Wells v. Shelter General Ins. Co.

• Decision Date: 02 August 2002
• Docket Number: Civil Action No. 301CV999BN.
• Citation: 217 F.Supp.2d 744
• Parties: Cedric WELLS, Perry Lee McDonald, Darlisa McDonald, and Jason Vircher Plaintiff v. SHELTER GENERAL INSURANCE COMPANY, Shelter Mutual Insurance Company, and Kerry Howell Defendant
• Court: U.S. District Court — Southern District of Mississippi

217 F.Supp.2d 744

Cedric WELLS, Perry Lee McDonald, Darlisa McDonald, and Jason Vircher Plaintiff v. SHELTER GENERAL INSURANCE COMPANY, Shelter Mutual Insurance Company, and Kerry Howell Defendant

Civil Action No. 301CV999BN.

United States District Court, S.D. Mississippi, Jackson Division.

August 2, 2002.

COPYRIGHT MATERIAL OMITTED

J. Brad Pigott, James Douglas Minor, Jr., Pigott, Reeves, Johnson & Minor, P.A., Jackson, MS, for Cedric Wells, Perry Lee McDonald, Darlisa McDonald, Jason Vircher.

Michael N. Watts, Robert B. Best, Holcomb Dunbar, P.A., Oxford, MS, for Shelter General Ins. Co.

Charles Greg Copeland, Janet G. Arnold, Copeland, Cook, Taylor & Bush, Ridgeland, MS, for Mississippi State Rating Bureau.

Teselyn Afrique Melton, Robert L. Gibbs, Brunini, Grantham, Grower & Hewes, Jackson, MS, for Kerry Howell.

OPINION AND ORDER

BARBOUR, District Judge.

This cause is before the Court on the Motion of Plaintiffs to Remand. Having considered the Motion, Response, Rebuttal, Surrebuttal, attachments to each, and supporting and opposing authority, the Court finds that the Motion is not well taken and should be denied.

I. Background and Procedural History

Plaintiffs filed the instant lawsuit in the Circuit Court of the First Judicial District of Hinds County, Mississippi, on November 19, 2001. Plaintiffs alleged that, based on their credit scores, which Shelter obtained from Choicepoint, Inc., a nonparty to this action, Defendants Shelter General Insurance Company or Shelter Mutual Insurance Company (collectively "Shelter" or "Insurance Defendants") either denied their applications for automobile and/or homeowners insurance, approved their applications at higher rates, or canceled their existing insurance coverage. Plaintiffs further alleged that (1) the use by Shelter of their credit scores in making coverage-related decisions was discriminatory pursuant to sections 83-2-3¹ and 83-5-35² of the Mississippi Code, and (2) the use of their credit scores in determining their insurability was concealed by agents of Shelter at the direction of Defendant Kerry Howell ("Howell"), a managerial employee of Shelter. Based on the alleged denials or cancellations of insurance coverage by Shelter, and the conduct of Defendants in connection thereto, Plaintiffs asserted causes of action against Shelter and Howell for conspiracy, breach of implied covenant of good faith and fair dealing, and negligent misrepresentation.³

On December 28, 2001, the Insurance Defendants removed the lawsuit to this Court pursuant to 28 U.S.C. § 1441 on the basis of federal question jurisdiction under 28 U.S.C. § 1331 and diversity of citizenship jurisdiction under 28 U.S.C. § 1332. For the purpose of diversity analysis, Plaintiffs are citizens of Mississippi. Defendants Shelter General Insurance Company and Shelter Mutual Insurance Company are corporations organized under the laws of Missouri with their principal places of business in Missouri. Defendant Howell is a citizen of Mississippi. Defendants contend that Plaintiffs have fraudulently joined Howell to avoid federal jurisdiction and that the Court may therefore properly assert federal subject matter jurisdiction over this case.⁴ Defendants also contend that the Court may properly assert federal subject matter jurisdiction over this case on ground that Plaintiffs' state law claims are completely preempted by the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. Plaintiffs filed the instant Motion to Remand on January 25, 2002.

II. Analysis

A. Does Federal Question Jurisdiction Exist?

In their Complaint, Plaintiffs' asserted only state law claims. Defendants contend, however, that even though no federal claim appears on the face of the Complaint, this Court has subject matter jurisdiction because the Plaintiffs' claims are either governed, or completely preempted, by federal law. Pursuant to 28 U.S.C. § 1447(c), a case that has been removed from state court under 28 U.S.C. § 1441(a) must be remanded if the district court finds that it lacks subject matter jurisdiction. Generally, to determine whether a federal question exists for removal purposes, a court examines the allegations of the plaintiff's well pleaded complaint. See Carpenter v. Wichita Falls Independent School District, 44 F.3d 362, 366 (5th Cir. 1995). Under the well pleaded complaint rule, a federal question must appear on the face of a plaintiff's state court complaint before a federal district court may exercise removal jurisdiction. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987).

In the case sub judice, examination of the subject state court Complaint does not reveal any federal question upon which this Court can exercise removal jurisdiction as the Plaintiff has only pled state law claims ranging from conspiracy to negligent misrepresentation. Defendants nevertheless argue that this case was removable under the artful pleading doctrine, an exception to the well pleaded complaint rule applicable in cases in which a plaintiff has essentially pled a federal cause of action but files a complaint in state court, asserting only state law claims, to avoid federal jurisdiction. In this situation, a federal district court is required to look behind the face of the complaint and ascertain the real nature of the plaintiff's complaint. See Carpenter, 44 F.3d at 366-67. However, the artful pleading doctrine is a narrow exception to the well pleaded complaint rule, only applicable when a plaintiff's state law causes of action are completely preempted by federal law.⁵ See Waste Control Specialists, LLC v. Envirocare of Texas, Inc., 199 F.3d 781, 784 (5th Cir.2000) (holding that artful pleading doctrine is a narrow exception to well pleaded complaint rule and only applicable where preemption is complete). See also Carpenter, 44 F.3d at 367 (observing that the United States Supreme Court has only sanctioned the artful pleading rule with regard to federal labor relations and the Employment Retirement Income Security Act of 1974). When this occurs, the case is removable even though only state law claims appear in the compliant. See e.g. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987) (holding that in cases in which ERISA applies, a case may be removed to federal court even though only state law claims appear in the compliant).

Defendants argue that Plaintiffs' allegations of conspiracy and negligent misrepresentation are artfully pled federal claims governed by the FCRA, which (1) provides that a credit reporting agency may furnish a credit report "[t]o a person which it has reason to believe intends to use the information in connection with the underwriting of insurance involving the consumer," 15 U.S.C. § 1681b(a)(3)(C), and (2) imposes mandatory disclosure requirements upon all users of credit information. See 15 U.S.C. § 1681m(a) (providing users of credit information must, inter alia, advise the consumer of the name and address of the consumer reporting agency that provided the report when the user "takes any adverse action with respect to a consumer based in whole or in part on any information contained in the consumer report"). Defendants further argue that the Plaintiffs' state law claims are preempted by subsection 1681t(b)(1)(D)⁶ of the FCRA or one of the other subsections of 1681t(b)(1).⁷ The Court does not agree, but need not decide whether any of the preemptive provisions contained at 15 U.S.C. § 1681t(b)(1) are applicable to the facts of this case as Defendants argue and thus available to Defendants as a defense. As previously stated, the existence of such a federal preemption defense does not authorize removal. See Metropolitan, 481 U.S. at 63, 107 S.Ct. 1542. The question before the Court is whether the FCRA completely preempts Plaintiffs' state law claims relating to the alleged credit-based coverage decisions of Defendants such that the case was removable and federal question jurisdiction exists. See Envirocare, 199 F.3d at 783 (holding that, "without complete preemption, the artful pleading doctrine does not apply").

In order to completely preempt state law and permit removal to federal court, a federal statutory scheme must: (1) provide a civil enforcement provision that creates a federal cause of action replacing and protecting the same interests as the preempted state law causes of action; (2) provide a specific jurisdictional grant to the federal courts to enforce the cause of action created by the federal statute; and (3) reflect a clear Congressional intent to make the preempted state claims removable to federal court. See Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1164-65 (5th cir.1989). With regard to the first two prongs of the Aaron test, Congress made clear its intent with regard to creating a new cause of action under the FCRA in section 1681p of the Act.⁸ The Court therefore finds that the FCRA satisfies the first two prongs of the test for complete preemption set forth by the United States Court of Appeals for the Fifth Circuit in Aaron. With regard to the third prong of the Aaron test, other courts faced with the question presently before the Court have found that the FCRA does not provide for the removal of state law claims "because the [statute] explicitly declines to replace all state law causes of action or to provide exclusive jurisdiction in the federal courts, and fails to reflect clearly an intent to make claims removable." Swecker v. Trans Union Corporation, 31 F.Supp.2d 536, 539 (E.D.Va.1998). See also Watkins v. Trans Union, L.L.C., 118 F.Supp.2d 1217 (N.D.Ala.2000) (holding that "Congress did not intend to make state law causes of action defensively preempted by the FCRA removable to federal court"); Sherron v. Greenwood Trust Co., 977 F.Supp. 804, 808 (N.D.Miss.1997) (holding that "[t]here is nothing in the legislative history or the FCRA itself to establish that Congress...