IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 07-30464

BARRY BERNHARD; SHERYLE BERNHARD

Plaintiffs - Appellees

v.

WHITNEY NATIONAL BANK

Defendant - Appellant

Appeal from the United States District Court

for the Middle District of Louisiana

Before JOLLY, BARKSDALE, and BENAVIDES, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

This case was birthed in Louisiana state court by Barry and Sheryle

Bernhard. It was adopted by the Middle District of Louisiana when the

defendants, Capital One and Whitney National Bank, removed it on the basis

of a federal question. Whitney appeals a split-the-baby decision of the district

court, granting summary judgment in Whitney’s favor on the federal claim, yet

remanding the state claims. Because we hold that, under the unusual

circumstances ofthis case,the district courtlacked federal question jurisdiction,

we VACATE the district court’s judgment and REMAND with instructions that

the case be remanded to the custody of the state court.

United States Court of Appeals

Fifth Circuit

F I L E D

April 2, 2008

Charles R. Fulbruge III

Clerk
No. 07-30464

1 Article 2315 provides, in part: “Every act whatever of man that causes damage to

another obliges him by whose fault it happened to repair it.” Article 2316 provides: “Every

person is responsible for the damage he occasions not merely by his act, but by his negligence,

his imprudence, or his want of skill.”

2

In particular, the Bernhards alleged that Capital One was negligent in the following

respects: “(1) Improper management of online transactions; (2) Failure to properly verify

authority of withdrawer; (3) In failing to verify with transferor institution the authorization

of online banking transactions; (4) Improper allocation of unauthorized funds; and (5) In other

respects which will more particularly be proven at the trial of this matter.”

Whitney is alleged to have been negligent in the following respects: “(1) Improper

management of entrusted funds; (2) Improper payment of unauthorized debits; (3) Failure to

monitor client accounts; and (4) In other respects which will more particularly be proven at the

trial of this matter.”

2

I. 

Barry and Sheryle Bernhard brought this suit against Whitney National

Bank and Capital One Bank, LLC, in Louisiana state court in July 2005. They

alleged violations of Louisiana Civil Code articles 2315 and 2316.1 Their claims

arose out of alleged unauthorized transfers from their checking account at

Whitney Bank by a contractor with whom the Bernhards did business, Robert

Williams. The Bernhards alleged that Williams had used Capital One’s online

banking system to make unauthorized electronic transfers from the Whitney

account, using the routing and account numbers from the Bernhards’ personal

check. They alleged that Capital One and Whitney breached duties owed to

them by allowing Williams to make the unauthorized transfers and by failing to

maintain adequate security procedures.2

The unauthorized transfers began in November 2003 and continued

through November 2004,totaling $113,836.83. The Bernhards notified Whitney

of the unauthorized transfers in November 2004 and were credited $24,859 for

some of the unauthorized withdrawals. 
No. 07-30464

3

The Bernhards alleged in their petition that the defendants are liable for

an amountto compensate them for losses sustained, legal interest, and “all costs

of these proceedings, including attorney’s fees.” 

The defendants removed the case to the federal district court for the

Middle District of Louisiana. They contended that “the facts alleged and the

actions complained of by the Bernhards actually involve and include alleged

violations of federal law, namely the Electronic Funds Transfer Act, 15 U.S.C.

§ 1693 et seq. (the “EFTA”), and its implementing regulations. . . . Resolution of

the Bernhards’ claims requires the interpretation of these federal laws.” The

defendants also argued that, because the Bernhards sought attorneys’ fees,

which are available under the EFTA but not under state law, the claims

necessarily arise under federal law. 

The Bernhards moved to remand the case to the state court, arguing that

they sought relief only under state law. The magistrate judge filed a report and

recommendation that the motion to remand be denied. The magistrate judge

found that “plaintiffs’ claims arise under federal law even though the plaintiffs

have characterized them as state law claims.” Citing this court’s decision in

Medina v. Ramsey Steel Co., Inc., 238 F.3d 674 (5th Cir. 2001), the magistrate

judge found that, “if the remedy that the plaintiff seeks in his or her complaint

is exclusively available under federal law, then a federal court has jurisdiction

of the case.” The magistrate judge concluded that, because the attorneys’ fees

sought by the Bernhards are exclusively available under federal law,the district

court had federal question jurisdiction over the case under 28 U.S.C. § 1331.

The magistrate judge also found: 

Secondly, even though the plaintiffs only assert causes

of action under state law in their petition, [automated

clearing house] transactions like those at issue are

governed by federal law, EFTA and its implementing

regulations, Regulation E. In order to determine

whether plaintiffs are entitled to attorneys fees as
No. 07-30464

4

requested, it will be necessary for the Court to engage

in an analysis of whether EFTA was violated by the

defendants. Accordingly, this case necessarily involves

an embedded issue of federal law affording the Court

original jurisdiction under Grable [&] Sons Metal Prod.

Inc., [v.] Daru[e] Eng’g & Mfg., [545 U.S. 308,] 125 S.Ct.

2362, 162 L.Ed.2d 257 (2005).

The magistrate judge cited the provision of the EFTA defining its

relationship to state laws, 15 U.S.C. § 1693q, interpreting it to provide “that

state laws which are inconsistent or afford consumers less protection than EFTA

relating to electronic fund transfers are pre-empted by EFTA.” 

The district court adopted the magistrate judge’s recommendation over the

Bernhards’ objection and denied their motion to remand.

Capital One and Whitney filed motions for summary judgment. The

district court granted the motions for summary judgment as to claims arising

under the EFTA. The district court found that the plaintiffs were entitled to no

further reimbursement from Whitney under the EFTA because the plaintiffs

failed to report the unauthorized transfers to Whitney in a timely manner.

Under the EFTA, Whitney was notlegally obligated to reimburse the Bernhards

for unauthorized transfers occurring more than sixty days after the receipt ofthe

bank statement showing the first unauthorized transfer and before notice was

given to Whitney. The district court found that the Bernhards could not set

forth a cause of action against Capital One under the EFTA because Capital One

is not a “financial institution” with respect to the Bernhards as provided by the

EFTA, 15 U.S.C. § 1693a(8). 

The court found that it had supplemental jurisdiction under 28 U.S.C. §

1367(a) over all claims that are so related to the claims over which the court has

original jurisdiction that the related claims are part of the same case or

controversy. The court declined to exercise supplemental jurisdiction and

remanded “the remaining state law negligence claims” to state court. 
No. 07-30464

5

Whitney filed a motion under Rule 59(e) to alter or amend the judgment

for clarification. Fed. R. Civ. P. 59(e). Whitney contended that the district court

did not properly specify in its order that the only negligence claims remanded to

state court were those against Capital One. Whitney sought clarification that

the EFTA “preempts Louisiana state law, thus the Bernhards have no state law

claim against Whitney to remand.”

The district court denied Whitney’s motion, reaffirming its previous

determination notto exercise supplemental jurisdiction over any remaining state

law claims in the case. Whitney appealed to this court.

II.

Whitney contends that the district court granted its motion for summary

judgment in a manner inconsistent with its earlier conclusion that the

Bernhards’ state law negligence claims were, in fact, federal claims under the

EFTA and were preempted by the EFTA. Whitney contends that the court

therefore erred in denying Whitney’s Rule 59(e) motion to reconsider its

judgment.

III.

None of the parties raised the question of jurisdiction on appeal. Of

course, we must raise the issue of jurisdiction on our own motion if necessary.

E.g., Hill v. City of Seven Points, 230 F.3d 167, 169 (5th Cir. 2000). We must

first consider our own jurisdiction and then that of the district court. United

States v. Creamer Indus., Inc., 349 F.2d 625, 626 (5th Cir. 1965). 

A.

This court has jurisdiction over an appeal of a final judgment under 28

U.S.C. § 1291. Although this court may not review a district court's order to

remand that is based upon grounds specified in 28 U.S.C. § 1447(c), we may

review a remand order that is based on the district court's exercise of its

discretion not to take supplemental jurisdiction over state law claims under 28
No. 07-30464

6

U.S.C. § 1367. Smith v. Tex. Children’s Hosp., 172 F.3d 923, 926 n.5 (5th Cir.

1999). 

In this case, the district court explicitly remanded the Bernhards’ state

law claims on the basis of its discretionary power to decline to exercise

supplemental jurisdiction. Therefore this court has appellate jurisdiction over

the district court’s decision to remand remaining state law claims. 

B.

Jurisdiction of the district court, however, is quite another matter. We

review the remand orders in this case de novo. Campbell v. Stone Ins., Inc., 509

F.3d 665, 669 (5th Cir. 2007). 

The district court has removal jurisdiction in any case where it has

original jurisdiction. 28 U.S.C. § 1441(a). The district court has original federal

question jurisdiction over “all civil actions arising under the Constitution, laws,

or treaties of the United States.” 28 U.S.C. § 1331. However, the fact that

federal law may provide a defense to a state claim is insufficient to establish

federal question jurisdiction. E.g., Hart v. Bayer Corp., 199 F.3d 239, 244 (5th

Cir. 2000).

We start with the long-established axiom that a plaintiff is master of his

complaint and may generally allege only a state law cause of action even where

a federal remedy is also available. See Waste Control Specialists, LLC v.

Envirocare of Tex., Inc., 199 F.3d 781, 784 (5th Cir.), modified in part on

rehearing, 207 F.3d 225 (5th Cir. 2000). Under this “well-pleaded complaint”

rule, a federal court has original or removal jurisdiction only if a federal question

appears on the face of the plaintiff'’s well-pleaded complaint; generally, there is

no federal jurisdiction if the plaintiff properly pleads only a state law cause of

action. E.g., Franchise Tax Bd. v. Const. Laborers Vacation Trust, 463 U.S. 1,

10-11 (1983). As we have noted above, “[a] defense that raises a federal question

is inadequate to confer federal jurisdiction.” Merrell Dow Pharmaceuticals, Inc.
No. 07-30464

7

v. Thompson, 478 U.S. 804, 808 (1986). Even an inevitable federal defense does

not provide a basis for removal jurisdiction. Hoskins v. Bekins Van Lines, 343

F.3d 769, 772 (5th Cir. 2003) (quoting Carpenter v. Wichita Falls Ind. School

Dist., 44 F.3d 362, 366 (5th Cir. 1995)). 

However, a case pleading only state law claims may arise under federal

law “where the vindication of a right under state law necessarily turn[s] on some

construction of federal law.” Franchise Tax Bd., 463 U.S. at 9. The federal

courts have jurisdiction over a state law claim that “necessarily raise[s] a stated

federal issue, actually disputed and substantial, which a federal forum may

entertain without disturbing any congressionally approved balance of federal

and state judicial responsibilities.” Grable, 545 U.S. at 314.

In analyzing the issue before us, we should also refer to the “artful

pleading” doctrine, which is an “independent corollary” to the well-pleaded

complaint rule. Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998). Under

this principle, even though the plaintiff has artfully avoided any suggestion of

a federal issue, removal is not defeated by the plaintiff’s pleading skills in hiding

the federal question. See id. There is no doubt but that “[t]he artful pleading

doctrine allows removal where federal law completely preempts a plaintiff's

state-law claim.” Id. In fact, we have said that the artful pleading doctrine

applies only where state law is subject to complete preemption. Terrebonne

Homecare, Inc. v. SMA Health Plan, Inc., 271 F.3d 186, 188-89 (5th Cir. 2001).

Federal question jurisdiction therefore exists where, because state law is

completely preempted, “there is, in short, no such thing as a state-law claim.”

Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 11 (2003). In contrast, under the

well-pleaded complaint rule, a “defense that relies on . . . the pre-emptive effect

of a federal statute will not provide a basis for removal.” Id. at 6 (citation

omitted) (emphasis added).
No. 07-30464

3 The district court denied the Bernhards’ motion to remand on November 28, 2005.

Our decision in In re Hot-Hed was not issued until January 30, 2007. Nevertheless, we

generally apply the law as it exists at the time of review when a controlling precedent

intervenes between the date on which a lower court ruled and the date of appellate review.

8

Because the Bernhards’ petition for damages alleges only state law claims,

the district court had federal question jurisdiction over their case only if: (1) the

state law claims necessarily raise a federal issue or (2) the state law claims are

completely preempted by federal law. 

1.

The district court found a necessary federal issue because the Bernhards

requested attorneys’ fees, which are available only under federal law. The court

found that attorneys’ fees are not available under Louisiana law unless

specifically authorized by statute or provided for by contract, but that attorneys’

fees are allowed under the EFTA. See 15 U.S.C. § 1693m(a)(3). The court

understandably relied on this court’s decision in Medina for the proposition that

a defendant can support removal by showing that a remedy the plaintiff seeks

in his or her complaint is exclusively available under federal law. See Medina,

238 F.3d at 680.

However, we have since distinguished this holding in Medina and have

determined that a requestfor attorneys’ fees, even if allowable under federal but

not state law, does not in itself present federal question jurisdiction. In the case

of In re Hot-Hed, Inc., we said that

a boiler-plate request for attorneys’ fees ‘as allowed by

law’ is insufficient to confer subject-matter jurisdiction

on the federal courts. We agree with the Ninth

Circuit’s holding in Carter v. Health Net of California,

Inc.[, 374 F.3d 830, 834 (9th Cir. 2004),] that ‘[a]

request for attorney’s fees cannot be a basis for federal

jurisdiction.’ A contrary holding would allow the

proverbial tail to wag the dog. 

477 F.3d 320, 324 (5th Cir. 2007) (second alteration in original).3
No. 07-30464

See Cracker v. McCotter, 805 F.2d 538, 542 (5th Cir. 1986). 

4 Whitney contends that Civil Code Articles 2315 and 2316 are inapplicable to the facts

of this case at state law and that Louisiana Revised Statutes § 10:4-406 applies and is

preempted because it is less protective of consumers than the EFTA. This argument may be

questionable because § 10:4-406 applies by its terms to “an item” which is defined as a written

promise or order to pay money. See La. Rev. Stat. §§ 10:4-406(d); 10:4-104(a)(9); 10:3-

9

In Hot-Hed, the plaintiff asserted claims under the Texas Business and

Commerce Code and Texas common law and sought injunctive and

compensatory relief, as well as attorneys’ fees and costs, interest, and any other

relief to which it was entitled. Id. at 322. The court held that, even if attorneys’

fees were not authorized under state law,the plaintiff’s request would not confer

federal jurisdiction. Id. at 324. 

The court distinguished Medina, noting thatthe plaintiff in Medina sought

back pay and liquidated damages under the Age Discrimination in Employment

Act, substantive relief under a specified federal statute. Id. at 325. The

question of whether the Hot-Hed plaintiff was entitled to attorneys’ fees, on the

other hand, did not “raise a ‘substantial, disputed question’ about an essential

element of a federal right, as required for an issue to present a federal question.”

Id.

In the instant case, the Bernhards’ request for “all costs of these

proceedings, including attorney’s fees”is a boiler-plate requestfor attorneys fees

that does not reference any federal law. Irrespective of whether such fees would

be available under state law, the request does not raise a necessary federal

question that would allow for original jurisdiction and therefore removal to the

district court.

2.

Whitney contends that the district court, in remanding the state claims,

erred by failing to rule consistently with its finding that the EFTA preempted

the Bernhards’ state law claims.4 Although the magistrate judge’s
No. 07-30464

103(a)(6), (9); 10:3-104(a), (b). Because we lack jurisdiction over this case, we leave to the

Louisiana courts the question of which provision of Louisiana law to apply.

10

recommendation does not clearly define the scope of any finding it made

regarding preemption, federal question jurisdiction exists on the basis of

preemption only if the EFTA completely preempts the Bernhards’ state law

claims. See Terrebonne, 271 F.3d at 188-89. 

Before the Supreme Court’s 2003 decision in Beneficial National Bank v.

Anderson, this court required a defendant to make three showings in order to

demonstrate complete preemption over otherwise purely state law claims: 

(1) the statute contains a civil enforcement provision

that creates a cause of action that both replaces and

protects the analogous area of state law; (2) there is a

specific jurisdictional grant to the federal courts for

enforcement of the right; and (3) there is clear

Congressional intent that claims brought under the

federal law be removable.

Hoskins, 343 F.3d at 775 (quoting Johnson v. Baylor Univ., 214 F.3d 630, 632

(5th Cir. 2000)) (emphasis removed). 

In Beneficial, however, the Supreme Court explained that “the proper

inquiry focuses on whether Congress intended the federal cause of action to be

exclusive rather than on whether Congress intended that the cause of action be

removable.” 539 U.S. at 9 n.5. Therefore, we must determine that Congress

intended a federal act to provide the exclusive cause of action for the claims at

issue to hold that it completely preempts state law claims. See Hoskins, 343

F.3d at 776.

In their notice of removal, the defendants argued that “any claims of the

Bernhards purportedly arising under state law conflict with federal law,

including the provisions of the EFTA and Regulation E, and are therefore

preempted.” Whitney based its opposition to the Bernhards’ motion to remand

on the Bernhards’ request for attorneys’ fees, stating that “[d]efendants here do
No. 07-30464

5 The district court’s order denying remand and Whitney’s argument are based on the

preemptive effect ofthe EFTA; we do not consider whether the Bernhards’ state law claims are

preempted--completely or otherwise--by any other federal statute.

6 The Supreme Court may review a preemption defense that has been rejected by a

state court: “[T]he absence of original jurisdiction does not mean that there is no federal forum

in which a preemption defense may be heard. If the state courts reject a claim of federal

preemption, that decision may ultimately be reviewed on appeal by this Court.” Franchise Tax

Bd., 463 U.S. at 12 n.12.

11

not rely exclusively on the preemptive effect of the EFTA but on plaintiff’s

request for damages not authorized under state law and allowable only under

federal law.” Whitney neither alleged nor demonstrated complete preemption.5

The EFTA expressly states its relation to State laws:

This subchapter does not annul, alter, or affectthe laws

of any State relating to electronic fund transfers, except

to the extent that those laws are inconsistent with the

provisions of this subchapter, and then only to the

extent of the inconsistency. A State law is not

inconsistent with this subchapter if the protection such

law affords any consumer is greater than the protection

afforded by this subchapter.

15 U.S.C. § 1693q.

The clear language of the EFTA indicates that Congress did notintend for

the Act to provide the exclusive cause of action for claims relating to

unauthorized electronic fund transfers. The Act contemplates the application

of state law that is not preempted by its provisions. It does not completely

preempt claims relating to electronic fund transfers and does not, therefore,

provide federal question jurisdiction in this case. The federal courts may not

decide in the first instance whether the EFTA provides a federal preemption

defense to the Bernhards’ state law negligence claims.6 Neither may the federal

courts decide whether the claims are viable under Louisiana law. See

Terrebonne, 271 F.3d at 189. Under the well-pleaded complaint rule, the

availability of a federal claim does not deprive the Bernhards of the opportunity
No. 07-30464

7 Nothing in our opinion today precludes Whitney from arguing in state court that

Louisiana law is preempted because it conflicts with the EFTA or other federal law. Moreover,

the EFTA provides that it does not affect inconsistent state laws “relating to electronic fund

transfers.” The plaintiffs in this case have not cited any Louisiana law specifically “relating

to electronic fund transfers,” and it appears that Louisiana has not enacted such a law. We

make no suggestion whether the cited Civil Code provisions are applicable to the facts of this

case as a matter of Louisiana law or whether the Bernhards’ claims are subject to state or

federal defenses. 

12

to plead state law claims that may ultimately have no merit. The federal courts

do not have federal question jurisdiction simply because a federal right was

available but was not asserted.7

IV.

For the foregoing reasons, we hold that the district court lacked federal

question jurisdiction over the Bernhards’ claims. Accordingly, we VACATE the

judgment of the district court and REMAND the case to the district court with

instructions that it be returned to the state court from which it was removed. 

VACATED and REMANDED with instructions.