Nelson v. Citibank (South Dakota), NA

• Decision Date: 28 May 1992
• Docket Number: Civ. No. 4-92-286,4-92-287.
• Citation: 794 F. Supp. 312
• Parties: Michelle NELSON, and all others similarly situated, Janis Ideson, and all others similarly situated, Donald Lauer, and all others similarly situated, Plaintiffs, v. CITIBANK (SOUTH DAKOTA) N.A., First National Bank of Omaha, Bank One, Columbus, N.A., MBNA American Bank, N.A. f/k/a MBNA America, N.A., Defendants. Michael B. TIKKANEN, and all others similarly situated, Barry Rosenberg, and all others similarly situated, Plaintiffs. v. CITIBANK (SOUTH DAKOTA) N.A., MBNA American Bank, N.A., f/k/a MBNA America, N.A., Defendants.
• Court: U.S. District Court — District of Minnesota

794 F. Supp. 312

Michelle NELSON, and all others similarly situated, Janis Ideson, and all others similarly situated, Donald Lauer, and all others similarly situated, Plaintiffs, v. CITIBANK (SOUTH DAKOTA) N.A., First National Bank of Omaha, Bank One, Columbus, N.A., MBNA American Bank, N.A. f/k/a MBNA America, N.A., Defendants.

Michael B. TIKKANEN, and all others similarly situated, Barry Rosenberg, and all others similarly situated, Plaintiffs. v. CITIBANK (SOUTH DAKOTA) N.A., MBNA American Bank, N.A., f/k/a MBNA America, N.A., Defendants.

Civ. Nos. 4-92-286, 4-92-287.

United States District Court, D. Minnesota, Fourth Division.

May 28, 1992.

William H. Crowder, Mark Reinhardt, Reinhardt & Anderson, St. Paul, for plaintiffs Michelle Nelson, Janis Ideson and Donald Lauer.

Charles H. Johnson, Johnson Law Office, St. Paul, for plaintiffs Michael B. Tikkanen and Barry Rosenberg.

Lawrence C. Brown, James L. Volling, Faegre & Benson, Minneapolis, for defendants.

Arnold M. Lerman, Christopher R. Lipsett, John B. Bellinger, Wilmer, Cutler & Pickering, Washington, D.C., for defendant Citibank (South Dakota) N.A.

John L. Warden, Richard J. Urowsky, Lori S. Sherman, Sullivan & Cromwell, New York City, for defendant MBNA America Bank, N.A.

MEMORANDUM AND ORDER

MacLAUGHLIN, Chief Judge.

This matter is before the Court on plaintiffs' motions to remand. The motion will be denied.

FACTS

Plaintiffs in these two related actions are credit card customers of the defendant banks.¹ Defendants are national banks located in states other than Minnesota. Plaintiffs, all residents of Minnesota, brought suit in state court, challenging defendants' practice of charging late fees and overlimit fees in addition to periodic interest charges. The fees assessed by the defendant banks are permitted by the laws of the states in which the defendants are located. In their original complaints, plaintiffs alleged that defendants assessed fees in violation of Minn.Stat. § 48.185(4), that defendants combined the unpaid fees with unpaid principal, and that defendants then imposed interest on the whole, resulting in a usurious rate of interest in violation of Minn.Stat. § 48.195. Plaintiffs asked the Court to certify a class of similarly situated plaintiffs, to declare that defendants' practice of assessing late and overlimit fees violated section 48.185(4), to enjoin defendants from engaging in that practice in the future, and to award plaintiffs section 48.195's penalty for usurious interest paid. Plaintiffs also asked for an award of costs and attorney's fees.

Defendants removed the actions to federal court, on the ground that a substantial federal question is a necessary element of plaintiffs' state law claims.² Subsequent to removal, plaintiffs amended their complaints. In the amended complaints, plaintiffs again allege that defendants charged late and overlimit fees in violation of Minn. Stat. § 48.185(4), combined the unpaid fees with unpaid principal, and imposed interest on the whole; however, they do not allege that the resulting interest was usurious under Minn.Stat. § 48.195. Nelson Am. Compl. ¶ 49, 50; Tikkanen Am.Compl. ¶ 35, 36. The amended complaints raise two causes of action, for deceptive trade practices and unjust enrichment. Plaintiffs ask the Court to certify a class of similarly situated plaintiffs, declare that defendants' practice of assessing late and overlimit fees violates Minn.Stat. § 48.185, enjoin defendants from engaging in that practice in the future, award plaintiffs damages under Minnesota's deceptive trade practices statute, and award plaintiffs costs and attorney's fees. Although plaintiffs omitted references to Minnesota's statutory usury penalty in their amended complaint, they ask the Court to award them the illegal fees charged or collected by defendants, as well as all interest charged on such fees.³ Plaintiffs now move to remand the actions to state court on the grounds that their complaints present no federal question.

DISCUSSION

Removal of a state court action on the basis of federal question jurisdiction is appropriate where the action arises under the Constitution, laws, or treaties of the United States, and therefore could have been brought in federal district court in the first place. 28 U.S.C. § 1441(b). The federal question must appear on the face of the plaintiff's complaint. "Under the `well-pleaded complaint' doctrine, the plaintiff is master of his claim and may avoid federal removal jurisdiction by exclusive reliance on state law." M. Nahas & Co. v. First Nat'l Bank of Hot Springs, 930 F.2d 608, 611 (8th Cir.1991) (citing Caterpillar v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987)). The removing party bears the burden of establishing that the federal court has jurisdiction; if any doubts remain as to the right of removal, the case should be remanded. Bor-Son Building Corp. v. Heller, 572 F.2d 174, 181 n. 13 (8th Cir.1978); Abing v. Paine, Webber, Jackson & Curtis, 538 F.Supp. 1193, 1195 (D.Minn.1982).

I. The Effect of Plaintiffs' Amended Complaints

As noted above, plaintiffs amended their complaints subsequent to removal. Plaintiffs assert that whether their complaints present a federal question must be determined from the face of the amended complaints. Defendants assert that whether plaintiffs' complaints present a federal question must be determined from the face of plaintiffs' original complaints.

The settled rule is that the propriety of removal is determined by the record as it stands at the time the petition for removal is filed. Hatridge v. Aetna Casualty & Surety Co., 415 F.2d 809, 814 (8th Cir. 1969); Butts v. Hansen, 650 F.Supp. 996, 998 (D.Minn.1987). Federal jurisdiction is not defeated by a plaintiff's post-removal amendment to eliminate the federal claims upon which federal jurisdiction is premised. Ching v. Mitre Corp., 921 F.2d 11, 13 (1st Cir.1990); Henry v. Independent American Sav. Ass'n, 857 F.2d 995, 998 (5th Cir.1988); see 6 Charles A. Wright, Arthur R. Miller, & Mary K. Kane, Federal Practice and Procedure § 1477 at 562-63 (2d ed. 1990). Plaintiffs argue, however, that the settled rule has been displaced by the decision of the United States Supreme Court in Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 108 S.Ct. 614, 98 L.Ed.2d 720 (1988).

In Carnegie-Mellon, the plaintiffs filed a complaint in state court alleging violations of federal age discrimination laws, as well as state common law claims. After the defendants removed the action to federal court, the plaintiffs moved to amend their complaint to delete the federal age discrimination claim and to remand the case to state court on the ground that the amendment would eliminate their sole federal claim. The district court granted both motions. The court of appeals denied the defendants' application for a writ of mandamus, and the defendants appealed the appellate court's decision to the United States Supreme Court.

The issue before the Court was "whether a federal district court has discretion under the doctrine of pendent jurisdiction to remand a properly removed case to state court when all federal-law claims in the action have been eliminated and only pendent state-law claims remain." Carnegie-Mellon, 484 U.S. at 345, 108 S.Ct. at 616 (emphasis added). The Court concluded that a federal district court did have that discretion. In reaching this result, the Court noted that the pendent jurisdiction doctrine is a doctrine of discretion designed to enable courts to handle cases involving state law claims in the way that best furthers the interests of economy, convenience, fairness, and comity. Remanding an action could in some circumstances better accommodate those interests than dismissing the action would. For example, dismissing the action could work injustice to plaintiffs in cases where the statute of limitations expires before the federal court has determined that it should relinquish jurisdiction. In addition, because dismissal would require the parties to refile their papers in state court and the state court to reprocess the case, remand would in most cases be the more efficient and economical alternative.

The Court dismissed the defendants' argument that giving district courts discretion to remand cases involving pendent state-law claims would allow plaintiffs to use manipulative tactics to defeat removal. This concern, the Court reasoned, did not justify a categorical prohibition on the remand of such cases, because in exercising its discretion, the district court could consider whether the plaintiff has engaged in manipulative tactics and balance that factor against factors weighing in favor of remand.

Because Carnegie-Mellon deals with a district court's discretion to remand a properly removed case, it does alter the established rule that the propriety of removal must be determined by reference to the record at the time of removal. If plaintiffs' original complaints raised a federal cause of action and if their amended complaints eliminated that cause of action, then the Court would have discretion, under Carnegie-Mellon, to remand plaintiffs' remaining state law claims. Whether the Court has federal question jurisdiction over plaintiffs' claims, however, is not a matter of discretion, and must be determined by reference to the record as it stood at the time of removal — that is, by reference to plaintiffs' original complaints.

II. Plaintiffs' Claims to Recover Interest

Under the well-pleaded complaint rule, there is no right of removal where a federal question arises from a possible defense to the action. This is true even where federal law or principles of preemption provide a complete defense to the state law claims. M. Nahas, 930 F.2d at 611. There is, however, an exception to the well-pleaded complaint rule. An action that asserts only state law claims may nonetheless be subject to removal where federal statutes "so completely preempt a...