Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-00755/USCOURTS-cand-3_06-cv-00755-0/pdf.json

Nature of Suit Code: 710
Nature of Suit: Fair Labor Standards Act
Cause of Action: 28:1332 Diversity-Fair Labor Standards Act

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

EVELYN HOLLIMAN, SHERRY CALLAHAN,

THANA BRUNGES, and SHANEE JONES, 

on behalf of themselves and other

members of the general public

similarly situated, 

Plaintiffs,

 v.

KAISER FOUNDATION HEALTH PLAN,

KAISER FOUNDATION HOSPITALS, THE

PERMANENTE MEDICAL GROUP, SOUTHERN

CALIFORNIA PERMANENTE MEDICAL

GROUP, and DOES 1 through 20,

inclusive,

Defendants.

 

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No. C-06-0755 SC

ORDER GRANTING

PLAINTIFFS' MOTION TO

REMAND 

- and - 

ORDER DISMISSING

DEFENDANTS' MOTION TO

TRANSFER VENUE 

I. INTRODUCTION

Plaintiffs Evelyn Holliman et al. ("Plaintiffs") filed this

purported class action in the Superior Court of Alameda County

against Kaiser Foundation Health Plan et al. ("Kaiser" or

"Defendants"), and Does 1-100, alleging violations of the

California Labor Code. Defendants removed the action to Federal

Court, claiming federal question jurisdiction. 

Presently before the Court is Plaintiffs' motion to remand

the action to state court and Defendants' motion to transfer

venue. For the reasons contained herein, the Court hereby GRANTS

Plaintiffs' motion and REMANDS the action to the Superior Court of

Alameda County. Defendants' motion to transfer venue is DISMISSED

as moot.

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 1 of 9
United States District Court

For the Northern District of California

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1

 Plaintiffs first filed this action in the Superior Court for

the County of Alameda. 

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II. BACKGROUND

Plaintiffs filed this class action against Kaiser "to

challenge Kaiser's policy and practice of miscalculating the

regular rate of pay of its hourly employees in order to

systematically underpay them." Plaintiffs' Memorandum in Support

of Motion to Remand at 1.1

Plaintiffs allege that Kaiser has (1) violated California

Business Code § 17200 et seq., by engaging in unlawful, unfair and

fraudulent business acts; (2) violated California Labor Code § 226

by failing to "keep and provide accurate itemized statements of

employees' compensation and hours worked"; and (3) violated

California Labor Code §§ 201-202 by failing to "pay Plaintiffs all

wages earned and unpaid at the time Plaintiffs left or were

discharged from their jobs with Defendant [sic]." Id. at 1-2. 

Kaiser has filed a motion to transfer venue to the Central

District of California. Kaiser contends that "Plaintiff's [sic]

counsel filed this case in a blatant attempt to circumvent [sic]

adverse class action in a substantively identical putative class

action in the Central District":

Plaintiff's [sic] counsel are currently prosecuting the same

claims that they assert here in a matter entitled Regina

Allen v. Kaiser Foundation Hospitals, Case No. 05-7010 R

(PLAx), which is pending in the Central District. After

receiving unfavorable rulings from the district court in that

action on class certification, Plaintiff's [sic] counsel

filed the instant action substituting Evelyn Holliman for the

two named plaintiffs in the Allen action. In short, this

action is just an attempted second bite at the apple on class

certification with a new judge and [sic] new representative.

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 2 of 9
United States District Court

For the Northern District of California

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Defendants' Memorandum in Support of Motion to Transfer Venue 

at 2. 

III. LEGAL STANDARD

Suits filed in state court may be removed to Federal Court

where the Federal Court would have had original jurisdiction over

the action in the first instance. 28 U.S.C. § 1441(a). 

The removal statute is strictly construed against removal. 

See Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988). "Federal

jurisdiction must be rejected if there is any doubt as to the

right of removal in the first instance." Gaus v. Miles, Inc., 980

F.2d 564, 566 (9th Cir. 1992). The defendant seeking removal of

an action to Federal Court has the burden of establishing grounds

for federal jurisdiction. See id. 

The general rule is that for a plaintiff to state a claim

under federal law, "it must be clear from the face of the

plaintiff's well-pleaded complaint that there is a federal

question." Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996)

(citations removed). However, though the plaintiff is the master

of the complaint, a "plaintiff may not defeat removal by omitting

to plead necessary federal questions in a complaint." Franchise

Tax Board of California v. Construction Laborers Vacation Trust,

463 U.S. 1, 22 (1983). Even if a federal question does not appear

on the face of the complaint, the doctrine of "artful pleading"

allows Federal Courts to retain jurisdiction in three types of

cases: (1) where federal law entirely preempts state law; 

(2) where "a substantial, disputed question of federal law is a

necessary element...of the well-pleaded state claim"; or (3) where

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 3 of 9
United States District Court

For the Northern District of California

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2 The U.S. Supreme Court held that the "federal law be both

essential and substantial to the state action." Merrell Dow

Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 828 (1986). 

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the "right to relief depends on the resolution of a substantial,

disputed federal question." Lippitt v. Raymond James Financial

Services, 340 F.3d 1033, 1043 (9th Cir. 2003), quoting Rains v.

Citerion Systems Inc., 80 F.3d 339, 345 (9th Cir. 1996) and

Brennan v. Southwest Airlines Co., 134 F.3d 1405, 1409 (9th Cir.

1998).2 

Courts should "invoke the [artful pleading] doctrine only in

limited circumstances as it raises difficult issues of state and

federal relationships and often yields unsatisfactory results." 

Lippitt, 340 F.3d at 1041 (citations and quotation marks removed).

IV. DISCUSSION

California Business and Professions Code section 17200

prohibits unlawful, unfair, or fraudulent business practices. See

Cel-Tech Communications, Inc. v. Los Angeles Cellular Telephone,

20 Cal. 4th 163, 180 (1999). To assert a claim for unlawful

business practices, "[s]ection 17200 borrows violations of other

laws and treats them as unlawful practices that the unfair

competition law makes independently actionable." Id. 

In the instant case, Plaintiffs have predicated these

violations of section 17200 on both state and federal laws, viz.,

violations of California Labor Code §§ 201-203 and 206 as well as

on violations of 29 U.S.C. §§ 207(a)(1) and 217. Complaint ¶¶ 27-

31 ("Compl.").

//

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 4 of 9
United States District Court

For the Northern District of California

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A. Well-Pleaded Complaint

Federal question jurisdiction is, generally speaking,

governed by the well-pleaded complaint rule. This rule provides

that only when a federal question is presented on the face of the

well-pleaded complaint does a Federal Court have jurisdiction over

the complaint. See Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th

Cir. 1996).

There is no federal question presented on the face of the

well-pleaded complaint. Accordingly, the Court will examine

whether the artful pleading doctrine applies to this case. 

B. Artful Pleading Doctrine

1. Complete Preemption

Some federal laws grant the Federal Courts exclusive

jurisdiction over certain claims, preempting any similar state law

claims, such as claims brought under ERISA or section 27 of the

Exchange Act, 15 U.S.C. § 78aa, which creates a cause of action

"brought to enforce any liability or duty created by this chapter

or the rules and regulations thereunder." See Lippitt, 340 F.3d

at 1042. 

Jurisdiction over claims brought under the Fair Labor

Standards Act ("FLSA") is not exclusively federal. The FLSA

grants concurrent jurisdiction to state and federal courts: "An

action to recover the liability prescribed in [sections 206 or

207] may be maintained against any employer...in any Federal or

State court of competent jurisdiction." 29 U.S.C. § 216(b).

Because the statute allows claims to be brought in both

Federal and State Courts, Plaintiffs' claim is not preempted.

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United States District Court

For the Northern District of California

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2. Whether There Is a Substantial, Disputed Question

of Federal Law

Kaiser cites several cases in support of its contention that

it is "well established that where a [state unfair competition law

or "UCL"] is premised on a violation of a federal law, and a claim

for a violation of that federal law would itself be removable, so

too is the UCL claim." Defendants' Brief in Opposition to Motion

for Remand at 2. Nearly all these cases are inapposite to the

situation presently before the Court.

The court upheld removal in many of these cases because the

federal issue lurking in the state claim was committed to the

exclusive jurisdiction of the Federal Courts. For instance, in

Brennan v. Southwest Airlines, plaintiffs, who had asserted only

state law claim, contended that the defendants were not 

authorized to collect an excise tax. See 134 F.3d at 1408. The

Ninth Circuit declared that plaintiffs' action was in fact a tax

refund suit - therefore the Internal Revenue Code could provide

the sole remedy - even though plaintiffs had presented it as a

state law action. See id. at 1409-1410. 

The next three cases discuss California Business and

Professions Code section 17200. In People ex rel. Lockyer v.

Dynegy Power Marketing, plaintiffs brought a state law claim

alleging that electric power companies had engaged in unfair

business practices. See 375 F.3d 831, 837 (9th Cir. 2003). The

Ninth Circuit upheld removal, stating that the complaint was an

attempt to enforce federal tariffs over which, under the Federal

Power Act, "District Courts of the United States...have exclusive

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 6 of 9
United States District Court

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jurisdiction." Id. at 839-840, quoting 16 U.S.C. § 825p. 

In National Credit Reporting Association Inc. v. Experian

Information Solutions Inc., the court stated that Plaintiff

"borrowed federal antitrust laws." No. C-04-01661, 2004 U.S.

Dist. LEXIS 17303 at *8 (N.D. Cal. Jul. 21, 2004). Thus, the

section 17200 claim, the court said, "necessarily rest[ed] on

questions of federal antitrust law." Id. at *9. The court,

citing Dynegy Power Marking, stated that "[w]hen the borrowed law

is a federal law, then the claim for unlawful business practices

rests on resolution of the federal law. Such an unlawful claim

may be removed because the federal law is essential to the

plaintiff's claim." Id. at *10. Despite this broad statement,

the court stated that "the rule that state law claims cannot be

alchemized into federal causes of action by incidental

reference...has no application when relief is particularly

predicated on a subject matter committed exclusively to federal

jurisdiction." See id. at *12-13, quoting Sparta Surgical Corp.

v. National Association of Sec. Dealers, Inc., 159 F.3d 1209,

1212-1213 (9th Cir. 1998). The court held that "removal was

proper under the artful pleading doctrine" because "plaintiff's

Section 17200 claim requires an interpretation of the Sherman

Act," which under 15 U.S.C. § 15 grants exclusive jurisdiction to

the Federal Courts. Id. at *7. 

Defendants have not provided adequate support for their

contention. The cases they cite relate to questions of exclusive

federal jurisdiction and are, therefore, inapposite to the issues

currently before the Court. 

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United States District Court

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3. Whether the Right to Relief Depends on the Resolution of

a Substantial, Disputed Federal Question

Now to the question whether federal law is a necessary

element of the claim or is required for establishing a right to a

remedy. 

Two section 17200 cases settle the matter in Plaintiffs'

favor. In Castro v. Providian National Bank, the court declared

that "[f]atal to defendants' argument [in support of their motion

to remand] is the fact that plaintiffs have pled and intend to

prove that the unlawful prong of section 17200 is supported by

violations of state law as well." No. C-00-4256, 2000 WL 1929366

at *3 (N.D. Cal. Dec. 29, 2000). "A jury could find," the court

declared, "that defendants have violated section 17200 - even just

the unlawful prong of section 17200 - without finding that

defendants have violated the [Truth in Lending Act]. As a result,

plaintiffs' cause of action under section 17200 does 'not depend

necessarily upon a question of federal law.'" Id., quoting

Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 807

(1986). 

Similarly, in Roskind v. Morgan Stanley Dean Witter &

Company, the Court, in its remand order, found that "state law,

not [National Association of Securities Dealers or "NASD"] rules,

will determine whether Defendant engaged in unfair practices. 

165 F. Supp. 2d 1059, 1067 (N.D. Cal. Apr. 11, 2001). "Plaintiff

need not establish a violation of the NASD rules to establish

liability under his § 17200 claim." Id. 

In the instant case, Plaintiffs predicate their section 17200

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 8 of 9
United States District Court

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claim on violations of California Labor Code §§ 201-203 and 206 as

well as on violations of 29 U.S.C. §§ 207(a)(1) and 217. A jury

could find liability based on the predicate state claims, rather

than on the federal ones. Therefore, the federal claim is neither

a necessary element of the claim nor does the right to a remedy

turn on the resolution of substantial, disputed question of

federal law. 

Based on the foregoing, the Court grants the motion to

remand. The Court determines that federal law does not preempt

the state claim, that the federal claim is not necessary to

establish a claim or a right to a remedy, that Federal Courts

should only rarely invoke the artful pleading doctrine, and that

the Defendants have not overcome the strict construction of the

removal statute against removal.

V. CONCLUSION

 For the foregoing reasons, the Court GRANTS Plaintiffs'

motion to remand. The case is REMANDED to the Superior Court for

Alameda County. Defendants' motion to transfer venue is DISMISSED

as moot. 

IT IS SO ORDERED.

Dated: March 14, 2006

 ____________________________

UNITED STATES DISTRICT JUDGE 

 

Case 3:06-cv-00755-SC Document 24 Filed 03/14/06 Page 9 of 9