Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_16-cv-06058/USCOURTS-cand-3_16-cv-06058-1/pdf.json

Parties Involved:
Velva Angell
Defendant
Florine Bates
Defendant
Laura Borden
Defendant
Serena Brooks
Defendant
Robert Davis
Plaintiff
Ellen Durfee
Defendant
Everett Myers
Defendant
Richard Myers
Defendant
Kenneth Rogers
Defendant
Cheryl Seider
Defendant
Farrel Starr
Defendant
Charlene Storr
Defendant
Joy Sundberg
Defendant
United Indian Health Services, Inc.
Defendant

Document Text:

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

RICHARD BALAND,

Plaintiff,

 v.

UNITED INDIAN HEALTH SERVICES,

INC., CHARLENE STORR, FLORINE

BATES, FARREL STARR, EVERETT

MYERS, ELLEN DURFEE, KENNETH

ROGERS, RICHARD MYERS, LAURA

BORDEN, JOY SUNDBERG, CHERYL

SEIDER, VELVA ANGELL, and DOES 1

through 50,

Defendants. /

ROBERT DAVIS,

Plaintiff,

 v.

UNITED INDIAN HEALTH SERVICES,

INC., CHARLENE STORR, FLORINE

BATES, FARREL STARR, EVERETT

MYERS, ELLEN DURFEE, KENNETH

ROGERS, RICHARD MYERS, LAURA

BORDEN, JOY SUNDBERG, CHERYL

SEIDER, VELVA ANGELL, SERENA

BROOKS, and DOES 1 through 50,

Defendants. /

No. C 16-06057 WHA

No. C 16-06058 WHA

ORDER REMANDING CASES

AND AWARDING CERTAIN

FEES AND COSTS

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 1 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

INTRODUCTION

In these related actions asserting various state-law claims involving the termination of

plaintiffs’ positions as executives of a health services corporation, defendants move to dismiss

both actions. Plaintiffs move to remand both actions to state court and seek to recover

attorney’s fees and costs incurred in seeking remand. For the reasons stated below, the motions

to remand are GRANTED, and plaintiffs are entitled to recover some attorney’s fees and costs. 

The motions to dismiss are reserved for the state court upon remand.

STATEMENT

Defendant United Indian Health Services, Inc., was and remains a California non-profit

corporation with its principal place of business in Humboldt County. It received federal funds

subject to certain regulation. The complaints in the instant actions fail to allege what services

United Indian specifically offered, but both sides agree United Indian provided health services

to Native American communities. Plaintiff Richard Baland worked as the chief financial officer

of United Indian, and plaintiff Robert Davis worked as its chief executive officer.

In November 2013, third-party John Lott, the corporate compliance officer of United

Indian, began to investigate overspending at United Indian. Throughout his investigation, he

grew concerned about fraud, self-dealing, and misappropriation of federal funds, among other

misconduct by members of the board of directors of United Indian. Lott, together with Baland

and Davis, further investigated these concerns and reported their findings to the board of

directors and then to the federal government. In July 2014, the board of directors of United

Indian terminated Baland, Davis, and Lott. 

In July 2016, Baland and Davis, who are represented by the same counsel, commenced

actions in Humboldt County Superior Court against United Indian and several board members

and employees. The complaints allege various state-law claims relating to their termination,

generally contending that defendants conspired to wrongfully terminate them in retaliation for

their whistleblowing activities. No federal claims for relief are asserted. In October 2016,

defendants removed both actions to federal court here in San Francisco, purportedly on the basis

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 2 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

of federal-question jurisdiction. The actions became related under our local rules and both

assigned to the undersigned judge.

Baland and Davis each now move to remand. Defendants move to dismiss. The briefs

in each action are nearly identical and raise the same issues. Accordingly, this order jointly

addresses the remand motions, following full briefing and oral argument.

ANALYSIS

Plaintiffs move to remand these actions to Humboldt County Superior Court, contending

that their complaints do not raise federal questions. (The parties are not diverse.) They also

seek their reasonable attorney’s fees and costs incurred as a result of the removal. Defendants

move to dismiss, arguing that United Indian and the individual defendants are immune from suit

and that plaintiffs failed to properly serve process. This order finds that removal was improper,

that defendants lacked any objectively reasonable basis to seek removal, and that plaintiffs

should recover attorney’s fees and costs as stated below. Inasmuch as the Court lacks subjectmatter jurisdiction, this order only rules on plaintiffs’ motions, and reserves decision on

defendants’ motions to dismiss to the state court on remand.

1. REMAND.

A defendant may remove a civil action from state court to federal court if original

jurisdiction would have existed at the time the complaint was filed. 28 U.S.C. 1441(a). 

The presumption against removal jurisdiction means that the defendant bears the burden of

establishing proper removal. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir.

2009). 

Under the “well-pleaded complaint” rule, federal-question jurisdiction exists only where

the federal question appears on the face of the complaint. Duncan v. Stuetzle, 76 F.3d 1480,

1485 (9th Cir. 1996). Thus, the relevant inquiry for making this jurisdictional determination is

to examine the specific claims made by our plaintiffs and decide if they are under federal or

state law. Federal jurisdiction is not conferred by the assertion of a defense or counterclaim that

arises under federal law. Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826,

831–32 (2002). 

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 3 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

Generally, the defense of federal preemption does not confer federal jurisdiction. 

Caterpillar Inc. v. Williams, 482 U.S. 386, 392–93 (1987). When, however, a “federal statute

completely preempts the state-law cause of action, a claim which comes within the scope of that

cause of action, even if pleaded in terms of state law, is in reality based on federal law.” 

Beneficial Nat. Bank v. Anderson, 539 U.S. 1, 8 (2003). Additionally, federal subject-matter

jurisdiction may be conferred where a “contested and substantial federal question” is

“embedded” in the state-law claims. Grable & Sons Metal Products, Inc. v. Darue Engr. &

Mfg., 545 U.S. 308, 313 (2005). 

Defendants contend that they are immune from suit under the federal common law

concept of tribal sovereign immunity. They contend that tribal sovereign immunity is

embedded in each of plaintiffs’ claims because they arise out of plaintiffs’ relationship with an

allegedly immune sovereign entity, but they do not explain how the claims so rely. Defendants

assert, without citing authority, that “the issue is more than a mere defense” (Defs.’ Opp. at 3). 

They frame immunity as “the disputed and substantial federal issue of contracting or working

for a sovereign entity” (id. at 4). Regardless of how defendants frame the federal issues that

could arise in this case, they remain federal defenses.

In Oklahoma Tax Commission v. Graham, 489 U.S. 838 (1989), Oklahoma sought to

collect taxes on cigarette sales and gambling receipts from an Indian tribe, and filed a complaint

in state court. This occurred prior to the Supreme Court’s decision in Caterpillar, which

clarified that the defense of federal preemption does not confer federal jurisdiction. The tribe

removed the action, claiming the complaint implicated the federal question of tribal immunity. 

The district court denied the motion and the Tenth Circuit affirmed, holding that a claim against

an Indian tribe included as a necessary element an alleged waiver of tribal sovereign immunity

or consent to be sued. 

The Supreme Court vacated the appellate decision and remanded for reconsideration in

light of Caterpillar. The Tenth Circuit reinstated its decision, notwithstanding Caterpillar,

holding that the federal question of sovereign immunity was inherent within the complaint by

virtue of the parties’ identity. The Supreme Court reversed, holding the decision “plainly

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 4 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

inconsistent with Caterpillar.” Id. at 842. The fact that tribal sovereign immunity might have

ultimately provided a complete defense did not convert the claims into a federal question.

Earlier this year, months before these actions were removed, our court of appeals

confirmed in a dictum, citing Oklahoma Tax Commission, that “A tribal immunity defense does

not provide an independent basis for federal jurisdiction.” Bodi v. Shingle Springs Band of

Miwok Indians, 832 F.3d 1011, 1023 n.16 (9th Cir. 2016). 

The defense brief did not address Oklahoma Tax Commission at all. That brief

referenced Bodi as a basis for the objective reasonableness of removal, as follows (Defs.’ Opp.

at 6 (citing Bodi, 832 F.3d at 1022–23)):

As highlighted in Bodi, “[t]here are reasons why a tribe may prefer

to litigate in federal court,” including the “experience, solicitude,

and hope of uniformity that a federal forum offers on [such]

federal issues.”

This quote omitted the most important part of Bodi for our purposes. The excerpted passage, in

fact, actually read as follows:

There are reasons why a tribe may prefer to litigate in federal

court. “[T]ribal immunity ‘is a matter of federal law,’” Bay Mills, 134 S.Ct. at 2031 (quoting Kiowa Tribe, 523 U.S. at 756, 118 S.Ct.

1700), and, as such, tribes may wish to avail themselves, when

possible (footnote 16), of the “experience, solicitude, and hope of

uniformity that a federal forum offers on [such] federal issues,”

Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545

U.S. 308, 312, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005) (discussing

removability of claims “implicat[ing] significant federal issues”);

see Contour Spa, 692 F.3d at 1207 (recognizing that tribes “have

an interest in a uniform body of federal law in [the] area” of tribal

immunity).

Bodi, 832 F.3d at 1022–23. In other words, the defense brief skipped over the text referencing

footnote 16, which footnote stated the critical point for our case:

A tribal immunity defense does not provide an independent basis

for federal jurisdiction. See Okla. Tax Comm’n v. Graham, 489

U.S. 838, 841, 109 S.Ct. 1519, 103 L.Ed.2d 924 (1989) (per

curiam). The Tribe in this case was instead able to access a federal

forum to litigate its immunity defense because Bodi’s FMLA claim

provided for original federal jurisdiction.

The defense brief ignored footnote 16 altogether. This deliberate sleight of hand is and remains

a disappointment to the Court.

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 5 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 At oral argument, defense counsel described Ward as an “Eighth Circuit” decision, though it is in

fact a decision from the District of South Dakota. 

2

 Defendants cite this provision as 25 U.S.C. 450e(b), but Section 450e was moved to Section 5307

last year.

6

When pressed at oral argument to explain how defendants could get around this clear

statement of circuit law in Bodi, counsel cited J.L. Ward Associates v. Great Plains Tribal

Chairmen’s Health Board, 842 F. Supp. 2d 1163 (D.S.D. 2012). But Ward did not involve

removal at all. Rather, as defense counsel eventually conceded, the decision simply discussed

the standard for the application of the tribal sovereign immunity defense. Whether or not our

defendants may ultimately prevail under the standard discussed in Ward (or otherwise) is

irrelevant, inasmuch this Court lacks jurisdiction to resolve that federal defense.1

Defendants alternatively claim that plaintiffs’ claims for discrimination necessarily raise

a federal issue, inasmuch as United Indian receives federal funds to provide health care under

the Indian Self-Determination and Education Assistance Act. Section 5307(b) of Title 25 of the

United States Code (part of the ISDEAA) provides that “Indian organizations . . . shall require

that to the greatest extent feasible . . . preferences and opportunities for training an employment

in connection with the administration of [federal] contracts or grants shall be given to Indians.” 

Defendants contend that Section 5307(b) is an integral part of any discrimination claim, but

again, it simply provides a possible defense.2

Indeed, in Pink v. Modoc Indian Health Project, Inc., 157 F.3d 1185, 1188–89 (9th Cir.

1998), our court of appeals held that the ISDEAA and other protections from discrimination

claims against Indian tribes do not confer federal jurisdiction. 

Finally, defendants contend the claims herein are completely preempted by Title 25 of

the United States Code, which generally addresses Indian law. Complete preemption applies

where the law is “so pervasive as to make reasonable the inference that Congress left no room

for the States to supplement it . . . because the federal interest is so dominant that the federal

system will be assumed to preclude enforcement of state laws on the same subject.” Pac. Gas

& Elec. Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190, 204 (1983)

(citations omitted).

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 6 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

In Oneida Indian Nation of N. Y. State v. Oneida County, New York, 414 U.S. 661

(1974), the Supreme Court held that a claim to possession of Indian land conferred federal

jurisdiction even though the claim had been brought under state law. That was because “the

right to possession itself is claimed to arise under federal law in the first instance,” because

“federal law now protects, and has continuously protected from the time of the formation of the

United States, possessory rights to tribal lands, wholly apart from the application of state law

principles which normally and separately protect a valid right of possession.” Id. at 675–77. 

Accordingly, the complaint therein arose under federal law.

Oneida did not describe its holding as finding “complete preemption,” but the Supreme

Court later described Oneida as holding that “state-law complaint that alleges a present right to

possession of Indian tribal lands necessarily ‘asserts a present right to possession under federal

law,’ and is thus completely preempted and arises under federal law.” Caterpillar, 482 U.S. at

393 n.8. That is not our case.

Here, plaintiffs do not claim a right that arises under federal law in the first instance,

such as a right to Indian land. Rather, they seek to assert rights granted by the state, albeit

against an alleged Indian tribal organization. Certain provisions in Title 25 might provide a

defense to those claims, but that does not establish complete preemption. 

Defendants note that Title 25 of the United States Code includes laws governing

healthcare, child welfare, cultural protections, land management, and contracts. Thus,

defendants argue, “Congressional intent is clearly to displace any state law on these topics”

(Defs.’ Opp. at 5). Again, defendants cite no authority to support that expansive contention,

and no decision has ever held that federal Indian law completely preempts state-law

discrimination, employment, and contract claims. Indeed, such a holding would be plainly

inconsistent with Oklahoma Tax Commission and Bodi, which indicated that the presence of

issues of Indian law did not always confer federal jurisdiction (as defendants here propose).

Defendants’ unsupported theories are rejected. Plaintiffs’ motions to remand are

GRANTED.

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 7 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

2. FEES AND COSTS.

Section 1447(c) of Title 28 of the United States Code authorizes the award of “just costs

and any actual expenses, including attorney fees, incurred as a result of the removal.” 

“Absent unusual circumstances, courts may award attorney’s fees under [Section 1447(c)] only

where the removing party lacked an objectively reasonable basis for seeking removal.” Martin

v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). 

Defendants contend they had an objectively reasonable basis for seeking removal, citing

the statement in Bodi noting that there are reasons an Indian tribe may want to litigate in federal

court. But, as stated, their citation of Bodi studiously omitted the statement of the law that

directly contradicts defendants’ position here, omitting that “A tribal immunity defense does not

provide an independent basis for federal jurisdiction.” Moreover, the facts of Bodi do not

support their case. Bodi was removable simply because the complaint included a claim under

the federal Family and Medical Leave Act. The issue on appeal was whether or not such

removal constituted a waiver of tribal sovereign immunity. Our court of appeals held there was

no waiver. To repeat, removal was not the issue. Nevertheless, Bodi reminded us that tribal

sovereign immunity provided no basis for removal (in footnote 16). 

The law is plain: The federal issues our defendants raise are federal defenses that do not

confer federal jurisdiction. Indeed, defendants cite not a single decision that provides any

support for their theory of removal. They come closest by eliding the contrary authority in

Bodi. Defendants’ removal here was entirely baseless. Furthermore, their sleight of hand

relating to Bodi shows the knew their position was objectively unreasonable.

United Indian and many of our individual defendants lost on the issue of tribal sovereign

immunity in Humboldt County Superior Court in an unrelated case in Green v. United Indian

Health Services, Inc., Humboldt County Superior Court No. DR 120103 (Mitlyng Decl., Exhs.

2–3). The California Court of Appeal denied United Indian’s petition for a writ of mandate (id.,

Exh. 4). That case ended in settlement, so it appears United Indian would not be estopped from

relitigating the issue, but it is clear that our defendants’ baseless removal was simply a gimmick

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 8 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

to flee a forum where they had already lost on a key issue, further demonstrating the extent of

defendants’ unreasonableness.

Defendants’ citation to a related action, United Indian Health Services, Inc. v. Julie Su,

No. 15-2151 (Dkt. No. 35) (E.D. Cal., Nov. 22, 2016) (Judge Troy L. Nunley), is unavailing. 

There, United Indian (the plaintiff there, a defendant here), filed an action in federal court

seeking to enjoin investigations by federal agencies and seeking declaratory judgment that it

was not subject to the agencies’ jurisdiction. An order dismissed the action as lacking a

justiciable case or controversy. The defendants (which included Baland and Davis, our

plaintiffs) moved for sanctions under Rule 11. An order denied the request for sanctions, noting

that United Indian filed the action before Bodi clarified that removal did not constitute a waiver

of tribal sovereign immunity. Judge Nunley reasoned that United Indian faced the very

predicament discussed in Bodi, namely, that it might be forced to raise its federal immunity

defense in state court (at the conclusion of the agency investigations), but it might waive that

defense by seeking removal (assuming it could do so properly). Thus, Judge Nunley held that

United Indian’s actions were reasonable in light of the pre-Bodi state of the law, then denied the

sanctions motion.

Here, however, things are different. First, our case simply does not concern the issue of

waiver. Rather, our case is about removal based on a federal defense — an issue settled long

before Bodi, but restated in Bodi. Second, United Indian removed this action months after our

court of appeals decided Bodi. Thus, the facts that led to the denial of the motion sanctions

against United Indian’s case in the Eastern District of California are completely distinguishable

from the facts of our case. 

It was simply unreasonable for United Indian to seek removal on the basis that this case

involves federal issues, since those issues plainly arise only as defenses. Accordingly, this

order finds plaintiffs are entitled to their reasonable attorney’s fees and costs incurred as a result

of remand.

Plaintiffs each contend that by the time this motion is resolved they will incur $10,850

in attorney’s fees and expenses of $251.20 as a result of this removal. Attorney Linda S.

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 9 of 10
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

10

Mitlyng submitted a sworn declaration averring that she expects to bill 31 attorney hours at

$350 per hour, for a total of $10,850 in each action. Specifically, she avers she spent 19 hours

“defending the case” as of the time she filed the motion to remand, and that she expected to

spend seven hours “preparing the reply,” one hour for her “court appearance,” and three hours

of travel time (six hours in each direction, billed at half rate and split between the Baland and

Davis actions) from Eureka (Mitlyng Decl. ¶¶ 16–24). She also calculates travel expenses and

hotel accommodations at a total of $502.40, to be split between the actions (id. ¶ 25).

Defendants do not dispute the veracity of Attorney Mitlyng’s declaration, except to call

the request “exorbitant.” Nevertheless, Attorney Mitlyng’s declaration fails to address whether

the fees incurred in “defending the action” included hours worked opposing defendants’

motions to dismiss, which work can be largely recycled on remand. More critically, Attorney

Mitlyng avers she spent 26 hours preparing the briefs in each matter (and thus seeks to recover

a total of 52 hours of fees for preparation between the two actions). But the briefs were nearly

identical, so it would have been unreasonable for Attorney Mitlyng to have billed each of our

plaintiffs for the entirety of the work done, rather than half. Our record is simply too bare to

determine the true amount of fees reasonably incurred.

While this order finds that plaintiffs are each entitled to their reasonable attorney’s fees

and costs, since plaintiffs failed to provide an adequate sworn record to support the claimed

amount, this order awards the minimum amount in fees and costs that the Court can be certain

was actually expended between the two cases — four thousand dollars. That is, defendants

shall pay two thousand dollars in attorney’s fees and costs to each of our two plaintiffs.

CONCLUSION

For the reasons stated above, plaintiffs’ motions to remand are GRANTED, and they are

each entitled to two thousand dollars in attorney’s fees and costs in each case, for a total of four

thousand dollars to be paid by defendants. The Clerk shall please REMAND the action to

Humboldt County Superior Court and CLOSE THE FILE.

IT IS SO ORDERED.

Dated: December 30, 2016. 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:16-cv-06058-WHA Document 37 Filed 12/30/16 Page 10 of 10