Opinion
NO. C01-00734TEH
April 16, 2001
ORDER
This matter comes before the Court on Plaintiffs Motion for Remand. After careful consideration of the written and oral argument by counsel, the Court finds the Motion for Remand is HEREBY GRANTED. For the reasons stated herein, the Court finds that adjudication of Plaintiffs state law claims does not require interpretation of a collective bargaining agreement, and therefore, Plaintiffs claims are not preempted by § 301 of the Labor Management Relations Act, 29 U.S.C. § 185.
FACTUAL BACKGROUND
Plaintiffs Arme MacQue-Garcia and Walter Page bring this action on behalf of themselves, others similarly situated, and the general public against Catholic Health Care West and twenty other operators of nursing facilities. Plaintiffs allege that Defendants refused to pay "wage pass-through" ("WPT") funds to Plaintiffs as required by law. See Cal. Welf. Inst. Code § 14110.6. WPT funds are intended to increase the amount of wages and/or benefits received by employees providing direct care in nursing facilities which receive Medi-Cal reimbursements. The California Department of Health Services is required to increase the Medi-Cal reimbursement for nursing facilities solely to provide funds for salary, wage, and benefit increases for direct care staff. The amount to be passed through by each facility is the per diem amount received by the facility (pursuant to subdivision (e)) times the facility's number of Medi-Cal patient days. See Cal. Welf. Inst. § l4110.6(e).
Cal. Weif Inst. § 14110.6(e) provides in pertinent part: "The department shall, commencing August 1, 1999, increase the Medi-Cal reimbursement for level A and level B nursing facilities solely to provide funds for salaries, wages, and benefits increases for direct care staff. For the purposes of this subdivision, "direct care staff' means registered nurses, licensed vocational nurses, and nurse assistants, who provide direct patient care. The amount of funds to be provided to each level A and level B facility pursuant to this subdivision shall be calculated on a per patient day basis, and shall be added to the per diem rate paid to each facility. The amount of funds provided under this subdivision to each nursing facility peer group shall be published in a Medi-Cal provider bulletin. Level A and level B facilities shall compensate their registered nurses, licensed vocational nurses, and nurse assistants that portion of the rate increase provided under this subdivision in the form of salaries, wages, and benefits increases for their direct care staff The total amount to be passed through by each facility shall be the per diem amount received by the facility pursuant to this subdivision times the facility's number of Medi-Cal patient days.
Plaintiffs allege that Defendants received, but refused to pay, monies from the State of California that were required to be paid as wages or benefits to employees pursuant to the wage pass-through legislation. Plaintiffs assert seven causes of action against Defendants alleging violations of California law, including unfair and unlawful business practices, Cal. Bus. Prof. Code § 1720; violation of the wage pass-through provision, Cal. Welf. Inst. Code § 14110.6; violation of payment of wages, Cal. Lab. Code § 204; violation of overtime pay, Cal. Lab. Code § 204.3; violation of secret payment of lower wages, Cal. Lab. Code § 223; violation of itemized wage statements, Cal. Lab. Code § 226; and a third party beneficiaiy action.
The violation of Cal. Bus. Prof Code § 17200 is based upon numerous the predicate acts, including violation of Cal. Welf Inst. Code § 14110, Cal. Lab. Code §§ 204, 204.3, 223, 226, 510, 1174, 1174.5, Industrial Welfare Commission Order No. 4-98, and Cal. Code of Regs. Title 8 § 11040.
Plaintiffs filed this lawsuit in the Superior Court for the County of Alameda on December 7, 2000. Plaintiffs filed a First Amended Complaint on December 27, 2000. On January 19, 2001, Defendants raised the issue of improper venue since defendant Catholic Health Care West and its entities did not exist in Alameda County. On Januaiy 20, 2001, the parties agreed by stipulation to transfer the action to San Francisco County Superior Court, with costs, but not attorney's fees, to be paid by Plaintiff. Defendants filed the Stipulation in Alameda County Superior Court on February 15, 2001. An order of transfer was signed by Alameda County Superior Court Judge Ronald M. Sabraw on February 26, 2001.
On February 16, 2001, defendant Bruceville Terrace filed a Notice of Removal on the grounds that each cause of action concerns allocation and distribution of wage pass-through funds to union-represented nurses, vocational nurses, and nursing assistants. Defendant Bruceville Terrace asserts that such wages are expressly governed by a collective bargaining agreement, and therefore, Plaintiffs' claims are completely preempted by § 301 of the Labor Management Relations Act ("LMRA"). In support of its removal action, Bruceville Terrace referred to its June 8, 2000 agreement with Service Employees International Union ("SEIU") Local 250 concerning the distribution of pass-though wages. (See Raisner Decl., Ex. D.) Upon learning of this agreement, Plaintiffs voluntarily dismissed Defendant Bruceville Terrace from this action. Plaintiffs now claim that the complete preemption doctrine does not apply. In the alternative, Plaintiffs argue that Defendants waived their right to removal when they stipulated to a change of venue transferring the action to San Francisco County Superior Court. Finally, Plaintiffs argue that they do not have standing in federal court under Article III to bring this action on behalf of the general public.
LEGAL STANDARD
A suit filed in state court may be removed to federal court if the federal court would have had original subject matter jurisdiction over that suit. 28 U.S.C. § 1441(a); Snow v. Ford Motor Co., 561 F.2d 787, 789 (9th Cir. 1977). A motion to remand is the proper procedure for challenging removal. 28 U.S.C. § 1447 (c). The issue presented is whether the case was properly removed to federal court in the first instance under 28 U.S.C. § 1441. The burden of establishing federal jurisdiction is on the party seeking removal, and the removal statute is strictly construed against removal jurisdiction. Emrich v. Touche Ross Co., 846 F.2d 1190, 1195 (9th Cir. 1988) (quotations and citations omitted). The existence of federal jurisdiction on removal must be determined on the face of the plaintiffs complaint. See Louisville Nashville R.R. v. Mottley, 211 U.S. 149 (1908).
DISCUSSION
I. Motion for Remand
A. Preemption by LMRA § 301
Federal jurisdiction exists only when a federal question is presented on the face of the plaintiffs properly pleaded complaint. See Caterpillar. Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). This "well-pleaded complaint rule" allows a plaintiff to avoid federal jurisdiction by relying exclusively on state law; that is, a plaintiff is master of his complaint. Id.
The "complete preemption" doctrine is a corollary to the well-pleaded complaint rule. The preemptive force of some federal statutes is so strong that they "completely preempt" an area of state law. See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). In such instances, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law. See Franchise Tax Bd. of State of Cal. v. Construction Laborers Vacation Trust for is Southern California, 463 U.S. 1, 24, 103 S.Ct. 2841 (1983). The "complete preemption" exception to the well-pleaded complaint rule is applied primarily under § 301 of the Labor Management Relations Act of 1947 ("LMRA").
Section 301(a) provides:
Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties. 29 U.S.C. § 185.
To determine if the state law claims in the present case are preempted by § 301 of the LMRA, the relevant inquny is whether resolution of the claims requires the Court to construe a provision of a collective bargaining agreement ("CBA"). The Supreme Court held that "an application of the state law is preempted by § 301 of the Labor Management Relations Act of 1947 only if such application requires the interpretation of a collective bargaining agreement." Lingle v. Norge Div. of Magic Chef, 486 U.S. 399, 413, 108 S.Ct. 1877, 1885 (1988); Jimeno v. Mobil Oil Corp. 66 F.3d 1514, 1523 (9th Cir. 1995). In other words, "[w]hen a state-law claim is substantially dependent on analysis of a collective bargaining agreement, a plaintiff may not evade the preemptive force of § 301 of the LMRA by casting the suit as a state-law claim." International Brotherhood of Electrical Workers v. Hechler 481 U.S. 851, 859, 107 S.Ct. 2161, 2167, fn. 3 (1987); Ahis-Chalmers v. Lueck 471 U.S. 202, 220, 105 S.Ct. 1904, 1915-1916 (1985). Merely looking at the CBA is not enough; preemption results only if resolution of the state law claim requires the court to interpret the CBA. Milne Employees Ass'n v. Sun Carriers. Inc., 960 F.2d 1401, 1409 (9th Cir. 1991).
Here, Plaintiffs allege that Defendants failed to pay wages as required by California law. See Cal. Welf. Inst. Code § 14110.6(e). Unless interpreting or applying terms from a labor agreement, state enforcement of a wage payment act is not preempted by the LMRA. See Lingle, 486 U.S. at 413, n. 12 (determining that state claims are not necessarily preempted even if consulting the agreement is necessary to determine wage rates in order to compute damages). Plaintiffs argue that interpretation of a CBA is not required since the money must be paid pursuant to state law regardless of the facility's collective bargaining status.
Plaintiffs rely primarily upon Balcorta v. Twentieth Century Fox Films Corp., 208 F.3d 1102 (2000). In Balcorta, the Ninth Circuit held that § 301 of the LMRA did not completely preempt a wage claim by a temporary worker against a film studio under subsection 201.5 of the California Labor Code, which requires payment of an employee within 24-hours after discharge. The court stressed that "the term "interpret' is defined narrowly-it means something more than to `consider,' `refer to,' or `apply.'" Id. at 1108. The court found that interpretation of a collective bargaining agreement was not required to determine whether unpaid wages were tendered within the statutoly time period. Id. at 1110.
Defendants argue that unlike in Balcorta, here, there is complete preemption because Plaintiffs' claims involve a dispute over base wage rates, overtime rates and the terms of conditions of overtime payment, which are covered by the collective bargaining agreements of the nursing staff. Defendants contend that the Court cannot examine Plaintiffs' claims that the established wage rates, overtime rates, and time-off provided in exchange of overtime accruals were improper without examining the actual rates that were set in collective bargaining and whether those collectively bargained rates included pass-through amounts in whole or in part.
Defendants rely primarily upon Firestone v. Southern California Gas Co., 219 F.3d 1063 (2000). In Firestone, the plaintiffs' unions and the employer agreed to a compensation arrangement, yet the method of calculating compensation for overtime hours was disputed by the parties. The Ninth Circuit found that to determine whether there were overtime violations required interpretation of the contractual wage rates in the CBA. "To resolve that dispute, it would be necessaiy to apply California law to determine the overtime rights and obligations of the parties to the agreement. The claim is not "independent" of the collective bargaining agreement under federal preemption law." Firestone at 1066, citing Lingle, 486 U.S. at 407, 108 S.Ct. 1877. Defendants contend that here, like Firestone, Plaintiffs' wage rate claims require interpreting the rates and related provisions of the contract and so the LMRA preempts the claims.
Defendant have failed to meet their burden of establishing that the state law claims require an interpretation of a CBA. Defendants provided the nursing staff CBAs in support of their brief, yet do not point to any relevant terms in the various CBAs that might be interpreted. Moreover, Defendants do not point to any provisions of the relevant CBAs which are uncertain or ambiguous. See Miller v. ATT Network Systems, 850 F.2d 543, 548 n. 2 (9th Cir. 1988) ("If a CBA contains no relevant terms that require interpretation, then no danger of inconsistent interpretation arises."). And importantly, some of the Defendants are not governed by any CBA indicating the claims are independent of collective bargaining under federal preemption law.
Defendants state that about a third (7 of 20) of the defendant nursing facilities have nursing staff covered by a collective bargaining agreement.
In this case, like Balcorta, the "[defendant] provides no argument to support its bare assertion that a court must interpret those [CBA] provisions" in its analysis. Balcorta, 208 F.3d at 1109. Defendants suggest that application of the law requires determining if Defendants improperly exchanged wage rates, overtime rates, and time-off in exchange of overtime accruals. If there are provisions controlling this exchange in the CBA, Defendants plainly fail to demonstrate where.
Instead, Defendants point to language in the First Amended Complaint that refers to wages and overtime pay and suggest that as a result the Court will be required to construe the terms of the bargaining agreement. This case undeniably involves a dispute over the payment of wages, yet eveiy wage dispute is not necessarily preempted by federal law. States maintain the ability to enforce their own wage legislation. See Balcorta, 208 F.3d 1102. Here, the wage legislation states clearly that money from the California Department of Health Services must pass directly to nursing staff in the form of wages or benefits by a calculus provided in the statute. See Cal. Welf. Inst. Code § l4110.6(e). This legislation confers a non-negotiable state law right on employees to receive state funds as an increase in wages regardless of any CBA.
Simply stated, to determine if the wage pass-through statute was violatedmdashithat is, if Defendants improperly refused to pass-through funds-does not require interpretation of the CBAs. Because application of the state claims are not substantially dependent on analysis of a collective bargaining agreement, the Court finds there is no complete preemption and that removal was improper.
B. Medicare Preemption
Defendants' argument that the state claims are preempted by Medicare law is without merit. In Congress of California Seniors v. Catholic Healtheare West, 87 Cal.App.4th 491, 104 Cal.Rptr.2d 655, (Cal.Ct.App. 2001) the court determined that "federal law governing [Medicare] provider cost reporting and reimbursement so thoroughly occupies the field with its pervasive and complex regulatory system as to make reasonable the inference that Congress left no room for the states to supplement it." Id. at 668. In that case the court said, "In short, our view is that we ought to abstain with regard to the Medi-Cal claims because the Medicare claims are preempted." Id. 670 n. 14. Here, there are no Medicare claims to adjudicate, and thus no basis for abstention. Moreover, the Court agrees with Plaintiffs that while the state of California may not regulate Medicare cost reporting and reimbursement, the state may regulate the institutions that receive Medicare funds. Thus, removal on this basis was improper as well.
C. Lack of Standing under Cal. Bus. Prof. Code § 17200 and Stipulation
Because the state claims are not completely preempted by § 301 of the LMRA or federal Medicare laws, we need not address Plaintiffs alternative arguments that Plaintiffs lack standing in federal court under Cal. Bus. Prof. Code § 17200 and that Defendants' waived the right to remove by seeking relief in the state court.
D. Attorneys' Fees
"An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447 (c). Neither a showing of "bad faith" nor a lack of "substantial justification" is necessaiy for the court to award fees and costs under Section 1447(c). See Moore v. Permanente Medical Group. Inc., 981 F.2d 443, 447 (9th Cir. 1992). In the Ninth Circuit, an award of attorneys' fees for wrongful removal is permitted even where defendants' removal was "fairly supportable," but wrong as a matter of law. See Balcorta v. Twentieth Century-Fox Film Corp., 208 F.3d 1102, 1106 n. 6 (9th Cir. 2000) (upholding district court's award of attorneys' fees to plaintiff following remand order).
Although the Court finds that the case was improperly removed from state court it declines to exercise its discretion to award attorneys' fees and costs. Even though a district court can award fees and costs in cases where the defendant's removal was "fairly supportable," the Court does not believe that awarding fees and costs in this case is necessary to further the goal of deterring improper removal. Defendants' removal, although legally incorrect, does not appear to have been taken in bad faith, or for the purpose of harassing Plaintiffs and delaying the progress of the lawsuit. Given that the complete preemption doctrine presents nothing short of a legal thicket, Defendants had a reasonable basis for removing.
For these reasons, Plaintiffs' Motion for Attorney's fees is DENIED.
CONCLUSION
Accordingly, and good cause appearing, it is HEREBY ORDERED that:
1. Plaintiffs' Motion for Remand is GRANTED and this case is remanded to state court.
2. Plaintiffs' Motion for Attorneys' Fee is DENIED.
3. Defendants' Motion to Dismiss is moot for lack of jurisdiction as a result of the remanding the case to state court.