Court Opinion

ID: 2963140
Source: CourtListenerOpinion
Date Created: 2015-09-21 21:06:59.706309+00
Date Added: 2024-06-11T11:42:39.057360
License: Public Domain

USCA1 Opinion

	

          March 21, 1995                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ___________________          No.  94-1525                                   CLYDE ARMISTEAD,                                Plaintiff, Appellant,                                          v.                            C & M TRANSPORT, INC., ET AL.,                                Defendants, Appellees.                                 ____________________                                     ERRATA SHEET               The  opinion  of this  Court issued  on  March 13,  1995, is          amended as follows:               On page 9, line 9, change "chose" to "choose".

                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                 ___________________          No. 94-1525                                               CLYDE ARMISTEAD,                                Plaintiff, Appellant,                                          v.                            C & M TRANSPORT, INC., ET AL.,                                Defendants, Appellees.                                  __________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                     [Hon. Morton A. Brody, U.S. District Judge]
                                            ___________________                                 ___________________                                        Before                                Selya, Circuit Judge,
                                       _____________                           Campbell, Senior Circuit Judge,
                                     ____________________                              and Boudin, Circuit Judge.
                                          _____________                                 ___________________               Clyde Armistead on brief pro se.
               _______________               John H. Montgomery, Diane S. Lukac, Mary Elizabeth  Fougere,
               __________________  ______________  _______________________          and Bernstein, Shur, Sawyer  & Nelson on brief for  appellee, The
              _________________________________          Travelers Insurance Company.                                  __________________                                    March 9, 1995                                  __________________

                      Selya, Circuit Judge.  Defendant-appellee Travelers
                             _____________            Insurance  Company ("Travelers") removed  this action  to the            federal district court  despite the provision in  28 U.S.C.              1445(c) forbidding  removal  of  cases  arising  under  state            workers'  compensation  laws.     Plaintiff-appellant   Clyde            Armistead    unsuccessfully    resisted   the    removal   on            jurisdictional  grounds, but  overlooked the  bar of  section            1445(c).   The  district  court granted  summary judgment  in            Travelers' favor.   On appeal,  Armistead for the  first time            invokes section 1445(c).   We  hold that  the district  court            lacked   subject   matter   jurisdiction   in    this   case.            Accordingly, we vacate the judgment below and direct that the            case be remanded to state court.                                          I
                                          I                      Armistead, a citizen and resident  of Maine, worked            as  a truck driver  for C &  M Transport,  Inc. ("C &  M"), a            Maine  corporation.   He was  injured on  May 7,  1987, while            driving  a C &  M truck in  Maryland.  Appellee  Travelers, a            Connecticut corporation, was  at one  time C  & M's  workers'            compensation insurer.                        Armistead filed  a petition for benefits  under the            Maine  Workers'  Compensation  Act,  39   M.R.S.A.      1-195            (repealed),1 in  October,  1987.   The Workers'  Compensation                                
            ____________________            1.    The  legislature  retrofitted  the  Act  with  neoteric            provisions  which took effect on  January 1, 1993.   See 39-A
                                                                 ___            M.R.S.A.      101-409.   The  new  law  alters  benefits  and                                         -2-

            Commission issued a benefits award in February, 1988 (after C            &  M defaulted), but no compensation payments were made.  The            Commission's award indicates "no record of insurance," and as            for C & M, it filed for Chapter 7 protection, was adjudicated            bankrupt,  and ceased  doing  business.     According to  the            record before us, Travelers  had notified the Commission that            it  had canceled C & M's coverage for nonpayment of premiums,            effective some three weeks before the date of injury.                        In July  of 1992,  Armistead resumed his  quest for            benefits by seeking a Commission determination that Travelers            was liable on the award because it had failed to send a prior            notice of  the cancellation to  C & M,  as required  by state            law.  See 39 M.R.S.A.   23(1) (1987) (repealed); see also 39-
                  ___                                        ________            A  M.R.S.A.    403(1)  (1992).    After informal  proceedings            failed to resolve the claim, Armistead filed a  formal motion            for enforcement of the award.  Travelers denied liability and            cross-moved for  a review of  Armistead's alleged disability.            The  statute  contemplates an  evidentiary  hearing before  a            Commissioner on such motions,  subject to appellate review in                                
            ____________________            replaces  the  Workers'   Compensation  Commission  with   an            administrative  board.    See  39-A  M.R.S.A.      151,  152.
                                      ___            Transitional  provisions preserve  benefits under  the former            law  for  injuries  sustained  before January  1,  1993,  and            continue the Commission's authority over pending claims for a            limited period.   See generally Clark  v. International Paper
                              _____________ _____     ___________________            Co.,  638 A.2d  65 (Me.  1994).   In all  procedural respects
            ___            relevant here, the current law is parallel to the former law.            The transitional  provisions and other changes  do not affect            our analysis.                                           -3-

            the Commission and a  discretionary appeal to Maine's highest            court.  See 39 M.R.S A.   94-B, 98-99, 103-A, 103-B, 103-C.  
                    ___                      While  these   motions  were  pending   before  the            Commission,  Armistead also  filed a  complaint in  the state            superior court for enforcement  of the Commission's  original            award.  The complaint alleged a right  to relief by virtue of            the superior  court's equitable  power to  enforce Commission            orders  under the  Workers' Compensation  Act, 39  M.R.S.A.              103-E.  Count 1 sought  enforcement of the award against C  &            M;  count  2 sought  a  declaration  that Travelers  afforded            coverage to C  & M under the  Act on the date  of injury, and            also  sought enforcement  of the  Commission's  award against            Travelers and C & M jointly.                        Travelers  promptly removed  the action  to federal            district  court, claiming  diversity  of citizenship  between            Travelers and Armistead, and describing the action as one for            "breach of  contract."   Seven months later,  Armistead moved            for a remand  to the state court, arguing that  C & M's Maine            citizenship destroyed complete diversity between the parties.            But there was a rub;  C & M had not been served with process,            and  its very  existence was  dubious.2   The district  judge                                
            ____________________            2.  Armistead  renews here the claim  that C &  M retains its            corporate existence under Maine's  corporation laws, and is a            "necessary" party to this  suit.  The argument was  not fully            developed  below, and we  deem it waived.   See Ryan v. Royal
                                                        ___ ____    _____            Ins. Co.,  916 F.2d 731, 734  (1st Cir. 1990).   At any rate,
            ________            Armistead  still  has  not  explained his  failure  to  serve            process on C & M.                                         -4-

            dismissed the claim against  C & M and, applying  the holding            of White  v. United States Fidelity & Guar. Co., 356 F.2d 746
               _____     __________________________________            (1st  Cir. 1966),  rejected Armistead's  alternative argument            that Travelers should be deemed to have the same  citizenship            as  its  insured under  28 U.S.C.     1332(c)(1).   The court            thereafter addressed  the parties' cross-motions  for summary            judgment  and decided the merits in favor of Travelers.  This            appeal ensued.                      On appeal,  Armistead adds  for the first  time the            argument  that  the removal  violated  28  U.S.C.    1445(c).            Travelers  urges that section 1445(c) is inapplicable because            Armistead's  suit  does  not "arise  under"  Maine's workers'            compensation law, and,  alternatively, that Armistead  waived            the argument.                                          II
                                          II                      Section 1445(c) renders nonremovable suits "arising            under" the workers' compensation laws  of the state in  which            the federal court sits.  The statute reflects a congressional            concern for  the states' interest in  administering their own            workers'   compensation  schemes,  the   burdens  on  injured            claimants  of  maintaining  a  federal court  suit,  and  the            incidence of federal court  congestion.  See generally Horton
                                                     _____________ ______            v.  Liberty  Mut.   Ins.  Co.,  367  U.S.   348,  350  (1961)
                _________________________            (explaining purpose of limitation on removal); 14A Charles A.                                         -5-

            Wright  et. al, Federal Practice  & Procedure    3729 (2d ed.
                            _____________________________            Supp. 1994) (listing cases).                      Travelers  does  not  directly  assert  a  right to            remove the  proceedings pending  before  the Commission,  but            focuses solely  on the  subsequent superior court  complaint.            While the  complaint was a  separate filing, however,  it did            not  comprise   independent  litigation based  on a  separate            common  law right to  relief.   Rather, the  complaint sought            statutory compensation  under  a provision  of  the  workers'            compensation  law vesting  in  the superior  court  equitable            powers  to enforce Commission  orders and to  issue pro forma
                                                                ___ _____            decisions  enforcing  Commission  benefit  awards.3    As  an            integral part  of the administrative enforcement  scheme, the            superior  court  action  was   merely  supplementary  to  the            Commission proceeding,  and both proceedings  obviously arose            under the workers'  compensation law within the meaning of 28            U.S.C.   1445(c).   Cf. Spearman v.  Exxon Coal USA, 16  F.3d
                                ___ ________     ______________                                
            ____________________            3.    Commission orders  are enforceable only by petition  to            the superior court, which may issue "any suitable process" in            aid of Commission proceedings.  See 39 M.R.S.A.    93, 103-E.
                                            ___            The  Commission itself  has  no general  equity powers.   See
                                                                      ___            Clark  v. International Paper Co.,  638 A.2d at  66.  Benefit
            _____     _______________________            awards  and  Commission   decisions  become  enforceable   on            presentation of a certified copy to the superior court, which            "shall render a pro  forma decision in accordance therewith."            39 M.R.S.A.   103-E.  The Commission's decisions thus acquire            the same force as if rendered  by the superior court.  See 39
                                                                   ___            M.R.S.A.   103-E.  Moreover, an award may be confirmed by the            superior  court  even if  it  remains  subject to  post-order            administrative proceedings  or a pending appeal.   See Cilley
                                                               ___ ______            v. Georgia-Pac. Corp., 519 A.2d 191, 192 (Me. 1986); see also
               __________________                                ________            39 M.R.S.A.   104-A.                                           -6-

            722, 725 (7th Cir.) (holding that a claim did not arise under            a  workers' compensation law when it stated a right to relief            in tort and sought common law damages distinct from statutory            compensation scheme), cert. denied, 115 S. Ct. 377 (1994).
                                  ____________                      Removal of  the case  thus was doubly  barred, once            under section  1445(c), and  again because  the supplementary            superior court proceeding does not independently qualify as a            removable "civil  action"  under 28  U.S.C.    1441(a).   See
                                                                      ___            Barrow  v. Hunton, 99 U.S.  80, 82 (1879)  (explaining that a
            ______     ______            supplementary action so connected  with an original action as            to  form a  mere  incident  or  continuation  of  it  is  not            removable as a  separate suit);  Bank v. Turnbull  & Co.,  83
                                             ____    _______________            U.S.  (16 Wall.)  190, 193 (1873)  (same); Federal  Savings &
                                                       __________________            Loan Ins. Corp. v. Quinn, 419 F.2d 1014, 1018 (7th Cir. 1969)
            _______________    _____            (same,  but  making claim  that  federal  standards determine            independence  of action);  Overman v.  Overman, 412  F. Supp.
                                       _______     _______            411, 412  (E.D. Tenn.  1976) (same, discussing  possible Erie
                                                                     ____            concerns).  Recent cases  in which parties attempt to  remove            state supplementary proceedings are  scarce, but the  federal            bar  to entertaining  "satellite elements"  of pending  state            suits and judgments clearly  remains intact as the "sensible"            judicial  rule.   14A  Wright et  al.,  supra,    3721 (Supp.
                                                    _____            1994);  see also 1A James  Wm. Moore et  al., Moore's Federal
                    ________                              _______________            Practice    0.157[4-11] (2d ed.  Supp. 1994)  (distinguishing
            ________                                         -7-

            the principle from  the "independent" claim concept  embodied            in 28 U.S.C.   1441(c)).                                         III
                                         III                      Under 28  U.S.C.    1447(c),  a motion  challenging            subject  matter jurisdiction  may be  made at  any time,  but            objections  based on a "defect in  removal procedure" must be            made within  thirty days  of the  removal.  Travelers  argues            that  Armistead waived any  objection to the  lack of removal            jurisdiction by  failing to  move for  a  remand within  this            period.                        In Williams v.  AC Spark Plugs Div. of  Gen. Motors
                         ________     ___________________________________            Corp., 985 F.2d 783 (5th Cir. 1993) the Fifth Circuit decided
            _____            that  removal  of  a  Texas  workers'  compensation  case  in            violation  of  section  1445(c)  should  be  treated  as  the            embodiment  of  a procedural  defect  and,  thus, subject  to            section  1447(c)'s  thirty  day   waiver  rule.    The  court            interpreted  section 1447(c)  as  meaning that  any  wrongful
                                                            ___            removal  is subject to waiver  so long as  the district court            would have  had original subject matter  jurisdiction had the            plaintiff initiated the action in federal court.  Id. at 787.
                                                              ___            Since the  plaintiff in Williams  could have chosen  to bring
                                    ________            her Texas claim  as an original  diversity action, the  court            held  that   she  waived  her  objection   to  federal  court            jurisdiction  by waiting  more  than thirty  days  to seek  a            remand.  Id. at 788.
                     ___                                         -8-

                      The  Eighth  Circuit, however,  has taken  the view            that where Congress expressly restricts  removal jurisdiction            over a particular class of cases, wrongful removal should not            be treated  as a  "mere procedural irregularity"  waivable by            the  parties,  but as  a  violation  of the  court's  limited            subject matter jurisdiction.                 The fact  that [plaintiff]  could have  invoked the                 original   jurisdiction   of   the  federal   court                 initially is irrelevant. . . .  The jurisdiction of                 the lower federal courts, both original and removal                 is entirely a creature of statute. . .  . If one of                 the statutory requirements is not met, the district                 court has no jurisdiction.            Hurt v.  Dow Chem. Co., 963  F.2d 1142, 1145 (8th  Cir. 1992)
            ____     _____________            (determining  that a  failure to  object to  lack of  removal            jurisdiction under   1441(b) did not operate as a waiver).                     We need not choose between these contradictory views            because in  this case there was  neither removal jurisdiction            nor  original  diversity  jurisdiction.    Unlike  the  Texas            statute  at issue  in  Williams, Maine's  compensation scheme
                                   ________            does not permit  a de  novo state court  action for  workers'
                               __  ____            compensation benefits.   See Dorey v.  Forster Mfg. Co.,  591
                                     ___ _____     ________________            A.2d  240, 241  (Me.  1991).    By  reason  of  the  policies            expressed in Erie R.R.  Co. v. Tompkins, 304 U.S.  64 (1938),
                         ______________    ________            the state's rule barring suitors from bringing such an action            de novo  in its own courts must be applied to bar an original
            __ ____            diversity  action  in  the   forum's  federal  courts.    See
                                                                      ___            Feinstein v. Massachusetts Gen. Hosp., 643 F.2d 880, 888 (1st
            _________    ________________________                                         -9-

            Cir. 1981) (stating that Erie policies requiring adherence to
                                     ____            state door-closing statutes likewise require a  federal court            to apply  state-created administrative limitations  on rights            to recovery) (citing Woods v. Interstate Realty Co., 337 U.S.
                                 _____    _____________________            535  (1949)); Construction  Aggregates  Corp.  v.  Rivera  de
                          _______________________________      __________            Vicenty, 573 F.2d  86, 96  (1st Cir. 1978)  (holding that  if
            _______            Puerto  Rico does not give its own courts jurisdiction over a            claim collaterally attacking workers' compensation  rates for            locally  hired  workers,  a  federal  court  cannot  exercise            diversity  jurisdiction  over  the  claim);  accord  Dial  v.
                                                         ______  ____            Hartford Accident & Indem.  Co., 863 F.2d 15 (5th  Cir. 1989)
            _______________________________            (examining Mississippi  workers' compensation law);  Trapp v.
                                                                 _____            Goetz, 373 F.2d 380 (10th Cir. 1966) (examining state pension
            _____            law); Shultz v. Lion Oil Co., 106 F. Supp. 119 (D. Ark. 1952)
                  ______    ____________            (examining  Arkansas  workers'   compensation  law),   appeal
                                                                   ______            dismissed, 202 F.2d 752 (8th Cir. 1953). 
            _________                      Moreover, the limited  supplementary and  appellate            authority exercised  by  the  Maine  courts  over  Commission            proceedings    finds   no   analog   in   federal   diversity            jurisdiction.   As courts  of original  jurisdiction, federal
                                          ________            district courts sitting in diversity jurisdiction do not have            appellate  power,  nor the  right  to  exercise supplementary            equitable control  over original  proceedings  in the state's            administrative tribunals.  See  Rooker v. Fidelity Trust Co.,
                                       ___  ______    __________________            263  U.S.  413,  416  (1923) (noting  that  the  jurisdiction                                         -10-

            possessed by federal district courts is "strictly original");            Barrow  v. Hunton,  99 U.S.  80,  82 (1879)  (explaining that
            ______     ______            federal   courts  may   not   exercise  control   over  state            proceedings by entertaining  supplementary actions which  are            but incidents of  state suits);   MacKay v.  Pfeil, 827  F.2d
                                              ______     _____            540,  545  (9th  Cir.  1987)  (holding  that  a  request  for            declaratory relief  that does  not state  a new case  arising            upon new facts, but in reality seeks review and correction of            a state court judgment is not within federal court's original            jurisdiction);  cf. 1A  Moore's  Federal Practice,  supra,   
                            ___     _________________________   _____            0.167[6]   (Supp.  1994)   (where  state  courts   have  only            appellate,  quasi-administrative review  over the  claim, the            proceeding "is not  a civil action  within the cognizance  of            the original jurisdiction of the federal court").4                       We need go no  further.  In the absence  of federal            subject matter jurisdiction, we  cannot proceed to the merits            of this appeal,  and the case must  be remanded to the  state                                
            ____________________            4.   Any claim  in this  case not  covered  by the  foregoing            principles would  be subject  to dismissal under  the related            doctrine of Burford-type abstention.  The state has signalled
                        ____________            its  interest in  regulatory coherency  by  concentrating all            claims  in an exclusive  administrative process, and parallel            federal  suits could "in a very real  sense . . . disrupt the            regulatory scheme."   Allstate Ins. Co. v.  Sabbagh, 603 F.2d
                                  _________________     _______            228, 233 (1st  Cir. 1979);  see also Bath  Memorial Hosp.  v.
                                        ________ ____________________            Maine  Health Care Fin. Com.,  853 F.2d 1007,  1013 (1st Cir.
            ____________________________            1988) (holding that a  court should abstain when an  exercise            of jurisdiction might lead  to a parallel federal `regulatory            review'   mechanism,   complicating  state   administration);            Construction  Aggregates   Corp.,  573  F.2d  at   91-93,  96
            ________________________________            (applying  principles of  Burford-type abstention  to various
                                      ____________            claims relating to workers' compensation law).                                         -11-

            court.  See Halleran v. Hoffman, 966 F.2d 45, 47-48 (1st Cir.
                    ___ ________    _______            1992).                      Accordingly, the judgment is vacated and this  case
                                                   _______            is  remanded to  the district  court which  shall immediately
                ________            remand the action to the state court.  All parties shall bear            their own costs.                                         -12-