Opinion ID: 706938
Heading Depth: 3
Heading Rank: 2

Heading: Remand under 28 U.S.C. Sec. 1445(c)

Text: 12 Before us, the Patins rely solely on Sec. 1445(c) as justification for remand. They contend that all of their claims against Travelers aris[e] under Workmen's Compensation laws of Texas; as such, the removal of this case from state court was void, and the case therefore must be remanded to state court. In response, Travelers offers two theories on which it urges us to affirm the district court's denial of remand and retention of jurisdiction: (1) The Patins have waived their right to insist on remand; and (2) the Patins' common law claim that Travelers breached the duty of good faith and fair dealing, their Texas Insurance Code claim, and their claim of civil conspiracy, were all separate and independent claims from the claims for statutory workers' compensation benefits that they advanced in their IAB/state court litigation, confirming that the Patins' action cannot come within the purview of the non-removability provisions of Sec. 1445(c). We address Travelers' two theories in sequence. 13
14 If Travelers is correct that the Patins have waived their right to claim improper removal, our remand inquiry is at an end, and we need not consider non-removability under Sec. 1445(c). Travelers insists that the Patins neither cited nor relied on Sec. 1445(c) in their Motion to Remand or in their argument to the district court at the hearing on that motion. Rather, states Travelers, remand based on Sec. 1445(c) was raised for the first time in the Patins' motion for a new trial (reconsideration), thereby failing to comply with the requirement of Sec. 1447(c) that [a] motion to remand the case on the basis of any defect in removal procedure must be made within 30 days after the filing of the notice of removal under section 1446(a). 6 Travelers notes correctly that in this circuit the wrongful removal of a civil action arising under a state's workers' compensation law is a procedural defect that is waivable under Sec. 1447(c). 7 Patin no longer disputes that diversity is complete, so the instant claim clearly could have been brought originally in federal court. As such, the following rule of this circuit applies: 15 If a plaintiff initially could have filed his action in federal court, yet chose to file in state court, even if a statutory provision prohibits the defendant from removing the action and the defendant removes despite a statutory proscription against such removal, the plaintiff must object to the improper removal within thirty days after the removal, or he waives his objection. 8 16 Although Travelers correctly recites the applicable law when it asserts that the Patins' removal complaint is procedural in nature and thus waivable, the facts eschew waiver. True, Sec. 1445(c) was neither quoted nor cited by section number in the Patins' removal motion or in their argument to the district court at the hearing on that motion. Nevertheless, the substantive concept embodied in Sec. 1445(c)--non-removability of claims arising under state workmen's compensation laws--was adverted to in the motion and was discussed, however briefly, in the hearing. Moreover, in contesting removal Travelers apparently addressed briefly the issue of non-removability and referred to Sec. 1445(c) by number, thereby eliminating any question whether that ground for remand was before the district court. Thus, we reject Travelers' contention that the Patins waived their right to insist on remand to state court. 17
18 The intra-circuit conflict alluded to in the introductory portion of this opinion was created by diametrically opposed jurisprudential answers to the question whether an employee's claim against his employer's workers' compensation insurance carrier for the breach of its duty of good faith and fair dealing arises under the workers' compensation laws of the state. Federal district courts of this circuit are split on the issue. 9 19 We begin by reiterating a basic rule of this circuit that the arising under standard expressed in Sec. 1445(c) should be interpreted broadly and in a manner consistent with our interpretation of that standard under Sec. 1331, which governs federal question jurisdiction. 10 We see that admonition followed by the district court in Almanza v. Transcontinental Ins. Co., a case relied on by the Patins, at least by analogy. 11 The Almanza court reasoned that, inasmuch as proof of a viable workers' compensation claim is an essential element of a claim against the compensation insurance carrier for breach of the duty of good faith and fair dealing, the workers' compensation statute creates the cause of action and the claim arises under that law. 12 The district court reasoned further that placing good faith and fair dealing claims within the scope of Sec. 1445(c) serves the important policy function of allowing courts of the states to vindicate the policies embodied in their workers' compensation schemes. 13 20 Travelers distinguishes the situation in Jones v. Roadway Express, Inc. 14 from the circumstances in the good faith and fair dealing cases that relied--erroneously, according to Travelers--on Jones. Travelers correctly observes that the cause of action underlying the retaliatory discharge claim at issue in Jones was created not by Texas common law but by statute, with specific reference to workers' compensation claims. 15 21 Historically, workers injured in Texas could not recover more than the statutory remedies contained in the compensation statute. 16 In 1988, however, the Texas Supreme Court recognized an employee's common law cause of action in tort for the breach--by an employer's workers' compensation insurance carrier--of the duty of good faith and fair dealing in the mishandling of the employee's compensation benefits claim. 17 Nevertheless, the Texas Supreme Court in Aranda made clear, as have the state appellate courts in the cases that have followed, that good faith and fair dealing claims arise under common law, not under the compensation statute. 18 This is consistent with the fact that damages for breach of good faith and fair dealing are not measured by reference to the exclusive remedy provisions of the TWCA. 19 22 Even if we were inclined to stop at this point, though, our inquiry could not be deemed complete. For, although state law may create the cause of action and define the claim, federal law governs whenever our consideration involves construction of a removal statute. 20 Those of our federal district courts that have held that bad faith claims do not arise under the state statute have, like the state courts, relied on the independent tort nature of such claims, i.e., that the duty to deal fairly and in good faith is created by the common law, not by the compensation statute. 21 For example, in Warner v. Crum & Forster Commercial Insurance Co., 22 the most recent federal case holding that claims for breach of that duty are removable because they do not arise under the TWCA, the district court speculated that [i]f the Texas legislature were to codify the duty of good faith and fair dealing, its codification undoubtedly would be with laws pertaining to the obligations of insurers generally, not with worker's compensation laws. 23 Given the general nature of the duty and the broad spectrum of relationships to which it can apply, the Warner court concluded that good faith and fair dealing claims are only incidentally related to the workers' compensation statute and the underlying contract providing compensation benefits. 24 23 Walker v. Health Benefit Management Cost Containment, Inc., 25 is the only published post-Almanza opinion from a district court of this circuit to hold that bad faith claims are not removable. The Walker court construed Sec. 1445(c) as reflecting a strong Congressional policy to defer to the states in the area of workers' compensation. 26 In Walker the district court placed great weight on what it characterized as the almost laughable anomaly that would be created if the bad faith claim were removable while the claim for benefits, on which it depends, were not. 27 We're not laughing: Perhaps on deeper analysis the Walker court too would have perceived the situation to be more serious and less amusing; for, in actuality, these claims are quite often severed at the state level. 24 Indeed, as most states have enacted expedient and less expensive administrative procedures for adjudicating claims of injured workers, 28 we interpret the policy underlying Sec. 1445(c) somewhat differently than did the Walker court. Section 1445(c) was passed to encourage the use of just such administrative procedures and to prevent the undue burden that is placed on the worker when an action is removed to federal court, where such procedures generally do not apply. That underlying policy does not appertain, though, when the cause of action at issue is independent of the administrative procedures applicable to a state workers' compensation claim--as are claims for breach of the duty of good faith and fair dealing. 25 Given (1) the cogent analysis of the Texas Supreme Court that claims against insurers arise under the common law, not under the TWCA, (2) the foregoing analysis of the purpose of Sec. 1445(c), and (3) the burgeoning administrative treatment of workers' compensation claims in the several states, we conclude that claims for the breach of the duty of good faith and fair dealing do not arise under the state workers' compensation statutes but are, at most, related to those statutes and thus do not come within the ambit of the non-removability provision of Sec. 1445(c). 29 We therefore affirm the ruling of the district court rejecting the Patins' motion to remove and their more recent motion to reconsider. As this holding confirms the diversity jurisdiction of the district court and sustains the district court's rejection of the removal and remand challenge mounted by the Patins, we turn now to consider the next hurdle that the Patins must clear to prevail, res judicata.