Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00723/USCOURTS-caed-2_05-cv-00723-0/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 29:201 Fair Labor Standards Act

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1 Because oral argument will not be of material

assistance, the court orders this matter submitted on the briefs. 

E.D. Cal. L.R. 78-230(h).

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

EVA WARE,individually and on

behalf of all others similarly

situated,

NO. CIV. S-05-723 FCD/KJM

Plaintiffs,

v. MEMORANDUM AND ORDER

SECURITY NATIONAL SERVICING

CORPORATION, et al.,

Defendants.

----oo0oo----

This matter is before the court on plaintiff Eva Ware’s

motion to remand and award attorney fees pursuant to 28 U.S.C. 

§ 1447(c) based upon the allegedly improper removal of the case

from the Sacramento County Superior Court. Defendants, Security

National Servicing Corporation (“SNSC”) and Security National

Holding Company, LLC (“SNHC”), oppose the motion.1

/ / /

/ / /

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BACKGROUND

Plaintiff originally filed her complaint in Sacramento

County Superior Court on March 15, 2005. Defendants removed the

action to this court on April 13, 2005.

As alleged in the complaint, plaintiff was employed as a

full-time Information Technology Project Manager by defendant

SNSC from December 6, 2004 to December 17, 2004. (Pl.’s Compl. 

¶ 6.) Plaintiff claims that she was forced to resign from this

position because she insisted that defendant pay her as an

employee, rather than as an independent contractor. (Pl.’s

Compl. ¶ 15.) Defendants deny plaintiff’s employeeclassification; instead, they allege that plaintiff was engaged

by defendant SNSC as an independent contractor to perform a

specific project during this time period. (Defs.’ Answer ¶ 6.) 

Thus, the present action stems from issues relating to the legal

relationship between the parties and the circumstances giving

rise to the subsequent termination of that relationship.

Plaintiff’s complaint alleges three causes of action: 

(1) wrongful constructive discharge in violation of public

policy; (2) a violation of California Labor Code section 203; and

(3) breach of contract. (Pl.’s Compl. ¶¶ 12-39, 40-42, 43-47.) 

Plaintiff’s first and second causes of action facially appear to

be based on state law alone; however, plaintiff bolstered these

claims by referencing defendants’ purported violations of the

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2 Paragraph 11 of plaintiff’s complaint reads as follows:

“If and only if this case is removed to federal court then

Plaintiffs allege that the foregoing acts also violate the FLSA.” 

Paragraph 36 delineates in relevant part that: “Defendant’s [sic]

conduct also violates public policies contained in the Federal

Standards Labor Act . . . .” The relevant portion of paragraph

41 reads: “The Defendant’s [sic] failure to pay wage

contributions . . . was willful in that Defendants required their

employees to work as independent contractors to evade . . . the

FLSA . . . .”

3 The relevant portion of paragraph 36 states:

“Defendant’s [sic] refusal to pay plaintiff as an employee in

order to evade payroll tax obligations thus constructively

terminating Plaintiff’s employment violates public policies in .

. . 26 USC sections 3111, 3301, 3101, 3102, and 7501.”

4 Paragraph 16 of plaintiff’s complaint states in

pertinent part: “Defendants [sic] refusal to pay Plaintiff as an

employee as required by law is part of a scheme to increase

profits by evading payroll taxes. Defendants engage in a pattern

and practice of paying employees as independent contractors to

evade payroll tax responsibilities and obligations.” The

relevant part of paragraph 41 reads: “The Defendant’s [sic]

failure to pay wage contributions . . . was willful in that

Defendants required their employees to work as independent

contractors to evade their payroll tax responsibilities . . . .”

5 Defendants did not assert diversity jurisdiction in

this matter, nor provide sufficient facts for the court to make a

proper determination of its existence. Therefore, the only

inquiry made at this time is whether removal was proper based on

federal question jurisdiction.

3

federal Fair Labor Standards Act(“FLSA”),2 various Internal

Revenue Code sections,3 and evasion of federal payroll tax

responsibilities and obligations.4 (Pl.’s Compl. ¶¶ 11, 16, 36,

41.) Defendants, arguing that plaintiff alleged federal claims

for relief, filed a notice of removal on the basis of federal

question jurisdiction.5 In response, plaintiff filed the instant

motion to remand and seeks attorney fees of $2,250.00.

/ / /

/ / /

/ / /

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STANDARD

A defendant may remove any civil action from state court to

the United States district court encompassing the location where

the action is pending, if the district court has original

jurisdiction over the matter. 28 U.S.C. § 1441(a). Citizenship

of the parties is irrelevant where the district court’s

jurisdiction is based on a federal question. 28 U.S.C. §

1441(b). District courts have original federal question

jurisdiction over “all civil actions arising under the

Constitution, laws, or treaties of the United States.” 28 U.S.C.

§ 1331.

The removal statute is strictly construed because of the

Congressional purpose to restrict the jurisdiction of the federal

courts on removal. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.

100, 108 (1941); See also Duncan v. Stuetzle, 76 F.3d 1480 (9th

Cir. 1996). Federal jurisdiction “must be rejected if there is

any doubt as to the right to removal in the first instance.” 

Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). 

Furthermore, the party seeking removal has the burden to

establish that federal jurisdiction is proper. California ex

rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004). 

“If at any time before final judgment it appears that the

district court lacks subject matter jurisdiction, the case shall

be remanded.” 28 USC § 1447(c).

Generally, courts determine the propriety of removal based

upon federal question jurisdiction by considering the allegations

on the face of the plaintiff’s “well-pleaded complaint.” 

Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). As the

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master of the complaint, a plaintiff may defeat removal by

foregoing independent federal claims for relief and asserting

only state law causes of action. Arco Envtl. Remediation, L.L.C.

v. Dep’t. of Health & Envtl. Quality of Mont., 213 F.3d 1108,

1114 (9th Cir. 2000) (citations omitted). Thus, federal question

jurisdiction “may not be sustained on a theory that the plaintiff

has not advanced.” Merrell Dow Pharms., Inc. v. Thompson, 478

U.S. 804, 809 n.6 (1986). However, the well-pleaded complaint

rule does not apply when the plaintiff attempts to defeat removal

by using “artful pleading” to disguise or conceal a federal claim

as a state claim. Ethridge v. Harbor House Rest., 861 F.2d 1389,

1393 (9th Cir. 1988).

“[F]ederal courts have jurisdiction to hear, originally or

by removal from a state court, only those cases in which a wellpleaded 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.” Franchise Tax Bd. v. Constr. Laborers Vacation

Trust, 463 U.S. 1, 27-28 (1983). 

ANALYSIS

1. Conditional Claim

Defendants contend that certain of the references to federal

law described above establish that plaintiff is alleging federal

claims for relief. First, plaintiff states in her complaint: “If

and only if this case is removed to federal court then Plaintiffs

allege that the foregoing acts also violate the FLSA.” (Pl.’s

Compl. ¶ 11). This is a conditional statement, which plaintiff

expressly states is to only take effect if the action is removed

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to federal court. Obviously, the corollary is that, if the

action is not removed, plaintiff does not assert a violation of

the FLSA. Thus, as to this allegation, plaintiff’s complaint

does not establish 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.” Franchise

Tax Bd., 463 U.S. at 27-28. Accordingly, contrary to defendants’

contention, this is not a sufficient basis for removal based upon

federal question jurisdiction.

2. Wrongful Constructive Discharge

Defendants argue that removal is proper because plaintiff

bases the constructive discharge element of her first cause of

action upon defendants’ alleged “refusal to pay plaintiff as an

employee in order to evade payroll tax obligations.” (Pl.’s

Compl. ¶ 36.) In essence, defendants assert that plaintiff is

alleging a claim under the Internal Revenue Code based on

defendants’ purported evasion of federal payroll tax obligations.

To state a cause of action for wrongful constructive

discharge in violation of public policy, a plaintiff must first

allege there was a constructive discharge. Turner v. AnheuserBusch, Inc., 7 Cal.4th 1238, 1251-52 (1994). “In order to

establish a constructive discharge, an employee must plead and

prove . . . the employer either intentionally created or

knowingly permitted working conditions that were so intolerable

or aggravated at the time of the employee’s resignation that a

reasonable employer would realize that a reasonable person in the

employee’s position would be compelled to resign.” Id. at 1251. 

Although it may not be necessary for plaintiff to allege facts

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regarding defendants’ purported motivation to treat plaintiff as

an independent contractor, rather than an employee, the inclusion

of these facts does not transform plaintiff’s underlying cause of

action for constructive discharge into a federal claim for

relief. Plaintiff is not pleading a claim under federal law, but

apparently made reference to the alleged violations of federal

law to demonstrate defendants’ improper motive or intent to

substantiate her constructive discharge theory.

The present case is distinguishable from Bright v. Bechtel

Petroleum, Inc., 780 F.2d 766 (9th Cir. 1986), relied on by

defendants. In that case, the plaintiff brought an action

against his employer in state court alleging that his employer

had breached their employment contract by paying him less than

required by the contract. Id. at 768. The plaintiff’s cause of

action arose because the Internal Revenue Service (“IRS”) denied

the plaintiff’s exemption from federal withholding tax on his W-4

Form and ordered the defendant to withhold federal income tax

from plaintiff’s paycheck. Id. The defendant removed the case

to federal district court alleging that plaintiff’s action

challenged the defendant’s withholding of federal income tax from

his paycheck, and thus, asserted a federal claim for relief. Id.

at 769. 

The Ninth Circuit held that the defendant, “through

background information . . . demonstrated that [plaintiff],

despite ‘artfully pleading’ his action as a breach of contract,

in fact is challenging federal income tax withholding laws and

regulations.” Id. The court emphasized that the plaintiff wrote

two letters to the defendant criticizing the IRS directive as

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illegal and citing IRS statutes, plaintiff referenced a Ninth

Circuit withholding case in one letter, and the plaintiff

admitted, after removal, that he only wanted to litigate the

withholding of state income tax at that point. Id. These facts

taken together, demonstrated that the plaintiff was “artfully

pleading” a federal claim for relief and removal to federal

district court was proper. Id. at 700.

The “artful pleading” doctrine has been described by the

Ninth Circuit as “‘a narrow exception to the straightforward

rules of removal jurisdiction,’” where “a court may

recharacterize a plaintiff’s claims as federal if ‘the particular

conduct complained of [is] governed exclusively by federal law.’” 

Redwood Theatres, Inc. v. Festival Enters., Inc., 908 F.2d 477,

479 (9th Cir. 1990) (internal citations omitted). Unlike Bright,

here, the claim does not arise from defendants’ non-compliance

with federal law, nor do we have extrinsic evidence demonstrating

that plaintiff’s “true motive” is to bring a claim under federal

law. To the contrary, plaintiff has expressly admitted in her

motion to remand that she “does not seek any federal remedies.”

(Pl.’s Mot. to Remand at 3.)

The present case is more analogous to Rains v. Criterion

Systems, Inc., 80 F.3d 339 (9th Cir. 1996), where the Ninth

Circuit addressed the removal of a claim analogous to the claim

in this case. In Rains, the plaintiff brought an action in state

court against his employer, inter alia, for wrongful termination

in violation of public policy. Id. at 342. Subsequently, the

defendants removed the case to federal district court. Id. To

establish the basis for a fundamental public policy to support

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his wrongful termination claim, the plaintiff referenced public

policy contained in the California Constitution, the California

Fair Employment and Housing Act, and Title VII of the Civil

Rights Act of 1964 (“Title VII”). Id. at 343. The Ninth Circuit

held that because state, not federal, law creates the cause of

action for wrongful discharge in violation of public policy, the

references to Title VII did not transform that state cause of

action into a federal claim for relief. Id. at 343-44. The

court stated that “the complaint merely incorporates Title VII as

one of several similar sources of public policy supporting

defendant’s [sic] state law claims.” Id. at 344.

Thus, under Rains, plaintiff can rely on federal public

policy to support her claim without converting the cause of

action into a federal claim for relief. Here, plaintiff has

supported her claim by referencing defendants’ alleged violations

of the public policies contained in various California

Unemployment Code sections, Internal Revenue Code sections, the

FLSA, and Title 8 of the California Code of Regulations. These

allegations are appropriate and do not support removal of the

action on the basis of a federal question.

3. Violation of California Labor Code

Plaintiff’s second cause of action under California Labor

Code section 203, also contains reference to federal law. 

Defendants maintain that as a result of plaintiff’s inclusion of

federal violations as a prerequisite to nonpayment under the

statute, a federal claim for relief is created. To make this

showing, defendants rely upon Breuer v. Jim’s Concrete of

Brevard, Inc., 538 U.S. 691 (2003); however, their reliance is

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misplaced. In Breuer, the Supreme Court held that a suit under

the FLSA may be removed from state to federal court. Id. at 700. 

However, plaintiff is not bringing her suit under the FLSA,

instead her cause of action is based upon the California Labor

Code. 

The relevant portion of Section 203 provides: “[i]f an

employer willfully fails to pay . . . any wages of an employee

who is discharged or who quits, the wages of the employee shall

continue as a penalty from the due date thereof at the same rate

until paid or until an action therefor is commenced . . . . ” 

Cal. Labor Code § 203 (West 2003). Plaintiff’s cause of action

under Section 203 specifically references defendants’ alleged

violations of federal law, namely evasion of federal payroll tax

responsibilities and the FLSA. These references provide evidence

of defendants’ alleged “willful” failure to pay plaintiff, an

express requirement of Section 203. They are not federal claims. 

Furthermore, under her second cause of action, plaintiff only

requests the specific damages proscribed by the Labor Code, the

penalty of plaintiff’s daily rate multiplied by 30 days; thus,

further supporting a finding that no federal claim is asserted.

Indeed, plaintiff’s allegations are similar to those of the

plaintiff in Easton v. Crossland Mortgage Corp., 114 F.3d 979

(9th Cir. 1997). In that case, the plaintiff’s complaint alleged

sexual harassment, inter alia, claiming that the described

conduct was in violation of Title VII, the right to privacy under

the California and federal constitutions, as well as various

state common law and statutory rights. Id. at 981. The Ninth

Circuit emphasized that the references to federal law in the

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plaintiff’s state law claims were only incidental, the plaintiff

was not requesting federal remedies, and the plaintiff

persistently denied any claim for federal relief. Id. at 982.

The court relied on the totality of the circumstances to hold

that the plaintiff’s action should have been remanded to state

court. Id.

Like Easton, viewing the totality of the circumstances in

this case, plaintiff has expressly admitted she is not alleging a

federal claim for relief and she does not seek any federal

remedies. Substantively, her references are either supportive of

the state claim or are merely incidental to the claim. 

Therefore, plaintiff’s second cause of action does not state a

legally sufficient basis for federal question jurisdiction.

4. Award of Attorney Fees

As part of her motion to remand, plaintiff requests an award

of attorney fees incurred in response to the removal. “An order

remanding the case may require payment of just costs and any

actual expenses, including attorney fees, incurred as a result of

the removal.” 28 USC § 1447(c). District courts are given

discretion whether to award fees depending on the circumstances

of the case. See Balcorta v. Twentieth Century-Fox Film Corp.,

208 F.3d 1102, 1106 n.6 (9th Cir. 2000) (explaining that bad

faith is no longer a prerequisite to an award of fees; however,

it is in the discretion of the district court not to award fees

when removal was fairly supportable, even though wrong as a

matter of law).

Defendants have presented at least a colorable basis for

removal. In general, it is difficult to discern the actual legal

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theories of plaintiff’s complaint without reference to the “point

headings” for each cause of action. Moreover, plaintiff’s

complaint is supported by numerous references to defendants’

purported violations of federal law, some of which appear to be

unnecessary to support plaintiff’s state law causes of action. 

The combination of these things created ambiguity, and thus it

was not unreasonable for defendants to remove the present action

to federal court. Although defendants have ultimately failed to

meet the burden necessary to justify removal, an award of

attorney fees and costs is not warranted.

CONCLUSION

For the foregoing reasons, plaintiff Eva Ware’s motion to

remand is GRANTED. Plaintiff’s request for an award of attorney

fees is DENIED.

IT IS SO ORDERED.

DATED: June 17, 2005

/s/ Frank C. Damrell Jr. 

FRANK C. DAMRELL, Jr.

UNITED STATES DISTRICT JUDGE

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