims. The district court ruled that McAteer's claims were preempted because she had enrolled in an ERISA plan which provided the exclusive procedures for recovery for on-the-job injuries.

The district court then ordered mediation, which was required by the Plan's procedures, and stayed the case for four months. Three months later, McAteer amended her complaint to assert a claim under ERISA, "while still respectfully disagreeing" with the district court's preemption decision.¹ After the mediation proved unsuccessful, the district court granted Silverleaf s motion to compel arbitration and dismissed McAteer's claims with prejudice. McAteer now appeals the final judgment and order denying remand. We review de novo the district court's legal determination that ERISA preempted McAteer's state law claims. See Bank of La. v. Aetna U.S. Healthcare Inc., 468 F.3d 237, 241 (5th Cir.2006), cert. denied, ___ U.S. ___, 127 S.Ct. 1826, 167 L.Ed.2d 322 (2007).

III. DISCUSSION

A. Whether McAteer's Appeal is Moot

We turn first to Silverleafs argument that McAteer's appeal is moot because she amended her complaint to include a claim for relief under ERISA, thus voluntarily creating federal jurisdiction. Silverleaf rests its conclusion on the judicially created "voluntary-involuntary" rule, which provides that "an action nonremovable when commenced may become removable thereafter only by the voluntary act of the plaintiff." Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir.) (internal quotation marks omitted), cert. denied, ___ U.S. ___, 126 S.Ct. 2945, 165 L.Ed.2d 956 (2006). We need not consider the voluntary-involuntary rule, however, because this court and the Supreme Court have addressed situations similar to this one, and those opinions provide the rule of decision in this case.

The Supreme Court considered the effect of the plaintiff's voluntary creation of federal jurisdiction following the denial of a motion to remand in Caterpillar, Inc. v. Lewis, 519 U.S. 61, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). There, the undisputed facts demonstrated that there was no diversity jurisdiction when the case was removed and that the district court had improperly denied the plaintiff's motion for remand. Id. at 70, 117 S.Ct. 467. Prior to a final judgment, though, the plaintiff voluntarily settled with the non-diverse defendant, thereby creating federal jurisdiction. Id. at 64, 117 S.Ct. 467. Following three years of litigation and a six-day trial that resulted in a verdict for the defendant, the plaintiff appealed on the ground that the removal was improper. Id. at 66-67, 117 S.Ct. 467.

In conducting its analysis, the Supreme Court stated that "by timely moving for remand, [the plaintiff] did all that was required to preserve his objection to removal." Id. at 74, 117 S.Ct. 467. Thus, despite the voluntary creation of jurisdiction (by settling with the non-diverse defendant), the plaintiff did not waive his claim that removal was improper. The Court ultimately decided, however, that because jurisdiction existed at the time of the final judgment and the case had proceeded all the way through trial after three years of litigation, "considerations of finality, efficiency, and economy" were "overwhelming." Id. at 75, 117 S.Ct. 467. Therefore, the Court permitted the verdict to stand. Id. at 77-78, 117 S.Ct. 467.

This court in Waste Control Specialists, L.L.C. v. Envirocare of Texas, Inc., 199 F.3d 781 (5th Cir.), opinion withdrawn and superseded in part, 207 F.3d 225 (5th Cir.2000), relied on the Supreme Court's reasoning in Caterpillar to analyze similar. facts. In Waste Control Specialists, we faced a situation in which a district court improperly concluded that federal antitrust law preempted the plaintiff's claims. 199 F.3d at 782-84. After its motion to remand was denied, the plaintiff added a federal antitrust claim, but it appealed on the ground of improper removal when its suit was dismissed on a Rule 12(b)(6) motion. Id. at 782-83.

On appeal, we first determined that the case as originally removed was not preempted and should have been remanded. Id. at 783-84. We then considered the effect of the plaintiffs subsequent addition of a federal claim and cited Caterpillar for the conclusion that "timely objection can preserve the jurisdictional claim despite subsequent amendment, even if other considerations may ultimately outweigh that objection." Id. at 785. Because the plaintiff timely objected to removal we held that it had not waived its objection to that removal despite the subsequent addition of a federal claim. Id. at 787. An important factor in our decision was that the suit had been dismissed on a Rule 12(b)(6) motion, rather than after a trial on the merits, which distinguished it from Caterpillar (a case that had proceeded through trial). See id. at 786-87.

Thus, both Caterpillar and Waste Control Specialists recognize that a motion to remand preserves arguments regarding improper removal, and a subsequent amendment to create federal jurisdiction does not necessarily make those arguments moot. However, if subject matter jurisdiction is eventually established and a case remains in the federal court system for a significant length of time or reaches a verdict on the merits, considerations of finality and economy may result in affirming a judgment despite the improper removal. See Caterpillar, 519 U.S. at 75, 117 S.Ct. 467.

Here, as in Caterpillar and Waste Control Specialists, McAteer preserved her argument regarding improper removal by timely moving to remand the case. It was only after the district court denied her motion to remand that she added an ERISA claim, and even then, she emphasized her disagreement with the remand decision. Further, the instant case has spent little time in federal court and its merits have never been addressed. Therefore, the concerns of...