Court Opinion

ID: 46458
Source: CourtListenerOpinion
Date Created: 2010-04-25 22:58:54+00
Date Added: 2024-06-11T17:17:39.657797
License: Public Domain

United States Court of Appeals
                                                                    Fifth Circuit
                                                                 F I L E D
               IN THE UNITED STATES COURT OF APPEALS             October 30, 2006
                       FOR THE FIFTH CIRCUIT
                                                             Charles R. Fulbruge III
                      ))))))))))))))))))))))))))                     Clerk

                           No. 05-50938
                         Summary Calendar

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DANIEL ABRAHAM LORENZ,

                Plaintiff–Appellant,

     v.

TEXAS WORKFORCE COMMISSION; WAL-MART ASSOCIATES, INC.,

                Defendants–Appellees.

           Appeal from the United States District Court
          for the Western District of Texas, San Antonio
                         No. 5:04-CV-0806

Before DEMOSS, STEWART, and PRADO, Circuit Judges.

PER CURIAM:*

     Daniel Lorenz appeals the district court’s order dismissing

his wrongful discharge claim against Wal-Mart Associates, Inc.

and remanding his unemployment benefits claim against the Texas

Workforce Commission to Texas state court.         Because the district

court lacked subject matter jurisdiction over this case, we

VACATE the order of the district court and REMAND this case with

     *
       Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
instructions that it be remanded to the state court from which it

was removed.

                        I. FACTUAL BACKGROUND

     Plaintiff-Appellant Daniel Lorenz (“Lorenz”), proceeding pro

se, was employed by Defendant-Appellee Wal-Mart Associates, Inc.

(“Wal-Mart”).1   According to Lorenz, he reported several public

health infractions committed by Wal-Mart employees to Wal-Mart

management.    Lorenz also wore a crucifix, a shirt with a clerical

collar, and a kaffiyeh while at work.    He claims he was counseled

by Wal-Mart to stop wearing his religious attire because

customers had complained.    Wal-Mart terminated Lorenz’s

employment on March 1, 2004.

     Lorenz then requested unemployment benefits from the Texas

Workforce Commission (“TWC”), also a Defendant-Appellee in this

case.    The TWC denied his claim, and has upheld that decision

through several levels of administrative appeal.

                       II. PROCEDURAL HISTORY

     Lorenz brought suit against Wal-Mart and the TWC in Texas

state court on August 2, 2004.    He labeled his claim against Wal-

Mart as “Wrongful Discharge” and his claim against the TWC as

“Negligent Misrepresentation.”    The substance of his petition

indicates that he believed Wal-Mart singled him out for religious

     1
        Wal-Mart states that its correct name is Wal-Mart Stores,
Inc. and that Lorenz has incorrectly identified it as Wal-Mart
Associates, Inc.

                                  2
discrimination based on his attire and changed his wages in

retaliation for his reports of public health violations.     He also

alleges that Wal-Mart ultimately terminated him because of his

religious attire.   His claim against the TWC is essentially a

request for judicial review of the TWC’s decision to deny him

unemployment benefits.   It is unclear if he is also bringing a

separate tort of negligent misrepresentation.

     The TWC answered in state court and moved to sever Lorenz’s

claim for unemployment benefits from his wrongful discharge

claim.   Wal-Mart then removed the case, with the TWC’s consent,

to the Western District of Texas on the basis of federal question

jurisdiction and diversity jurisdiction.   Once in federal court,

Wal-Mart filed a motion to dismiss on the ground that Lorenz had

not exhausted his administrative remedies with respect to his

religious discrimination claim.   Wal-Mart also filed a motion to

sever the wrongful discharge claim from Lorenz’s appeal of the

TWC’s decision.   The TWC filed a motion to remand Lorenz’s appeal

regarding unemployment benefits to state court on the ground that

sovereign immunity prevented Lorenz from proceeding against the

TWC in federal court.

     The case was referred to a magistrate judge for all pretrial

matters.   On May 5, 2005, the magistrate judge issued her

Memorandum and Recommendation, in which she recommended that Wal-

Mart’s motion to dismiss be granted, Wal-Mart’s motion to sever

be denied as moot, and the TWC’s motion to remand be granted.

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Lorenz filed objections; however, on May 24, 2005, the district

court adopted the magistrate judge’s recommendations, dismissed

the wrongful discharge claim against Wal-Mart, and remanded

Lorenz’s claim against the TWC to Texas state court.     Lorenz now

appeals this order.

                            III. DISCUSSION

     Before reaching the merits of Lorenz’s appeal, the court

must first determine if this court and the district court have

subject matter jurisdiction over this case.     See Steel Co. v.

Citizens for a Better Env’t, 523 U.S. 83, 94 (1998) (stating that

on appeal, “the first and fundamental question is that of

jurisdiction”).     Parties cannot waive the want of subject matter

jurisdiction.     Hospitality House, Inc. v. Gilbert, 298 F.3d 424,

429 (5th Cir. 2002); see also Stockman v. Fed. Election Comm’n,

138 F.3d 144, 151 (5th Cir. 1998) (noting that without

jurisdiction, federal courts lack the power to adjudicate

claims).   Thus, even if not suggested by the parties, the court

has the duty to ensure that it has jurisdiction.     See Steel Co.,

523 U.S. at 94; see also Ruhrgas AG v. Marathon Oil Co., 526 U.S.

574, 583 (1999) (stating that “subject-matter delineations must

be policed by the courts on their own initiative”).

     This case is currently in federal court because Wal-Mart

removed it with the TWC’s consent.     Removal is proper in any

civil action “of which the district courts of the United States

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have original jurisdiction . . . .”    28 U.S.C. § 1441(a) (2000).

The party removing the case bears the burden of establishing

federal subject matter jurisdiction.    Boone v. Citigroup, Inc.,

416 F.3d 382, 388 (5th Cir. 2005).    Doubts about whether removal

jurisdiction is proper should be resolved against federal

jurisdiction.   Acuna v. Brown & Root, Inc., 200 F.3d 335, 339

(5th Cir. 2000).   Thus, if at any time before final judgment “it

appears that the [federal] district court lacks subject matter

jurisdiction, the case shall be remanded.”    28 U.S.C. § 1447(c).

     In its notice of removal, Wal-Mart sets forth two grounds

for federal jurisdiction.    The first is federal question

jurisdiction, in which Wal-Mart asserts that Lorenz’s wrongful

discharge claim is actually a claim of religious discrimination

under Title VII of the Civil Rights Act of 1964, 42 U.S.C.

§ 2000e-2.   The second is diversity jurisdiction, which Wal-Mart

couples with the assertion that Lorenz improperly joined the TWC

to prevent removal.    We will examine each in turn to determine

whether they provide a basis for the exercise of federal subject

matter jurisdiction.

A.   Federal Question Jurisdiction

     Wal-Mart first asserts that Lorenz’s wrongful discharge

claim arises under the laws of the United States, which would

create federal question jurisdiction under 28 U.S.C. § 1331

(giving district courts original jurisdiction over “all civil

actions arising under the Constitution, laws, or treaties of the

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United States”).    To reach this conclusion, Wal-Mart

characterizes Lorenz’s wrongful discharge claim as a claim for

religious discrimination under Title VII.    On appeal, however,

Lorenz repeatedly asserts that he is not bringing a Title VII

claim.

       The presence or absence of federal question jurisdiction is

governed by the well-pleaded complaint rule, which states that

federal jurisdiction exists only when a federal question is

presented on the face of the plaintiff’s properly pleaded

complaint.    Caterpillar, Inc. v. Williams, 482 U.S. 386, 392

(1987); Hoskins v. Bekins Van Lines, 343 F.3d 769, 772 (5th Cir.

2003).    Thus, the plaintiff is made the master of his claim, and

he may avoid federal jurisdiction by exclusive reliance on state

law.    Caterpillar, 482 U.S. at 392; see also Medina v. Ramsey

Steel Co., 238 F.3d 674, 680 (5th Cir. 2001).    Here, it is

unclear on what law Lorenz does rely for his wrongful discharge

claim, as he does not reference any law in his petition.    His

petition does claim that he was subjected to the infliction of an

unreasonable hardship, retaliated against because of his report

of public health violations, and terminated because of his

religious attire.    Thus, although Lorenz does not clearly state a

specific cause of action, it is clear that his petition makes no

mention of Title VII as the source of his claim.

       In deciding Wal-Mart’s motion to dismiss, the magistrate

judge recognized that Lorenz denied bringing a religious

                                  6
discrimination claim, but the magistrate judge found that,

regardless of what Lorenz argued, his petition actually stated a

claim for religious discrimination.   However, assuming Lorenz’s

claim is one for religious discrimination, it is possible to

bring such a claim under Texas state law.   Indeed, in its notice

of removal, Wal-Mart concedes that Lorenz does not state whether

he is bringing his claim under Title VII or the Texas anti-

discrimination statute, TEX. LABOR CODE ANN. § 21.051 (Vernon 2006),

as both prohibit religious discrimination by employers.

     Thus, we are left with a petition that is ambiguous as to

what cause of action Lorenz is bringing and on what law he bases

his claim.   It is possible to construe his pleadings as stating a

federal claim, but it is equally possible that he is bringing a

claim solely under state law.   We have held that ambiguities are

construed against removal because the removal statute is strictly

construed in favor of remand.   Manguno v. Prudential Prop. & Cas.

Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); see also Willy v.

Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988).    Therefore,

we must construe the ambiguities in Lorenz’s petition against

removal.   When we do so, we are left with no allegations on which

to base federal question jurisdiction and must turn to whether

federal subject matter jurisdiction can be sustained on some

other ground.

B.   Diversity Jurisdiction

     The other ground for subject matter jurisdiction asserted by

                                 7
Wal-Mart in its removal papers is diversity jurisdiction pursuant

to 28 U.S.C. § 1332(a).    Wal-Mart, a citizen of Delaware and

Arkansas, claims that it is diverse from Lorenz, a Texas citizen,

and that Lorenz improperly joined the TWC, also a Texas citizen,

in order to defeat diversity jurisdiction.    In making this

argument, Wal-Mart reads Lorenz’s petition as solely making a

tort claim of negligent misrepresentation against the TWC and not

as appealing a claim for unemployment benefits.    Thus, Wal-Mart

argues that because a negligent misrepresentation claim cannot

lie against the TWC, the TWC is improperly joined and should not

be considered for purposes of diversity jurisdiction.    The court,

therefore, turns to the improper joinder analysis.

       We have stated that there are two ways to establish improper

joinder: (1) actual fraud in the pleading of jurisdictional

facts; and (2) the inability of the plaintiff to establish a

cause of action against the non-diverse party in state court.

Guillory v. PPG Indus., Inc., 434 F.3d 303, 308 (5th Cir. 2005);

McDonal v. Abbott Labs., 408 F.3d 177, 183 (5th Cir. 2005).

Actual fraud is not at issue in this case; therefore, the court

must determine whether Lorenz can establish a cause of action

against the TWC.

       The burden of demonstrating improper joinder is a heavy one

and is placed on the party seeking removal.    McDonal, 408 F.3d at

183.    To meet it, a defendant must show that there is no

reasonable basis to predict that the plaintiff might be able to

                                  8
recover against the in-state defendant.       Smallwood v. Ill. Cent.

R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc).       In

considering whether the plaintiff may recover, we need not

determine whether the plaintiff will actually, or even probably,

prevail on the merits, but look only for a possibility that he

may do so.   Guillory, 434 F.3d at 308-09.      We also evaluate the

factual allegations in the light most favorable to the plaintiff

and resolve all ambiguities in controlling state law in the

plaintiff’s favor.   Id. at 308; see Gray ex rel. Rudd v. Beverly

Enters.-Miss., Inc., 390 F.3d 400, 405 (5th Cir. 2004).

     As noted above, Wal-Mart focuses its improper joinder

argument on the negligent misrepresentation label that Lorenz

gives his claim against the TWC.       Review of Lorenz’s petition

reveals, however, that Lorenz is appealing the TWC’s decision to

deny him unemployment benefits.    See Johnson v. Atkins, 999 F.2d

99, 100 (5th Cir. 1993) (per curiam) (stating that courts are to

liberally construe pro se complaints).       Lorenz describes the

appeal process he has followed and specifically asks the court to

“judicially review” the TWC’s decision.       Although not making any

ruling as to the propriety of Lorenz’s appeal, the court does

note that judicial review of TWC decisions is permissible

pursuant to TEXAS LABOR CODE § 212.201.    Further, the TWC has

treated Lorenz’s lawsuit as an appeal of its unemployment

benefits decision.

     Wal-Mart bore the burden of demonstrating improper joinder

                                   9
by showing there was no reasonable basis to predict that Lorenz

might recover against the TWC.   See McDonal, 408 F.3d at 183.

Because it is possible for Lorenz to prevail against the TWC,

Wal-Mart has failed to meet its burden.     Therefore, the TWC has

not been improperly joined, and diversity jurisdiction does not

provide this court or the district court with federal subject

matter jurisdiction.   Because there is no federal question

jurisdiction nor is there diversity jurisdiction, there can be no

federal subject matter jurisdiction and this case must be

remanded to state court.

                           IV. CONCLUSION

     Because the district court lacked subject matter

jurisdiction over Lorenz’s claims, we VACATE the orders of the

district court and REMAND this case to the district court with

instructions that it be remanded to the state court from which it

was removed.

     VACATED and REMANDED.

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