Oler v. Truhome Solutions, LLC
| Decision Date | 24 October 2016 |
| Docket Number | Case No. 16-2307 |
| Parties | PHILLIP OLER, Plaintiff, v. TRUHOME SOLUTIONS, LLC, Defendant. |
| Court | U.S. District Court — District of Kansas |
This matter comes before the court on plaintiff Phillip Oler's Motion to Remand (Doc. 10). On March 31, 2016, plaintiff filed claims in the District Court of Johnson County, Kansas, for defamation and unlawful termination in violation of the whistleblower exception to the at-will employment doctrine. (Doc. 1-1.) On May 12, 2016, defendant removed the case to federal court. (Doc. 1.) On May 19, 2016, defendant filed a motion to dismiss for failure to state a claim, and on June 10, 2016, plaintiff filed his motion to remand.
Plaintiff's complaint states that he worked for defendant as a loan originator from November 21, 2014 to May 7, 2015. Plaintiff claims that his supervisor instructed him to gather private information from individuals who were completing loan applications with a rival company through personal connections at the rival company. Plaintiff states that he believed doing so would violate federal law and that a reasonably prudent person would have so believed. Plaintiff reported the situation to management and was fired a few days afterwards. Since plaintiff's employment with defendant was terminated, he has sought other employment. Plaintiff claims that defendant's agent made defamatory statements about plaintiff, damaging his reputation, making it impossible for him to find work in the mortgage-lending industry. Thus plaintiff sues for both defamation and wrongful termination.
"Federal courts are courts of limited jurisdiction; they must have a statutory basis for their jurisdiction." Dutcher v. Matheson, 733 F.3d 908, 984 (10th Cir. 2013) (quoting Rural Water Dist. No. 2 v. City of Glenpool, 698 F.3d 1270, 1274 (10th Cir. 2012)). A federal court has jurisdiction over a claim if it is one "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Civil actions filed in state courts over which district courts have original jurisdiction "may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
To determine whether a claim arises under federal law, the well-pleaded complaint rule usually governs. Sharp v. Wellmark, Inc., 744 F. Supp. 2d 1191, 1194 (D. Kan. 2010). It provides that federal jurisdiction lies where plaintiff's "well-pleaded complaint 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." Smoky Hills Wind Farm, LLC v. Midwest Energy, Inc., No. 15-1116-JTM, 2015 WL 3833378, at *2 (D. Kan. June 22, 2015) (quoting Morris v. City of Hobart, 39 F.3d 1105, 1111 (10th Cir. 1993)). "Even if a federal question appears on the face of a well-pleaded complaint, federal jurisdiction is not automatic." Nicodemus v. Union Pac. Corp., 440 F.3d 1227, 1232 (10th Cir. 2006). For removal to be appropriate, the federal question must be "contested and substantial." Id. (quoting Grable & Sons, 545 U.S. 308, 312 (2005)).
The rule makes plaintiffs the master of their own claim by allowing them to avoid federal jurisdiction by choosing to raise only state law claims. Id. Potential defenses are generally not a sufficient basis for removal. Dutcher, 698 F.3d at 985. "As a general rule, absent diversity jurisdiction, a case will not be removable if the complaint does not affirmatively allege a federal claim." Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003).
The party claiming jurisdiction has the burden to show it by a preponderance of the evidence. Karnes v. Boeing Co., 335 F.3d 1189, 1193 (10th Cir. 2003). There is a presumption against finding federal jurisdiction, until the party invoking it makes an adequate showing. Id. at 1194. "Doubtful cases must be resolved in favor of remand." Colbert v. Union Pac. R. R. Co., 485 F. Supp. 2d 1236, 1239 (D. Kan. 2007) (quoting Thurkill v. The Menninger Clinic, Inc., 72 F. Supp. 2d, 1232, 1234 (D. Kan. 1999)).
Defendant argues that plaintiff's state law claims are removable under the well-pleaded complaint rule or because plaintiff's wrongful termination claim falls into the complete preemption exception to the well-pleaded complaint rule. For the reasons explained more fully below, defendant fails to meet its burden to establish removal is appropriate.
The first step of the well-pleaded complaint rule asks whether plaintiff's claims are created by federal law. They are state law tort causes of action for defamation and wrongful termination, not created by federal law. The court is not persuaded by defendant's argument that just because plaintiff mentions a federal statute in the complaint, the Gramm-Leach-Bliley Act ("GLBA"), the case is removable. Defendant does not argue that plaintiff's defamation claim is removable on its own, so theonly possible avenue for removal under the well-pleaded complaint rule is if resolution of plaintiff's claim for wrongful termination requires the court to resolve a substantial issue of federal law.
The State of Kansas recognizes two public policy exceptions to the at-will employment doctrine, one of which is the whistleblower exception at issue in this case. Flenker v. Willamette Indus., Inc, 266 Kan. 198, 200 (1998). Under Kansas law, "[t]ermination, in retaliation for the good faith reporting of a co-worker's or employer's serious infraction of rules, regulations, or law pertaining to public health, safety, and the general welfare, is an actionable tort." Id. (citing Palmer v. Brown, 242 Kan. 893, 900 (1988)). To prove a claim under this exception, a plaintiff must show:
under the facts of the case, a reasonably prudent person would have concluded the employee's co-worker or employer was engaged in activities in violation of rules, regulations, or the law pertaining to public health, safety, and the general welfare; the employer had knowledge of the employee's reporting of such violation prior to discharge of the employee; and the employee was discharged in retaliation for making the report.
Palmer v. Brown, 242 Kan. 893, 900 (1988).
Defendant argues that to prevail, plaintiff must show (Doc. 11 at 6.) Plaintiff claims he must show only that "a reasonably prudent person would have concluded that the employer or supervisor was violating the law." (Doc. 10 at 3.)
The court determines that it would be most appropriate for a Kansas court to decide whether, under Kansas law, plaintiff is required to show that a law was actually violated, or whether it is sufficient to find, as the plain language of Kansas cases indicates, that "a reasonably prudent person would have concluded" that there was a violation. In any event, it is not necessary to resolve contested or substantial issues of federal law in this case. The GLBA states that "[i]t is the policy of the Congress that each financial institution has an affirmative and continuing obligation to respect theprivacy of its customers and to protect the security and confidentiality of those customers' nonpublic personal information." 15 U.S.C. § 6801(a). Even if plaintiff must prove that a rule, regulation or law relating to public policy was in fact violated, a state court would be equally competent to determine whether a violation occurred. Because plaintiff's claims are not created by federal law and resolving them does not require deciding substantial issues of federal law, there is no federal jurisdiction.
Defendant also argues that this case is removable based on the complete preemption doctrine. The complete preemption exception to the well-pleaded complaint rule provides that "when a federal statute wholly displaces the state-law cause of action through complete pre-emption," the state claim can be removed. Sharp, 744 F. Supp. 2d at 1195 (quoting Beneficial Nat'l Bank, 539 U.S. at 8). Complete preemption differs from ordinary preemption because it involves a "situation in which a federal law not only preempts a state law to some degree but also substitutes a federal cause of action for the state cause of action, thereby manifesting Congress's intent to permit removal." Colbert, 485 F. Supp. 2d at 1240 (quoting Schmeling v. NORDAM, 97 F.3d 1336, 1342 (10th Cir. 1996)). To employ the exception, a court must find that a claim falls within the scope of a federal statute Congress intended to completely displace all state law on the issue and comprehensively regulate the area. Hansen v. Harper Excavating, Inc., 641 F.3d 1216, 1221 (10th Cir. 2011).
"Complete preemption is a rare doctrine, one that represents an extraordinary pre-emptive power." Devon Energy Prod. Co. v. Mosaic Potash Carlsbad, Inc., 693 F.3d 1195, 1204 (10th Cir. 2012) (internal citations omitted). The United States Supreme Court warns not to imply the doctrine lightly and has recognized complete preemption in only three areas: § 301 of the Labor Management Relations Act of 1947 ("LMRA"); § 502 of the Employee Retirement Income Security Act of 1974 ("ERISA"); and actions for usury against national banks under the National Bank Act. Id. (citingHanson, 641 F.3d at 1221; Avco Corp. v. Aero Lodge No. 735 Ass'n of Machinists and Aerospace Workers, 390 U.S. 557 (1968) (LMRA); Metro. Life Ins. Co. v. Taylor, 481 U.S. 58 (1987) (ERISA); and Beneficial Nat. Bank, 539 U.S. 1 (2003) (National Bank Act). There is a two-part test to...
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