Court Opinion

ID: 17680
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:06:46+00
Date Added: 2024-06-11T09:33:23.676980
License: Public Domain

Revised May 21, 1999

                 IN THE UNITED STATES COURT OF APPEALS

                            FOR THE FIFTH CIRCUIT
                               _______________

                                 No. 98-10042
                               _______________

                              ANDRE L. COPLING,

                                                 Plaintiff-Appellee,

                                    VERSUS

                       THE CONTAINER STORE, INC.,

                                                 Defendant-Appellant.

                          _________________________

              Appeal from the United States District Court
                   for the Northern District of Texas
                        _________________________

                                 May 6, 1999

Before DAVIS, SMITH, and WIENER, Circuit Judges.

JERRY E. SMITH, Circuit Judge:

     The Container Store appeals the remand of Andre Copling's

breach   of    contract    claim.    Because     Congress   has   denied   us

jurisdiction over appeals from such remands, we dismiss the appeal.

                                      I.

     Copling was an employee of The Container Store, Inc. (“the

Store”), which had established a plan that provides employees and
their dependents with medical benefits, one of which is a “flexible

benefit” that allows employees to deduct pretax dollars from their

paycheck to cover eligible medical expenses. The deducted money is

placed in a healthcare reimbursement account, from which the

employee may draw funds for eligible expenses.          In compliance with

tax regulations, any unused funds in the account at the end of the

plan year must be forfeited.

     Copling informed the Store that he planned to have some

orthodontic work performed. The Store alleges that he entered into

a flexible benefit plan providing for the Store to deduct $1,500

from his salary to fund unreimbursed medical and dental expenses;

Copling signed a form, entitled “The Container Store 1995 Flexible

Benefit     Enrollment   Form,”    authorizing     these   deductions     and

providing that any contributions not used during the plan year are

forfeited.    Copling was paid $300 from the account for orthodontic

expenses.

     Copling argues that he was not informed that any unused funds

would be forfeited.      He thought he bargained for a simple payroll

deduction to fund unreimbursed medical expenses, but the Store gave

him an ERISA1 health care reimbursement account instead.           The Store

contends that Copling forfeited the remainder of the money pursuant

to the terms of the plan.

     Copling filed a breach of contract action in state court.            The

     1
        See the Employee Retirement and Income Security Act of 1974 (“ERISA”),
29 U.S.C. §§ 1001 et seq.

                                      2
Store removed to federal court and sought summary judgment.                     The

district court granted Copling's motion to remand.

                                       II.

     The Store seeks reversal on the ground that Copling's claim is

not subject to the doctrine of conflict preemption.                     Because we

conclude that the district court remanded because it decided that

it was without subject matter jurisdiction, we have no appellate

jurisdiction and thus cannot reach the merits of the conflict

preemption issue.

                                        A.

     We must examine the basis of our appellate jurisdiction, sua

sponte if necessary.           See Castaneda v. Falcon, 166 F.3d 799, 801

(5th Cir. 1999); Jones v. Collins, 132 F.3d 1048, 1051 (5th Cir.

1998).     Likewise,       a    district       court   must   inquire    into   its

jurisdiction, even if the parties have not questioned it.                 See Free

v. Abbott Labs., Inc., 164 F.3d 270, 272 (5th Cir. 1999).                  A well-

pleaded complaint raising a federal question provides one basis for

subject matter jurisdiction.2

     2
         See   28 U.S.C. § 1331 (“The district courts shall have original
jurisdiction   of all civil actions arising under the Constitution, laws, or
treaties of    the United States.”); see also Louisville & Nashville R.R. v.
Mottley, 211 U.S. 149, 152-54 (1908) (explaining well-pleaded complaint rule).

                                           3
                                      B.

      As we recently explained in McClelland v. Gronwaldt, 155 F.3d
507 (5th Cir. 1998), there are two types of preemption under ERISA.

First, ERISA may occupy a particular field, resulting in complete

preemption under § 502(a), 29 U.S.C. § 1132(a).             See Metropolitan

Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987); McClelland,
155 F.3d at 516-17.3      This functions as an exception to the well-

pleaded complaint rule; “Congress may so completely pre-empt a

particular area that any civil complaint raising this select group

of claims is necessarily federal in character.” Metropolitan Life,
481 U.S. at 64-65.      Section 502, by providing a civil enforcement

cause of action, completely preempts any state cause of action

seeking the same relief, regardless of how artfully pled as a state

action.

      Furthermore, because such a claim presents a federal question,

it provides grounds for a district court's exercise of jurisdiction

on removal from a state court.4        If the plaintiff moves to remand,

all the defendant has to do is demonstrate a substantial federal

claim, e.g., one completely preempted by ERISA, and the court may

      3
        As in McClelland, we make no comment on the breadth of ERISA's complete
preemption under § 502(a). See McClelland, 155 F.3d at 517 n.34.
      4
        See 28 U.S.C. § 1441 (providing for exercise of removal jurisdiction
whenever district court could have exercised original jurisdiction); 29 U.S.C.
§ 1132(f) (conferring federal jurisdiction over ERISA civil enforcement claims);
see also, e.g., Anderson v. Electronic Data Sys. Corp., 11 F.3d 1311, 1315
(5th Cir. 1994) (holding that state claim that falls within § 502 civil
enforcement provision is a federal claim, creating removal jurisdiction).

                                       4
not remand.    Once the court has proper removal jurisdiction over a

federal claim, it may exercise supplemental jurisdiction over state

law claims, see 28 U.S.C. § 1367, even if it dismisses or otherwise

disposes of the federal claim or claims.

                                       C.

      At issue here, however, is conflict preemption, also known as

ordinary preemption, under § 514.             See 29 U.S.C. § 1144.        “State

law   claims    which   fall    outside       the   scope   of   ERISA's    civil

enforcement provision, § 502, even if preempted by § 514(a), are

still governed by the well-pleaded complaint rule and, therefore,

are   not   removable     under    the       complete-preemption     principles

established in Metropolitan Life.” Dukes v. U.S. Healthcare, Inc.,

57 F.3d 350, 355 (3d Cir. 1995).5

      Conflict preemption simply fails to establish federal question

jurisdiction.     Rather than transmogrifying a state cause of action

into a federal one, as occurs with complete preemption, conflict

preemption serves as a defense to a state action.6                   “When the

      5
        See also Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S.
1, 23-27 (1983) (holding that preemption under § 514(a) does not permit a
defendant to remove where the plaintiff's state claim falls without the scope of
ERISA's civil remedy provisions); McClelland, 155 F.3d at 516.
      6
        See Soley v. First Nat'l Bank of Commerce, 923 F.2d 406, 408-09 (5th Cir.
1991) (relying on distinction between complete preemption and preemption defense
and holding that defense does not confer removal jurisdiction); see also Rice v.
Panchal, 65 F.3d 637, 639-40 (7th Cir. 1995) (noting that if issue is “merely”
conflict analysis, it serves only as a defense, and the complaint is not
recharacterized as federal).

                                         5
doctrine of complete preemption does not apply, but the plaintiff's

state claim is arguably preempted under § 514(a), the district

court, being without removal jurisdiction, cannot resolve the

dispute regarding preemption.         It lacks power to do anything other

than remand to the state court where the preemption issue can be

addressed and resolved.”        Dukes, 57 F.3d at 355 (citing Franchise

Tax Bd., 463 U.S. at 27-28).7

      Hence, when a complaint raises state causes of action that are

completely preempted, the district court may exercise removal

jurisdiction; but when a complaint contains only state causes of

action that the defendant argues are merely conflict preempted, the

court must remand for want of subject matter jurisdiction.               When a

complaint raises both completely preempted claims and arguably

conflict preempted claims, the district court may exercise removal

jurisdiction over the completely preempted claims and supplemental

jurisdiction over the remaining claims.8

                                       D.

      7
        See also Soley, 923 F.2d at 409 (holding that, because remand after
rejection of complete preemption is jurisdictional, district court's comments on
substantive preemption defense are irrelevant); 28 U.S.C. § 1447(c) (stating that
“[i]f at any time before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded”). This assumes that the
court lacks an independent basis for original jurisdiction, such as diversity
under 28 U.S.C. § 1332.
      8
        See, e.g., Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236,
241 (5th Cir. 1990) (ensuring that § 502 preemption of one claim provides basis
for jurisdiction, and then addressing conflict preemption of supplemental
claims).

                                       6
       The Store contends only that ERISA conflict-preempts Copling's

claim.       It nowhere cites § 502, but does cite to § 514(a) and

relies on conflict-preemption arguments and authority.9                                Because

conflict preemption does not function as an exception to the well-

pleaded complaint rule, the district court had no federal claims

before      it     at    any    time.        It   never      had   valid   subject     matter

jurisdiction.              It    had    an    obligation,          therefore,     to   remand

immediately.            See § 1447(c).

       The court did not remand immediately; instead, it commented

that       ERISA    conflict-preempted                none   of    the   claims    and   then

remanded.10        Nonetheless, the district court did remand pursuant to

       9
         The Store insists that it has preserved an argument of complete
preemption and asks us to decide that issue for the first time on appeal. The
record does not support the Store's assertion that it has argued complete
preemption all along.    The removal notice discusses only the “relates to”
language of ordinary preemption; it does not allege complete preemption. The
first amended answer to the complaint raises the affirmative defense of ERISA
preemption pursuant to 29 U.S.C. §§ 1446 et seq. But complete preemption arises
from 29 U.S.C. § 1432, not § 1446; and it is not an affirmative defense.

      The Store's response to the remand motion again discusses the “relates to”
standard of ordinary preemption and nowhere mentions complete preemption under
§ 502; the same is true of the Store's summary judgment motion. Although we
invited the Store to address whether it had raised and preserved a complete
preemption argument, the Store has failed to cite a single place in the record
where it previously had raised the argument, but rather merely asserts that the
argument is preserved and proceeds to make it. This legerdemain of parlaying an
ordinary preemption argument into a new complete preemption argument does not
suffice.
       10
         More properly, the court should have remanded without making any further
determination; the state court can resolve whether the conflict preemption
defense applies. Because the court lacked jurisdiction, its comments on ordinary
preemption are void and can be ignored by the state court. See Bogle v. Phillips
Petroleum Co., 24 F.3d 758, 762 (5th Cir. 1994) (holding that order granting
partial nonsuit “is void and of no effect” because district court lacked subject
matter jurisdiction after deciding it had no federal ERISA claims); Soley,
923 F.2d at 409 (holding that, because remand was jurisdictional, court's
statements on substantive ERISA preemption defense would have no preclusive
                                                                            (continued...)

                                                  7
§ 1447(c) because it lacked subject matter jurisdiction. Copling's

remand motion explicitly seeks remand pursuant to § 1447(c).

Furthermore, the district court noted that it could hear the

motion, untimely filed more than thirty days after removal, only

because it was based on a lack of subject matter jurisdiction.                It

stated no other ground for the remand.

                                       E.

      Given     this   background,    we    must   decide    whether   we   have

jurisdiction      to   review   the   order   of   remand.     We   begin   with

28 U.S.C. § 1447(d), which provides, “An order remanding a case to

State court from which it was removed is not reviewable on appeal

or otherwise . . . .”       Interpreted in pari materia with § 1447(c),

this indicates that an appellate court lacks jurisdiction to review

a remand under § 1447(c); conversely, remands on other grounds may

be reviewed.11 Reviewable non-§ 1447(c) remands constitute a narrow

class of cases, meaning we will review a remand order only if the

district court “clearly and affirmatively” relies on a non-§

1447(c) basis.      See Soley, 923 F.2d at 409; see also Tillman v. CSX

Transp., Inc., 929 F.2d 1023, 1027 (5th Cir. 1991).

      10
           (...continued)
effect on state court consideration of the same issue).      We likewise make no
comment on the merits of the preemption defense.
      11
         See Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995);
Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 345-46 (1976); see also,
e.g., Angelides v. Baylor College of Med., 117 F.3d 833, 835-36 (5th Cir. 1997);
Soley, 923 F.2d at 407-08.

                                        8
      Under § 1447(d), we may not review a § 1447(c) remand, based

on a putative want of jurisdiction, even if the district court's

remand is plainly erroneous.             See Thermtron, 423 U.S. at 351;

Angelides, 117 F.3d at 836; Tillman, 929 F.2d at 1028; Soley,
923 F.2d at 408.      We refuse to review even erroneous remands, “to

prevent delay      through    protracted      litigation      of    jurisdictional

issues.”     Id.   Although the district court, however briefly and

without preclusive effect, mistakenly felt compelled to address

conflict    preemption,      it   also   properly        remanded    for   want   of

jurisdiction.       We   cannot    review     this   §    1447(c)    remand   under

§ 1447(d).12

                                         F.

      The Store seeks to avoid § 1447(d) by arguing that we can

review the merits as separable from, and collateral to, the remand.

We cannot.     In Angelides, we explained that an order is separable,

and hence appealable notwithstanding § 1447(d), if two conditions

are satisfied:      “First, it must precede the order of remand in

logic and in fact, so as to be made while the district court had

control of the case.      Second, the order sought to be separated must

be conclusive.        An order is conclusive if it will have the

      12
         Cf. Bogle, 24 F.3d at 762 (5th Cir. 1994) (dismissing appeal of remand
that discussed discretionary factors because the district court had indicated its
lack of a federal claim, and noting that “[t]he critical distinction for
determining appealability is the presence of federal subject matter jurisdiction
prior to the order of remand.”).

                                         9
preclusive effect of being functionally unreviewable in the state

court.”      Angelides, 117 F.3d at 837 (citations and quotations

omitted); see also Soley, 923 F.2d at 409-10.

        The instant order meets neither condition.             As we held in

Soley when we dismissed the same argument:

        [T]he rejection of an ERISA preemption defense does not
        'in logic and in fact' precede a remand order because,
        under the 'well-pleaded complaint' rule, a defense does
        not confer removal jurisdiction.       Instead, if the
        district court considered the preemption defense, it did
        so only because of an erroneous belief that the defense
        was relevant to the jurisdictional issue . . . . In this
        case, . . . because we interpret the remand order as
        jurisdictional, the state court will have an opportunity
        to consider the appellants' preemption defense and the
        district court's order will have no preclusive effect.

Id.13    The Store offers no ground for distinguishing Soley, and we

know of none.14    The discussion of ERISA conflict preemption is not

        13
         Cf. Mitchell v. Carlson, 896 F.2d 128, 131-34 (5th Cir. 1990) (reviewing
portion of remand order that resubstituted an individual defendant for the United
States, and thus destroyed diversity jurisdiction, because it necessarily
preceded the remand and would not be reviewed by the state court).
        14
         The Store argues that McClelland's “two-step inquiry” into complete
preemption requires finding ordinary preemption before addressing whether the
claim falls within § 502(a). It then argues that a rejection of an ordinary
preemption defense in this process constitutes a separable, appealable order.
The Store's argument eviscerates § 1447(d)'s limitation on appeals from
jurisdictional remands in ERISA preemption cases, making all rejected preemption
claims appealable whenever the court discusses ordinary preemption.

      In McClelland, we described complete preemption as a “two-prong[ed]
analysis” that requires finding the claim both (1) preempted within the meaning
of § 514 (ordinary preemption) and (2) within § 502(a)'s civil enforcement
provisions. McClelland, 155 F.3d at 517. Because a claim that falls within
§ 502(a)'s civil enforcement provisions usually, if not always, also will be
preempted by § 514(a), a district court addressing complete preemption in a
jurisdictional posture might address preemption the same way we did in
McClellandSSassume, arguendo, ordinary preemption and address whether the claim
falls within the scope of § 502(a). Cf. id. Indeed, the Supreme Court in
Metropolitan Life addressed only § 502, ignoring conflict preemption under § 514.
                                                               (continued...)

                                       10
a separable, appealable order.

     Because the district court remanded pursuant to § 1447(c), the

appeal is DISMISSED for want of jurisdiction under § 1447(d).

     14
          (...continued)
See Metropolitan Life, 481 U.S. at 63-66.

      If the court finds no preemption under § 502(a), it may remand without
commenting on the ordinary preemption defense. But when a court addresses the
two prongs sequentially, the ordinary preemption step does not become a
separable, appealable order; it remains part of the jurisdictional analysis.
When a court mistakenly feels compelled to address ordinary preemption even
though complete preemption is not argued, and yet remands for want of subject
matter jurisdiction, its error is irrelevant, and § 1447(d) denies us
jurisdiction on appeal.

                                     11
WIENER, Circuit Judge, specially concurring:

       I concur in the foregoing opinion, but I write separately

(1) to emphasize the narrowness of our holding today, (2) to

encourage the state court to which this case is remanded to

recognize that counsel for Copling so grossly mischaracterized his

client’s cause of action as a state breach of contract claim as to

approach frivolousness; the most cursory of looks at the legal

document executed by Copling, a competent major, confirms beyond

cavil that he voluntarily signed an enrollment document in a dental

plan    that   is   governed   exclusively   by   ERISA,   (3)   to   furnish

additional guidance to the courts and the litigants regarding the

interplay of ERISA preemption and the federal removal statute, and

(4) to note the importance of carefully pleading the appropriate

type of preemption —— conflict or complete —— in cases such as

this.

       First, in concurring in the foregoing panel opinion, I start

with the observation that we are reaffirming the well-established

principle that 28 U.S.C. § 1447(d) precludes absolutely our review

of a district court’s order that, pursuant to § 1447(c), remands a

case to state court for lack of subject matter jurisdiction.              As

the panel opinion correctly notes, not only is there no appellate

jurisdiction to review such a remand, but a district court that

concludes it lacks jurisdiction necessarily cannot adjudicate on

the merits any issue of ERISA conflict preemption.                And, as I
observe below, conflict preemption is the only kind of preemption

that the parties have placed before the district court in this

case.

     Second, I acknowledge the important corollary that, when an

action is timely removed under § 1441(a), the district court to

which it has been removed does have jurisdiction to decide whether

a claim is completely preempted by ERISA, thereby making remand

improper.     Importantly, in considering complete preemption, the

district court is not —— I repeat, not —— bound by a plaintiff’s

self-serving characterization of his claim; on the contrary, the

court can determine for itself whether in actuality the claim
                                                                        15
asserted arises under an employee benefit plan covered by ERISA.

I cannot determine with any degree of certainty whether the able

trial     judge   in   this   case   simply   accepted   the   plaintiff’s

characterization of his claim as breach of contract under state

law, in a mistaken belief that the court was somehow bound under

the well-pleaded complaint doctrine (which it was not), or if the

court just failed to consider and discern the true ERISA nature of

the plaintiff’s complaint.           I am satisfied, however, that the

district court was not bound to accept unquestioningly Copling’s

allegation that he entered into a contract with his employer

separate and apart from the very ERISA plan in which he enrolled,

     15
        See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66
(1997); Hansen v. Continental Ins. Co., 940 F.2d 971, 979 (5th Cir.
1991).

                                      13
expressly and in writing.       The court quite properly could have

considered whether Copling signed an election to have payroll

deductions used to fund his participation in the subject ERISA-

covered medical and dental plan (action that the limited record in

this case clearly confirms that he took), and could then have

treated the claim —— as none other than Copling himself elsewhere

characterized it —— as one for “misrepresentation of the terms of

the Plan,” undeniably a claim exclusively grist for the ERISA mill.

The saving grace of this misstep is that our colleague on the state

bench to which this case is remanded will have ample opportunity to

correct it.

     Finally, I would urge the district courts of this Circuit to

remain mindful of the important burden they bear as a result of the

interaction of § 1447 and ERISA preemption: As § 1447(d) does not

permit appellate review of a remand order based on a conclusion

that no complete preemption exists, it is incumbent on the district

courts,   when   considering   remand   motions,   to   decide   complete

preemption issues with the utmost of care, and —— importantly —— to

do so without addressing any conflict preemption issue that might

remain as an affirmative defense to be resolved subsequently,

regardless of whether the case is remanded to state court or

retained in federal court.      In like manner, lawyers representing

defendants who are relying on ERISA preemption should remain ever

mindful that a federal district court cannot decide a question of

complete preemption unless it is asked to do so by a party —— the

                                   14
court cannot “lawyer” the case on its own.     As, alone, conflict

preemption will not sustain removal, it is the responsibility of

counsel for a defendant who seeks to remain in federal court by

meeting its burden of justifying remand, to articulate clearly and

with specificity —— and to establish —— a viable argument for

complete preemption.    Even though a complete preemption issue

clearly lurks in the record of this case, it was not presented to

the district court. Thus, that court’s order of remand resolves no

preemption issue of any kind.     Unless I miss my bet, however,

conflict preemption will be presented lucidly to the state court on

remand, where our learned state colleagues will, I am confident,

address these matters and decide them correctly.

                                15