Rosa-Phillips v. U.S. Dep't of Labor Owcp/Dfec
| Docket Number | Civil Action 23-84 |
| Decision Date | 07 June 2023 |
| Parties | STANCIA ROSA-PHILLIPS v. U.S. DEPARTMENT OF LABOR OWCP/DFEC |
| Court | U.S. District Court — Eastern District of Pennsylvania |
Stancia Rosa-Phillips is a mail carrier who was struck by an automobile while she was on the job. She received about $4,500 of workers' compensation from the Department of Labor, and also hired a lawyer, who obtained a $25,000 settlement from the driver's insurance company. She would need to pay the government back for the workers' compensation, but in spite of repeated efforts, her lawyer could not get the government's attention. So Ms Rosa-Phillips sought and (surprisingly) obtained an order from state court that waived the government's lien on the settlement.
The government eventually woke up and decided it had to do something about this $4,500. It removed the two-year old state court case and now asks us to vacate the state court order. To reach this objective, the government needs us to run a bit of an obstacle course. It begins with us agreeing that the doctrine of derivative jurisdiction gives us the same subjectmatter jurisdiction that the state court possessed prior to removal. It continues with us concluding the state court did not have subject-matter jurisdiction because there was no applicable waiver of the government's sovereign immunity. Having concluded the state court should not have heard the case, the last hurdle is to vacate the state court's order for this reason.
We agree with the government to a point. Our first task - deciding whether we have subject-matter jurisdiction - leads us to conclude the government is entitled to sovereign immunity. So, the government's facial attack on jurisdiction succeeds, and we have no subjectmatter jurisdiction to adjudicate the action. But, lacking subject-matter jurisdiction ourselves, we will not grant the relief the government seeks: vacatur of the two-year old state court order and reinstatement of the government's right to recover part of the postal employee's settlement. We therefore deny the government's motion to vacate as moot and dismiss for lack of subjectmatter jurisdiction.
On January 17, 2020, Ms. Rosa-Phillips - a United States Postal Service employee - was in an automobile accident. DI 1-3 ¶ 1. She suffered sprained ligaments in her spine. Id. Ex. A. The federal government - specifically, the Office of Workers' Compensation Programs (OWCP) - agreed to cover the expenses she incurred to treat her injuries. Id. ¶ 3.
In May 2020, Ms. Rosa-Phillips's attorneys asked OWCP about any potential lien it may have on a settlement between Ms. Rosa-Phillips and the third party involved in the accident. Id. ¶ 4. In response, OWCP asked Ms. Rosa-Phillips to provide “written authorization” so it could communicate with her about her claim. Id. Ex. B. Ms. Rosa-Phillips's attorneys sent her authorization one month later, along with a follow-up request to provide “any lien information related to” the accident. Id. Ex. C. The lien information would entitle OWCP to portions of any potential settlement. See id. Without the lien information, Ms. Rosa-Phillips's attorneys could not distribute settlement funds. Id. ¶ 17.
In July 2020, settlement discussions picked up between Ms. Rosa-Phillips and the adjuster for the third party. Id. ¶ 7. Ms. Rosa-Phillips's attorneys asked OWCP again on July 22, 27, and 28, about any potential lien - with no response. Id. ¶¶ 8, 9, 10, 11. On July 29, Ms. Rosa-Phillips agreed to release her claims against the third party in exchange for $25,000. Id. ¶¶ 12, 13.
Still missing the information needed to disperse the settlement funds, Ms. Rosa-Phillips's attorneys inquired again with OWCP on August 17 and 26. Id. ¶¶ 14, 15. OWCP did not respond. “As a result of th[e] lengthy and inexcusable delay,” Ms. Rosa-Phillips petitioned a Pennsylvania state court on October 8, 2020, to compel OWCP to produce any lien information, or alternatively, waive its rights to any lien. See id. ¶¶ 18-19.
Ms. Rosa-Phillips's petition went uncontested for three months until the Pennsylvania state court granted it. See DI 1-4.[2] Granting the petition left OWCP with two options: produce any lien information within ten days, or waive its ability to claim a lien on Ms. Rosa-Phillips's settlement. See id. OWCP did neither.
On January 9, 2023, about two years after the state court granted Ms. Rosa-Phillips's petition, OWCP removed the action here. See generally DI 1.[3]At oral argument, OWCP explained that the COVID-19 pandemic caused the delay in learning of and responding to Ms. Rosa-Phillips's petition. In its motion, OWCP suggests that it never appeared in state court because Ms. Rosa-Phillips may not have effectuated proper service of her petition, thus, it never had legal notice of the action. See DI 2 at 3.
Now, OWCP moves to vacate the state court's order and dismiss Ms. Rosa-Phillips's petition under Federal Rule of Civil Procedure 12(b)(1). See id. It makes four arguments in support.
First, OWCP argues it is entitled to sovereign immunity as an agency of the federal government. See id. at 4-6. OWCP maintains that, absent any “express waiver” of immunity, the state court lacked authority to grant Ms. Rosa-Phillips's petition. See id. It follows, according to OWCP, that we do not acquire jurisdiction upon removal under the doctrine of derivative jurisdiction. Id. at 6; see infra Part V.
Second, OWCP argues Ms. Rosa-Phillips's attorneys should have never distributed the settlement funds to Ms. Rosa-Phillips under applicable workers' compensation laws. See DI 2 at 7-9. OWCP asserts that the government has a “statutory right to be reimbursed,” and Ms. Rosa-Phillips's attorneys violated applicable laws by distributing the third-party settlement funds to her before the government received its cut. Id. at 8.
Third, OWCP argues we must vacate the state court's order because it is “null and without effect.” Id. at 10 (quoting In re James, 940 F.2d 46, 52 (3d Cir. 1991)). OWCP posits that sovereign immunity - and failing to first distribute settlement funds to the government - should have precluded the state court from granting Ms. Rosa-Phillips's petition. Id. at 9-10.
Fourth, OWCP argues it is not equitably estopped from claiming reimbursement. Id. at 10-11. OWCP tells us the burden of proving equitable estoppel is high, and the facts do not show “affirmative misconduct” by OWCP. See id.
In response, Ms. Rosa-Phillips argues that Congress waived sovereign immunity for petitions like hers under the Little Tucker Act. See DI 6 at 4-5.[4] She argues the lien that OWCP waived its right to is less than $10,000, thus, it is not entitled to sovereign immunity. Ms. Rosa-Phillips also advances a variety of equitable principles said to bar OWCP from obtaining relief - including untimeliness/waiver, equitable estoppel, the doctrine of unclean hands, and laches. Id. at 4. She does not address OWCP's argument regarding derivative jurisdiction.
OWCP replies that Ms. Rosa-Phillips's original petition sought equitable relief, and the Little Tucker Act waives sovereign immunity only for claims seeking money damages. See DI 7 at 2-3. And even if Ms. Rosa-Phillips's original petition claimed relief under the Little Tucker Act, OWCP argues the state court would not have had jurisdiction. Id. at 3. Lastly, OWCP argues Ms. Rosa-Phillips's arguments sounding in equity are inapplicable. See id. at 4-10.
We “always ha[ve] jurisdiction to determine [our] own jurisdiction.” United States v. Ruiz, 536 U.S. 622, 628 (2002). Deciding whether subject-matter jurisdiction exists is “an independent obligation” we may undertake “even in the absence of a challenge from any party.” Hartig Drug Co. Inc. v. Senju Pharm. Co., Ltd., 836 F.3d 261, 267 (3d Cir. 2016) (quoting Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006)).
Challenges to subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) come in two forms: “facial” and “factual” attacks. See Const. Party of Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014). Facial attacks “consider[] a claim on its face,” and factual attacks allow us to “look beyond the pleadings to ascertain facts.” Id. “The assertion of sovereign immunity as a defense is properly treated as a facial challenge.” Giovanni v. U.S. Dep't of the Navy, 433 F.Supp.3d 736, 741 (E.D. Pa. 2020); see C.D.A. v. United States, 2023 WL 2666064, at *13 (E.D. Pa. Mar. 28, 2023). Therefore, we treat OWCP's challenge as a facial attack.
The Third Circuit requires us to consider only “the allegations of the complaint and documents reference therein and attached thereto, in the light most favorable to the plaintiff,” when analyzing a facial attack to subject-matter jurisdiction. Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). Essentially, we use the same standard of review as a motion to dismiss for failure to state a claim. In re Schering Plough Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 243 (3d Cir. 2012).
OWCP's approach to this case requires us to begin with derivative jurisdiction, which applies because OWCP removed this action from state court under 28 U.S.C. § 1442. DI 2 at 6.[5] It follows that, upon removal, we acquire the jurisdiction of the state court that granted Ms. Rosa-Phillips's petition. See id. But there is no jurisdiction to acquire because OWCP argues it was entitled to sovereign immunity in the first place. Ms. Rosa-Phillips entirely avoids the derivative jurisdiction problem.
Derivative jurisdiction originates from the Supreme Court's decision in Lambert Run Coal Co. v. Baltimore & O.R. Co. which states that “[i]f the state court...
To continue reading
Request your trial