UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF OHIO 

CINCINNATI DIVISION 

CIVIL ACTION NO. 1:18-cv-00244 (WOB) 

JAMES VISKER, et al., 

 PLAINTIFFS 

 VS. MEMORANDUM OPINION AND ORDER 

DOMINIC FERRANTE, et al., 

 DEFENDANTS 

 

This matter is before the Court on Plaintiffs' Motion to 

Remand to state court. (Doc. 11). 

 Concluding that oral argument is unnecessary, the Court 

issues the following Memorandum Opinion and Order. 

Factual and Procedural Background

This is a securities action based on allegations that the 

defendants violated Delaware statute and common law, breached an 

Operating Agreement between the parties, and violated 15 U.S.C. 

§ 77 et seq. of federal securities laws. (Doc. 4, Complaint, ¶ 

1). James Visker and other minority investors have brought suit 

against TFG Wheels executive, Winona PVD Coatings Board member, 

and majority owner, Dominic Ferrante and others. (Id. ¶ 1). 

Plaintiffs allege that the defendants, who were executives and 

Board members of Winona, grossly mismanaged Winona and failed to 
fulfill their fiduciary duties to the plaintiffs, Winona's 

investors. (See id. at ¶¶ 101d, 120). Plaintiffs seek equitable 

relief, including, inter alia, a court ordered accounting of 

Winona's business and financial information, declaratory 

judgment that Defendants' owe fiduciary duties to Plaintiffs, 

and an injunction against Winona's sale. (Id. ¶¶ 90, 108, 141). 

 Plaintiffs filed their initial Complaint in Ohio state 

court. The defendants removed to federal court pursuant to 28 

U.S.C. §§ 1441 and 1446. Plaintiffs responded with a Motion to 

Remand to Ohio state court pursuant to 28 U.S.C. § 1447(c) for 

lack of federal question jurisdiction. 

 On the first page of the initial Complaint, there is a 

reference to "violations of 15 U.S.C. § 78(j) and 15 U.S.C. § 

77(q)(a)" by the defendants. (Doc. 4, Complaint, ¶ 1). The 

defendants argue that there are further allegations of similar 

substance made later in the Complaint. 

 Defendants removed to federal court on this basis, arguing 

that this Court has federal question jurisdiction over alleged 

violations of federal securities law, especially when alleged so 

explicitly at the start of the Complaint. However, Plaintiffs 

moved to remand to Ohio state court. Plaintiffs take the 

position that, despite their passing allegation of federal law 

violations, state law is the sole source of relief and that 

there are no actual federal issues for the Court to decide. This 
Court, the plaintiffs conclude, lacks federal question 

jurisdiction, removal was improper, and remand to state court is 

now appropriate. 

Analysis

Generally, removal of a case to federal court is proper 

only if the federal district court would have original 

jurisdiction over the suit under 28 U.S.C. § 1331. See

28 U.S.C. § 1441(a). If a claim "arises under" federal law, 

Section 1331 grants original jurisdiction to the district courts 

of the United States. See 28 U.S.C. § 1331. 

 A complaint arises under federal law if it: (1) states a 

federal cause of action; (2) includes state-law claims that 

necessarily turn on a substantial and disputed federal issue; 

(3) raises state-law claims that are completely preempted by 

federal law; or (4) artfully pleads state-law claims that amount 

to federal-law claims in disguise. Mikulski v. Centerior Energy 

Corp., 501 F.3d 555, 560 (6th Cir. 2007) (en banc). 

 The primary disagreement between the parties arises from 

conflicting understandings of the well-pleaded complaint rule 

and the embedded federal question doctrine. 

A. The Well-Pleaded Complaint Rule 

 The presence or absence of federal question jurisdiction is 

generally determined by the "well-pleaded complaint rule," which 

provides that federal jurisdiction exists when a federal 
question is presented on the face of the plaintiff's properly 

pleaded complaint. Caterpillar Inc. v. Williams, 482 U.S. 386, 

392 (1987). The plaintiff is the master of the claim; he or she 

may avoid federal jurisdiction by exclusive reliance on state 

law. Id. The well-pleaded complaint rule stands for the 

proposition that the court, in determining whether the case 

arises under federal law, will look only to the claim itself and 

ignore any extraneous material. 13D Charles Alan Wright & Arthur 

R. Miller, Federal Practice and Procedure § 3566 (3d ed. 2018). 

 In Merrill Lynch, Pierce, Fenner & Smith Inc., et al., v. 

Manning, the plaintiff brought suit alleging Merrill Lynch had 

engaged in naked short sales of Escala stock in violation of New 

Jersey law. 136 S.Ct. 1562, 1566 (2016). Similar to the instant 

case, the plaintiff alleged violations of state law, but his 

complaint also included an explicit allegation that Merrill 

Lynch had violated federal SEC Regulation SHO. Id. Section 27 

provides that the federal district courts will have exclusive 

jurisdiction over Exchange Act violations under 15 U.S.C. § 

78aa(a). In his complaint, the plaintiff even described the 

purpose of Regulation SHO and catalogued past incidents where 

Merrill Lynch flouted the requirements of that federal law. Id.

Still, the Supreme Court found this insufficient to create a 

federal question. Id. at 1575. 
 The Court looked to the natural reading of the language in 

Section 27 of the Exchange Act, "brought to enforce," also found 

in 15 U.S.C. §78aa(a). Id. The Court interpreted those words to 

mean that federal question jurisdiction exists "when an action 

is commenced in order to give effect to a [statutory] 

requirement." Id. at 1568. Justice Kagan gave an example, 

stating that when a plaintiff brings a simple state law action 

for breach of contract but also alleges for "atmospheric 

reasons" that the defendant's conduct violates federal statute, 

there is still no federal question jurisdiction without more. 

See id. at 1568-69 ("But that hypothetical suit is 'brought to 

enforce' state contract law, not the Exchange Act—because the 

plaintiff can get all the relief he seeks just by showing the 

breach of an agreement, without proving any violation of federal 

securities law."). Though the plaintiff in that case cited a 

federal law that could have potentially given rise to a cause of 

action, the plaintiff's allegations concerning federal law were 

of no consequence to the plaintiff's state law claims. See id.

The plaintiff did not raise federal law "in order to give 

effect" to it, but rather to cast the defendants in a negative 

light with superfluous detail, as is common in litigation. Id.

at 1569. Thus, there was no federal question jurisdiction. Id.

at 1575. 
 Here, Plaintiffs' isolated allegation that Defendants 

violated federal law, with nothing else to flesh-out or 

substantiate that allegation, is insufficient to "give effect" 

to federal law. The Supreme Court was clear that the mere 

allegation of a federal law violation, though made on the face 

of the complaint, does not confer federal question jurisdiction 

without something more. Instead, this suit was brought to 

enforce or, in Justice Kagan's words, to "give effect to," 

Delaware law. It is Delaware law, not federal law, which is the 

body of law invoked by the plaintiff. Under the well-pleaded 

complaint analysis, Plaintiffs' allegations do not create a 

federal question for this Court to address. 

B. The Embedded Federal Question Doctrine 

 Even if the plaintiff does not assert a federal cause of 

action, federal question jurisdiction may exist over state 

claims if: (1) the resolution of a federal question is a 

necessary element of a state claim raised by the plaintiff, (2) 

the interpretation or application of the federal law is actually 

disputed, (3) the question is of substantial federal interest, 

and (4) exercising jurisdiction would not disturb the federalstate division of labor intended by Congress when it passed 28 

U.S.C. § 1331. See Grable & Sons Metal Products, Inc. v. Darue 

Engineering & Mfg., 545 U.S. 308, 314 (2005). The Grable

framework is applied to show the existence of federal question 
jurisdiction where the determination or application of federal 

law is an essential component of a state law claim, i.e., the 

federal law is "embedded" within the state claim, but where no 

federal cause of action is independently invoked. The Grable

framework thus acts as a possible window for removal based on 

federal question jurisdiction. 

 In Grable, the Internal Revenue Service seized real 

property owned by Grable (petitioner) and gave Grable notice by 

mail before selling the property to satisfy a federal tax 

delinquency. Id. at 310-11. Grable brought suit to quiet title 

under state law. Id. Grable based his claim to superior title on 

a theory of insufficient notice under federal tax law. Id.

Defendant removed on the basis that an element of the state law 

claim required the interpretation and application of federal law 

and thus presented a federal question. Id. The Supreme Court 

ultimately agreed, concluding that there was a necessary and 

substantial federal question, that the federal government had a 

significant interest in facilitating tax revenue collection, and 

that to decide the state law claim would not upset the proper 

work-balance and separation of power between the state and 

federal judiciaries. Id. at 310. 

 Here, Defendants argue that the plaintiffs' Counts II and 

III require the determination of federal law embedded within the 

Delaware law invoked by the plaintiffs. Defendants argue that 15 
U.S.C. §§ 78j and 77q, cited by Plaintiffs early in the 

Complaint, is connected to allegations of "securities fraud 

violations" made in Count II and III. (Doc. 4, Comp., ¶¶ 1, 119, 

127). 

 The first element of Grable is not satisfied. Plaintiffs' 

state law claims do not turn on a determination of federal law. 

Plaintiffs do allege Title 15 violations but never again 

expressly or even impliedly refer to federal law. There is good 

reason to doubt the defendants' construction of the Complaint. 

The defendants connect a reference to federal law in the 

beginning of the Complaint with vague language in Counts II and 

III, counts which either expressly rely on Delaware law or make 

no reference to federal law at all. The defendants seem to have 

left to the imagination which element of which Delaware state 

law turns upon a determination of federal law. When this sort of 

doubt is present, federal courts should construe motions for 

remand in favor of the movant. See Cole v. Great Atlantic & 

Pacific Tea Co., 728 F.Supp 1305 (E.D.Ky. 1990). 

 The second and third elements of Grable also are not met. 

Defendants argue that federal law, which Plaintiffs presumably 

referred to vaguely as "securities laws," is both substantial 

and disputed in this case. Defendants cite two places where 

Plaintiffs allege there is "[a]n actual, present, and 

justiciable controversy." But while Defendants correctly argue 
that federal courts have exclusive jurisdiction over claims of 

Securities Exchange Act (SEA) violations, they fail to 

demonstrate where the SEA is effectively invoked anywhere in the 

Complaint or where federal law is embedded within one of the 

state claims. The plaintiffs deny any intention to enforce 

federal law but instead rely solely on Delaware securities law. 

Plaintiffs simply do not dispute any federal law or issue of 

federal law embedded within one of their state claims. 

 Finally, the fourth Grable element is not satisfied. The 

defendants reiterate that the SEA and Title 15 of the United 

States Code provide the federal courts with exclusive federal 

question jurisdiction and that to decline federal jurisdiction 

in this case would upset Congress' intended division of labor 

between the state and federal judiciaries. Perhaps that would be 

true if the plaintiffs were actually and actively invoking those 

federal statutes. But Defendants have still failed to point to 

any part of Delaware law cited by the plaintiffs which turns on 

a federal issue. The Ohio courts are fully capable of applying 

Delaware securities laws and affording equitable remedies when 

appropriate. Here, Ohio courts are simply not tasked with 

possessing the expertise or judgment of enforcing federal 

securities law. 
C. Attorney's Fees and Costs of Compelling Remand 

 The remaining issue is whether Plaintiffs are owed 

attorney's fees and costs incurred while compelling remand to 

state court. 

 The award of attorney's fees for challenging removal is 

dependent on the objective reasonableness of the basis for 

removal: "[T]he standard for awarding fees should turn on 

reasonableness of the removal. Absent unusual circumstances, 

courts may award attorney's fees under § 1447(c) only where the 

removing party lacked an objectively reasonable basis for 

seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132 

(2005). 

 While there is ultimately no sufficient federal question to 

sustain Defendants' removal, it was still reasonable to think 

that the plaintiffs might have wished to give effect to the 

federal law they cited. In the first line of the Complaint, 

Plaintiffs made no meaningful differentiation between the 

allegation of state law violations and alleged federal law 

violations. This Court does not consider that to be a 

categorically unreasonable basis for removal, even if the 

defendants' bases for federal question jurisdiction were 

ultimately insufficient to sustain removal. Because the grounds 

for removal were objectively reasonable, Plaintiffs are not 

entitled to attorney's fees or costs. 
 Finally, while Plaintiffs suggest that Warthman v. Genoa 

Twp. Bd. of Trs., 549 F.3d 1055, 1064 (6th Cir. 2008), created 

an affirmative duty to communicate with the non-moving party 

before removing to federal court, that reading of Warthman is 

either mistaken or a misconstrual.1 A review of that opinion 

reveals permissive dicta that merely suggests the parties 

communicate with one another to determine what body of law is 

being invoked. The Sixth Circuit did not rule that defendants 

have an affirmative duty to make such a clarification. 

 Therefore, having reviewed this matter, and the Court being 

sufficiently advised, 

IT IS ORDERED that Plaintiffs' Motion to Remand (Doc. 11) 

be, and is hereby, GRANTED, and Plaintiffs' request for 

attorney's fees and costs DENIED. The motion to stay (Doc. 7) 

be, and is hereby, DENIED AS MOOT. This matter is hereby 

REMANDED to the Hamilton County Court of Common Pleas. 

 This 6th day of August, 2018. 

                                                      

1 The passage cited: "... there is no law that prohibits the defendant from 

simply contacting the plaintiff and requesting a written confirmation that 

only state-law claims are being asserted." Warthman, 549 F.3d at 1064.