Opinion ID: 175618
Heading Depth: 2
Heading Rank: 2

Heading: Decisions From Other Courts

Text: Although Texas cases provide greater guidance for our Erie analysis, we may likewise consider, among other sources, treatises, decisions from other jurisdictions, and the `majority rule.' SMI Owen Steel Co. v. Marsh USA, Inc., 520 F.3d 432, 437 (5th Cir.2008) (citation omitted); see also Amerisure Ins. Co. v. Navigators Ins. Co., 611 F.3d 299, 311 (5th Cir.2010). Here, we have the benefit of a number of federal cases [5] interpreting the TWCA, and we consider these cases in determining whether the Texas Supreme Court would conclude that section 406.033 imposes an obligation on Rentech Steel to pay the Teels' judgment. We begin this analysis by considering Middleton v. Texas P&L Co ., a Supreme Court decision examining the TWCA only a few years following its 1913 enactment. 249 U.S. 152, 39 S.Ct. 227, 63 L.Ed. 527 (1919). The TWCA withstood constitutional challenge in the Texas Supreme Court in 1916, [6] but with United States Supreme Court review imminent, the Texas Legislature amended the Act while the appeal was pending to allow workers to forego workers' compensation remedies and thereby retain their common-law rights of action. See Ferguson v. Hosp. Corp. Int'l, 769 F.2d 268, 271 (5th Cir. 1985). In 1919, the Supreme Court affirmed the Texas Supreme Court and held that the statute was constitutional. Middleton, 249 U.S. at 155. In describing the Act, the Court explained that the TWCA shielded employers from common-law suits, but [e]mployers who do not become subscribers are subject as before to suits for damages based on negligence. Id. (emphasis added). Negligence suits preceding the enactment of the TWCA were unquestionably suits under common law. Therefore, the Supreme Court's statement leaves little doubt that it interpreted the TWCA as not fundamentally changing the characterization of common-law negligence claims against nonsubscribers. We are also guided by those federal decisions that have considered the question whether an action against a nonsubscriber arises under common law or the TWCA. Rentech Steel argues that we should follow Pyle v. Beverly Enters.-Tex., 826 F.Supp. 206, 209 (N.D.Tex.1993), holding that negligence claims against nonsubscribers exist independently of the TWCA. [7] In that well-reasoned opinion, Judge Fitzwater considered whether the plaintiff's negligence suit against her nonsubscribing employer arose under the TWCA, such that it was not preempted by ERISA. The court held that they were not so preempted because the plaintiff's state court petition does not seek recovery pursuant to the TWCA. It clearly alleges common law claims of negligence, intentional infliction of emotional distress and breach of duty of good faith and fair dealing. These are not causes of action that are created by the TWCA; they exist independently. Moreover, the fact that the TWCA deprives employers of certain defenses to negligence claims does not mean that claims by employees against nonsubscribing employers are brought pursuant to the TWCA. See Eurine v. Wyatt Cafeterias, Inc., 1991 WL 207468 at  (N.D.Tex. Aug. 21, 1991) (Sanders, C.J.) (A cause of action does not arise under workers' compensation laws merely because the workers' compensation statute deprives the defendant of certain defenses to the cause of action.). Id. This approach, we believe, is consistent with the Texas Supreme Court's approach in Kroger v. Keng, 23 S.W.3d 347 (Tex. 2000), and with the history of the TWCA, see Nunez, 771 F.Supp. at 167-68 (When the Texas Legislature put a workers' compensation law into effect in 1917 it, for all practical purposes, abolished the right of an employee to bring a common-law action against an employer having workers' compensation insurance coverage. However, the Legislature preserved the common law right of action for the employees of an employer who elected not to carry workers' compensation insurance, and enhanced those rights by a statutory provision that prevented an employer in such an action from asserting defenses that theretofore had been available to employers.). AISLIC, however, contends that we must consider those district-court decisions holding that claims against nonsubscribers are not removable to federal court under 28 U.S.C. § 1445(c), the federal statute addressing nonremovable actions, because such claims arise under the TWCA. See Figueroa v. Healthmark Partners, 125 F.Supp.2d 209, 210 (S.D.Tex. 2000); see also Smith v. Tubal-Cain Indus., Inc., 196 F.Supp.2d 421, 423 (E.D.Tex.2001); Dean v. Tex. Steel Co., 837 F.Supp. 212, 214 (N.D.Tex. 1993). But see Eurine v. Wyatt Cafeterias, Inc., No. 3-91-0408-H, 1991 WL 207468, at  (N.D.Tex. Aug. 21, 1991) (unpublished) (holding that, for the purposes of section 1445(c), a negligence action against a nonsubscriber is a common-law claim that does not arise out of the TWCA). We find these cases to be of limited value because section 1445(c) does not require the court to determine whether the TWCA imposes an obligation on a nonsubscriber to pay a judgment to an employee injured as a result of the employer's negligence. It provides only that a civil action in any State court arising under the workmen's compensation laws of such state may not be removed to any district court of the United States. Further, even if we assume arguendo that a claim that arises under the TWCA becomes an obligation under that law, the section 1445(c) cases nevertheless remain an imperfect litmus test for how the Texas Supreme Court would resolve the case before us. This is because of the deference courts afford to the congressional intent behind the removal statute, which is not applicable here. As the district court explained in Figueroa, Section 1445(c) denotes an effort by Congress to restrict the district courts' diversity jurisdiction in order to relieve the collectively overburdened docket of the federal courts. Courts have therefore construed section 1445(c) broadly in order to further this purpose. Figueroa, 125 F. Supp 2d. at 211 (internal citations omitted). This broad construction was also apparent in Smith, where the court found that a negligence claim aro[se] under the TWCA simply because [n]egligence actions against nonsubscribing employers are expressly contemplated by Texas workers' compensation law; indeed, several common-law defenses have been eliminated by statute. Smith, 196 F.Supp.2d at 423 (citation omitted). We do not comment on whether the TWCA's mere contemplat[ion] of a cause of action provides sufficient justification to deny removal under section 1445(c), but it is no proof at all that the TWCA actually obligate[s] a nonsubscriber to compensate an employee for negligence-induced injury. Likewise, Illinois National Insurance Co. v. Hagendorf Construction Co., 337 F.Supp.2d 902 (W.D.Tex.2004), is similarly unpersuasive. In that case, the court held that a policy exclusion, similar to the one considered here, excluded coverage for an employee's negligence claim against a nonsubscriber because the claim arose under the TWCA. [8] See id. at 905. We are disinclined to follow this decision for four reasons. First, though the Texas appellate court in Kroger followed the reasoning that the federal district court would later apply in Hagendorf, the Texas Supreme Court expressly declined to adopt that reasoning, and decided the case on other grounds. Kroger v. Keng, 23 S.W.3d 347 (Tex.2000). This inspires little confidence that the court would opt to follow that decision in this instance. Second, Hagendorf's holding is grounded on Figueroa, Smith, and Dean decisions that were decided using a broad construction of the term arising under, a construction that we do not apply here. Illinois Nat'l, 337 F.Supp.2d at 905 (citing Figueroa, 125 F.Supp.2d 209; Smith, 196 F.Supp.2d 421; Dean, 837 F.Supp. 212). Third, just as in the removal cases, Hagendorf held that the exclusion applied because the negligence claims were commenced pursuant to the TWCA, but this reasoning does not hold water. The text of the exclusion does not purport to exclude claims commenced pursuant to any workers' compensation law. The language required the court to determine whether the TWCA actually imposed an obligation on the nonsubscriber to compensate an employer for injuries caused by negligence. The court did not do so. [9] Finally, we find Hagendorf unreliable because the three decisions upon which the court premised its holding Figueroa, Smith, and Dean derive their respective holdings, at least in part, from a misreading of Foust v. City Insurance Co., 704 F.Supp. 752 (W.D.Tex.1989) (Gee, J., sitting by designation). These courts interpreted Foust 's languagethat employers depart the general common-law tort system upon hiring workers regardless of whether they choose to subscribe to the workers' compensation systemas implying that the common-law claims had been extinguished. Id. at 753; see also Figueroa, 125 F.Supp.2d at 211 (quoting Foust, 704 F.Supp. at 753); Smith, 196 F.Supp.2d at 423 (same); Dean, 837 F.Supp. at 214 (same). This interpretation conflicts with Foust 's language just sentences later: depending on whether an employer subscribed to the workers' compensation system, the TWCA either admitted [the employer] to the worker's compensation system or removed its defenses and relegated it to Texas common law, shorn of [its] defenses. Foust, 704 F.Supp. at 753 (emphasis added). Accordingly, we hold that a negligence claim against a nonsubscriber is not an obligation imposed by the TWCA.