Tidwell v. Coldwater Covers, Inc.

• Decision Date: 07 February 2005
• Docket Number: No. CV-04-BE-2198-E.,CV-04-BE-2198-E.
• Citation: 393 F.Supp.2d 1257
• Parties: Benjamin F. TIDWELL, Jr., Plaintiff, v. COLDWATER COVERS, INC., Defendant.
• Court: U.S. District Court — Northern District of Alabama

393 F.Supp.2d 1257

Benjamin F. TIDWELL, Jr., Plaintiff, v. COLDWATER COVERS, INC., Defendant.

No. CV-04-BE-2198-E.

United States District Court, N.D. Alabama, Eastern Division.

February 7, 2005.

COPYRIGHT MATERIAL OMITTED

Stephen Judson Bailey, The Bailey Law Firm, Anniston, AL, for Plaintiff.

Robert Dillon, Wilson Pumroy Turner & James LLC, Anniston, AL, James C. Pennington, Christopher A. Mixon, Ogletree Deakins Nash Smoak & Stewart PC, Birmingham, AL, for Defendant.

MEMORANDUM OPINION

BOWDRE, District Judge.

Before the court is Plaintiff Benjamin Tidwell, Jr.'s Motion to Remand (Doc. 2). Having reviewed the motion and the parties' submissions and having reviewed its jurisdiction independently, for the reasons stated below, the court grants the motion in part and orders this case remanded to the Circuit Court of Calhoun County, Alabama. The court denies the portion of Tidwell's motion requesting that the court order Coldwater Covers to pay Tidwell's costs of opposing the removal.

I. Background

Tidwell filed his complaint against Coldwater Covers, his former employer, in the Circuit Court of Calhoun County, Alabama, alleging fraud, breach of fiduciary duty, and intentional misrepresentation. Tidwell's complaint alleged that Coldwater Covers promised to invest $3.75 per hour of his pay in Coldwater Covers's common stock, but did not invest the money as promised. On its face, the complaint does not seek compensation under a written employee stock ownership or stock option plan.

Coldwater Covers removed the case to this court on the alternative bases of diversity jurisdiction and federal question jurisdiction under ERISA. Tidwell then filed a motion arguing that the case should be remanded because, under the well-pleaded complaint rule, his complaint did not state a federal cause of action because the plan at issue was a payroll savings plan, not an ERISA plan, and because Coldwater Covers did not establish that the court had diversity jurisdiction over the case. In his motion to remand, Tidwell also requested that the court order Coldwater Covers to pay his costs of opposing the removal.

After receiving Tidwell's motion to remand, the court ordered Coldwater Covers to "show cause why the case should not be remanded because [Tidwell's] complaint involves a payroll savings plan, not an ERISA plan." Doc. 4. In response, Coldwater Covers submitted its opposition to the motion to remand, along with its supporting evidence.¹ Coldwater Covers's response to the show cause Order addressed the requirements of the Order and all of Tidwell's other arguments for remand as well.

II. Discussion

A district court must remand a removed action if it has no jurisdiction over the subject matter of the case. As the party seeking to preserve this court's jurisdiction, Coldwater Covers bears the burden of showing the case meets all the requirements for removal. See Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir.2002). Because removal statutes are strictly construed against removal, Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108, 61 S.Ct. 868, 85 L.Ed. 1214 (1941), in general, doubts about jurisdiction must be resolved in favor of remand. See Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir.1999) ("A presumption in favor of remand is necessary because if a federal court reaches the merits of ... a removed case where subject matter jurisdiction may be lacking it deprives a state court of its right under the Constitution to resolve controversies in its own courts."); see also Edwards v. Prudential Ins. Co. of Am., 213 F.Supp.2d 1376, 1380 n. 6 (S.D.Fla.2002) (discussing the relationship between resolving doubts in favor of remand, federalism concerns, and Congress's ability to completely preempt state law through ERISA).

A. Diversity Jurisdiction

Coldwater Covers argues that this court may exercise jurisdiction over the case on the basis of diversity jurisdiction. Though Coldwater Covers has shown the parties are completely diverse (see Complaint p. 1; Notice of Removal, Doc. 1, p. 6; attachment to Notice of Removal, Doc. 1, Declaration of William David Withers, paragraphs 3, 4), Coldwater Covers has not met its burden to show that the amount in controversy satisfies the requirements of 28 U.S.C. § 1332. When, as here, the plaintiff's complaint does not specify the total amount of damages demanded, "a defendant seeking removal based on diversity jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds the $75,000 jurisdictional requirement." Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir.2002).

In its notice of removal, Coldwater Covers merely stated that the jurisdictional amount is satisfied because "Alabama courts regularly award damages in excess of $75,000 in cases alleging fraud and misrepresentation." Such a "conclusory allegation... that the jurisdictional amount is satisfied, without setting forth the underlying facts supporting such an assertion, is insufficient to meet [the remover's] burden." Id; see Notice of Removal, Doc. 1, p. 6.

Also insufficient to establish the jurisdictional amount are Coldwater Covers's citations of Alabama fraud cases involving a whole life insurance policy not related to employment (Alfa Life Ins. Corp. v. Green, 881 So.2d 987 (Ala.2003)); a dispute regarding car repairs and tires sold to consumers (Goodyear Tire & Rubber Co. v. Washington, 719 So.2d 774 (Ala.1998)); a business dispute (Ex parte Third Generation, Inc., 855 So.2d 489 (Ala.2003)); and a suit against a mobile home manufacturer in which the fraud claim was dismissed (Southern Energy Homes, Inc. v. Washington, 774 So.2d 505 (Ala.2000)). See Notice of Removal, Doc. 1, pgs. 6-7. Even if Coldwater Covers could not find cases more closely related to the action before this court, Coldwater Covers should have, but did not, explain to this court why the damages recovered in the cited cases are indicative of the amount in controversy in this case.

Tidwell admits that certain of his demanded damages total $44,995. Coldwater Covers offers only conclusory allegations, unsupported assumptions, and unexplained case citations regarding the amount of the remaining damages claims. See Doc. 5, 16-18. Because Coldwater Covers has not met its burden to show that the amount in controversy satisfies the jurisdictional requirement, the court cannot exercise jurisdiction under 28 U.S.C. § 1332.

B. Federal Question Jurisdiction

Tidwell argues that, under the well-pleaded complaint rule, this court cannot exercise jurisdiction over the action. However, as Coldwater Covers correctly points out, the well-pleaded complaint rule does not apply when Congress has completely preempted an area of law, and federal law provides the exclusive remedy for recovering benefits under an ERISA plan. See Opposition to Motion to Remand, Doc. 5, pgs. 5-6.

The court has a duty to review its jurisdiction, and the burden is on Coldwater Covers to show jurisdiction exists. Therefore, even though Tidwell is wrong about the application of the well-pleaded complaint rule, the court must independently consider whether Coldwater Covers is correct about the operation of the ERISA complete preemption doctrine in this case.

The Eleventh Circuit has developed two different complete preemption tests. Under the panel decisions of Hall v. Blue Cross/Blue Shield of Ala., 134 F.3d 1063, 1065 (11th Cir.1998), and Franklin v. QHG of Gadsden, 127 F.3d 1024, 1028 (11th Cir.1997), a state law claim is completely preempted when it is defensively preempted, i.e., when it "relates to" an ERISA plan. Under the Franklin/Hall standard, an employer can claim the benefits of complete preemption when, as here, the plaintiff is not seeking benefits under an ERISA plan, but the employer's defense relates to an ERISA plan. Under this standard, federal jurisdiction exists and the motion to remand should be denied.

However, under the standard set forth in another set of panel decisions, Ervast v. Flexible Products Co., 346 F.3d 1007, 1011-14 (11th Cir.2003), and Butero v. Royal Maccabees Life Insurance Co., 174 F.3d 1207, 1211-12 (11th Cir.1999), the Eleventh Circuit distinguished the "relates to" test for defensive preemption from the ERISA complete preemption test. Under Butero,

[h]ere's the rule: ERISA superpreemption exists only when the plaintiff is seeking relief that is available under 29 U.S.C. § 1132(a).... [R]elief is available, and there is complete preemption, when four elements are satisfied. First, there must be a relevant ERISA plan. Second, the plaintiff must have standing to sue under that plan. Third, the defendant must be an ERISA entity. Finally, the complaint must seek compensatory relief akin to that available under § 1132(a); often this will be a claim for benefits due under a plan.

174 F.3d at 1212 (citations omitted) (emphasis added). Thus, the employer cannot create federal jurisdiction by tying its defense to an ERISA plan even when the plaintiff is not seeking benefits under the plan.

To do justice and follow the law, the court will follow the Butero/Ervast standard. See generally Jones v. LMR Int'l, 351 F.Supp.2d 1308, 1310-12 (M.D.Ala.2005); Wilson v. Coman, 284 F.Supp.2d 1319, 1329-42 (M.D.Ala.2003). The court recognizes that, as panel decisions, Butero and Ervast cannot overrule prior Eleventh Circuit decisions. However, the court is convinced that Butero and Ervast are correct. The Supreme Court has held that "ERISA [defensive] pre-emption, without more, does not convert a state claim into an action arising under federal law." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 25-27, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)); see also Aetna Health Inc. v. Davila, 542 U.S. 200, 206-13, 124 S.Ct. 2488, 2495-98, 159 L.Ed.2d 312 (2004) (looking to 29...