IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 19, 2008
No. 07-20618
Charles R. Fulbruge III
Clerk
MICHELE POCHE,
Plaintiff-Appellee,
v.
TEXAS AIR CORPS, INC. D/B/A CERT EMERGENCY SERVICES,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Texas, Houston Division
Before KING, WIENER, and ELROD, Circuit Judges.
JENNIFER W. ELROD, Circuit Judge:
Defendant-Appellant Texas Air Corps, Inc. (“TAC”) appeals the district
court’s order remanding this case to state court. Because our precedent compels
the conclusion that the district court was without authority to remand Plaintiff-
Appellee Michele Poche’s Fair Labor Standards Act claim, we reverse and
remand.
I. Facts and Proceedings
TAC hired Michele Poche as an ambulance medic and dispatcher in June
2006. According to Poche’s state court petition, TAC told her that she would
work between fifty and sixty hours per week, and that she would be assigned a
company cell phone and would be on call at all times TAC was operating. Poche
further alleges that although TAC initially treated her as an employee,
No. 07-20618
withholding taxes from her paychecks, she worked significantly more than sixty
hours a week and never received overtime wages.
In October 2006, Poche and TAC executed an Employment Agreement
backdated to the first day of Poche’s employment with TAC. Under the terms
of the agreement, Poche was to be paid a salary based on a fifty-hour work week
for “providing professional emergency medical staffing as scheduled.” The
agreement further provided that Poche was an independent contractor rather
than an employee of TAC and was therefore not entitled to overtime wages.
Poche alleges that despite this provision, TAC continued to withhold taxes from
her paychecks but did not pay the amounts withheld to the IRS. After some
delay, TAC issued a 1099-MSC form reflecting payments to Poche totaling
$16,617.38—an amount that did not include the taxes TAC withheld from
Poche’s paychecks. On April 9, 2007, Poche received a check from TAC for
$3,894.23, which TAC denominated a “tax escrow distribution” for 2006. The
following day, TAC fired Poche without the two weeks’ notice required by the
Employment Agreement.
Poche sued TAC in the 129th Judicial District Court of Harris County,
Texas, seeking a declaratory judgment regarding her entitlement to overtime
wages and alleging fraud and misrepresentation, breach of contract, and
violations of the federal Fair Labor Standards Act (“FLSA”). TAC removed the
case to the United States District Court for Southern District of Texas under 28
U.S.C. § 1441 on the ground that Poche’s petition raised a federal question. TAC
then filed counterclaims against Poche for theft and conversion in violation of
the Texas Theft Liability Act, breach of contract, fraud and negligent
misrepresentation, and breach of fiduciary duty.
After TAC filed its counterclaims, Poche moved to remand the entire case,
arguing that because most of the claims and counterclaims arose under state
law, the case should be decided in state court. TAC opposed the motion, arguing
that (1) most of the state law claims were not subject to remand because they
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No. 07-20618
were not separate and independent from the FLSA claim; and (2) considerations
of judicial economy warranted retaining the remaining state law claims. After
the district court granted the motion to remand, TAC filed a motion for
reconsideration, arguing that even if the state court claims were subject to
remand, the court had no discretion to remand Poche’s federal FLSA claim. The
district court denied the motion for reconsideration, and this appeal followed.
II. Standard of Review
“If a district court’s decision to remand a case to state court is based on its
discretion, then we . . . review that decision for abuse of discretion.” Hook v.
Morrison Milling Co., 38 F.3d 776, 780 (5th Cir. 1994). Whether the district
court has that discretion, however, is a legal question we review de novo. Id.
III. Discussion
This appeal presents the following question: does 28 U.S.C. § 1441(c)
permit a district court to remand federal claims conferring removal jurisdiction
where those claims are part of a case “predominated” by state law? Before the
enactment of the Judicial Improvements Act of 1990, Pub. L. No. 101-650 § 312,
104 Stat. 5089, 5114 (1990), the operative statutory text provided:
Whenever a separate and independent claim or cause of action,
which would be removable if sued upon alone, is joined with one or
more otherwise non-removable claims or causes of action, the entire
case may be removed and the district court may determine all issues
therein, or, in its discretion, may remand all matters not otherwise
within its original jurisdiction.
28 U.S.C. § 1441(c) (amended 1990) (emphasis added). Under this version of the
statute, a district court could not remand federal claims conferring removal
jurisdiction. See In re Wilson Indus., Inc., 886 F.2d 93, 96 (5th Cir. 1989). With
the 1990 amendment, however, the statute now provides:
Whenever a separate and independent claim or cause of action
within the jurisdiction conferred by section 1331 of this title is
joined with one or more otherwise non-removable claims or causes
of action, the entire case may be removed and the district court may
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No. 07-20618
determine all issues therein, or, in its discretion, may remand all
matters in which State law predominates.
28 U.S.C. § 1441(c) (emphasis added). To affirm the district court’s remand
order, we would have to hold that the word “matters” in the current version of
section 1441(c) refers to an entire action, including component federal claims
conferring removal jurisdiction, rather than to particular causes of action. Some
courts have adopted this interpretation of “matters.” See, e.g., Lang v. Am. Elec.
Power Co., 785 F. Supp. 1331, 1334–35 (N.D. Ind. 1992); Moralez v. Meat Cutters
Local 539, 778 F. Supp. 368, 370–71 (E.D. Mich. 1991); see also 14C CHARLES
ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND
PROCEDURE § 3739 (3d ed. 1998). Our precedent, however, requires a different
result.
A. Buchner
We begin our analysis with Buchner v. FDIC, 981 F.2d 816 (5th Cir. 1993),
which TAC cites for the proposition that “federal district courts do not, under
[section] 1441(c), have discretion to remand claims arising under federal
question jurisdiction.” In Buchner, the FDIC sued Donald Buchner and others
(collectively, the “Buchners”) in state court to collect money owed to a bank in
receivership. 981 F.2d at 817. The Buchners asserted counterclaims against the
FDIC, and four months after those claims were severed from the collection
action, the FDIC removed them to federal court. Id. The FDIC’s removal was
untimely, and the district court granted a motion to remand the claims. Id.
The case continued in state court, and there it would have remained but
for a sanctions motion the Buchners filed against the FBI and one of its agents
conducting a criminal investigation in connection with the failure of the bank in
receivership. See id. The agent removed the entire case, including the
previously remanded claims, to federal court pursuant to 28 U.S.C. §§ 1442(a)(1)
and 1446(b). Id. The Buchners dismissed their sanctions motion against the
FBI and its agent and moved for a second remand of the case to state court. Id.
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No. 07-20618
at 818. The FDIC opposed the remand motion, arguing that “the federal district
court had no choice but to retain jurisdiction over the case because it involved
federal claims and the FDIC was a party.” Id. Without addressing the merits
of the FDIC’s opposition, the district court granted the motion to remand, ruling
that the FDIC had “waived its right of removal on those bases long ago.” Id.
On appeal, we rejected the district court’s waiver analysis, holding that
“[t]he fact that the FDIC waived its right to remove the instant case is irrelevant
to the determination of whether the case should have or could have been
remanded once it had been properly removed by another party who had not
waived the right to remove.” Id. We then proceeded to consider the merits of the
FDIC’s opposition to the Buchners’ motion to remand, and in doing so, discussed
whether the district court had discretion under section 1441(c) to remand the
case. We held that it did not:
[I]f a case is removed from state court on the basis of federal
question jurisdiction and that case also includes state law claims, §
1441(c) allows the district court to decide the entire case or, in its
discretion, to remand all matters in which state law predominates.
As the FDIC is a party to the present suit, all of the component
claims are conclusively deemed to have arisen under federal law.
And, as § 1441(c) authorizes the federal district court to remand
only those matters in which state law predominates, this
discretionary remand provision is inapplicable to the instant action.
Id. at 819 (emphasis added). Notwithstanding TAC’s reliance on Buchner, this
holding—that section 1441(c) is inapplicable to cases comprised entirely of
federal claims—does not resolve the question dispositive of the present appeal:
whether section 1441(c) authorizes remand of claims conferring removal
jurisdiction that are part of a case “in which state law predominates.” We thus
must look elsewhere in our precedent for guidance.
B. Eastus and Metro Ford
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No. 07-20618
We next consider Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100 (5th
Cir. 1996), and Metro Ford Truck Sales, Inc. v. Ford Motor Co., 145 F.3d 320 (5th
Cir. 1998), on which Poche relies in arguing that section 1441(c) permits district
courts to “remand [an] entire action, federal claims and all, if the state law
claims predominate.” Eastus, 97 F.3d at 106; see also Metro Ford, 145 F.3d at
328. In Eastus, Greg and Paige Eastus sued Blue Bell in Texas state court for
violation of the federal Family and Medical Leave Act (“FMLA”), intentional
infliction of emotional distress, and tortious interference with prospective
contractual relations after Greg Eastus lost his job at the company. 97 F.3d at
102–03. Blue Bell removed the case to federal court, and the Eastuses filed a
motion to remand the entire case. Id. at 103. The district court remanded the
state law intentional infliction of emotional distress and tortious interference
claims, but not the federal FMLA claim. Id.
The Eastuses appealed, arguing that the district court abused its
discretion in remanding their state law claims. Id. at 104. In considering the
appeal, we explained that for remand to be proper under section 1441(c), “the
claim remanded must be (1) a separate and independent claim or cause of action;
(2) joined with a federal question; (3) otherwise non-removable; and (4) a matter
in which state law predominates.” Id. Applying this standard, we determined
that the intentional infliction of emotional distress claim was not “separate and
independent” from their FMLA claim, and accordingly held that “[b]ecause §
1441(c) does not authorize remand of state law claims unless they are separate
and independent from the removed federal question claim, the district court
abused its discretion by remanding this claim.” Id. at 105.
We reached a different conclusion regarding the tortious interference
with prospective contractual relations claim. After determining that the tortious
interference claim was “separate and independent” from the FMLA claim, we
considered the argument that Ҥ 1441(c) allows remand only when state law
predominates as to the entire case” and “because district courts have the power
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No. 07-20618
to remand the entire action, they no longer have the power to remand specific
causes of action.” Id. at 106. Though we acknowledged that the argument was
not without force, we rejected it: “[W]e hold that § 1441(c) still allows the district
court to remand separate and independent state claims, if state law
predominates as to the individual claim. Therefore, § 1441(c) authorized the
district court to remand the tortious interference claim.” Id. at 106–07.
It is true, as Poche observes in her brief on appeal, that in discussing the
meaning of section 1441(c), we stated that “[c]ourts that have considered the
meaning of the new § 1441(c) have decided overwhelmingly that the provision
now permits them to remand the entire action, federal claims and all, if the state
law claims predominate.” Id. at 106. We further stated that the phrase “in
which State law predominates” in section 1441(c) “is not superfluous if it is
understood to give district courts the power to remand the entire case if state
law predominates.” Id. Neither of these statements, however, was essential to
our holding in Eastus, and in any event, the case did not present the question
now before us—whether section 1441(c) permits a district court to remand
claims conferring removal jurisdiction. The statements are thus dicta and do not
end our inquiry. See, e.g., Breen v. Texas A&M Univ., 485 F.3d 325, 336 (5th Cir.
2007) (recognizing that “statements in . . . cases . . . unnecessary to their
holdings . . . constitute[] only non-binding dicta”).
Metro Ford Truck Sales, Inc. v. Ford Motor Co., however, comes closer to
the mark. In that case, Metro sued Ford in Texas state court, seeking to prevent
Ford from terminating Metro’s franchise agreement or taking actions to correct
problems at Metro uncovered by an audit. Metro Ford, 145 F.3d at 323. After
Ford filed counterclaims against Metro and third-party claims against Metro’s
principal, Metro filed an amended petition that included a claim against Ford for
price discrimination under the Texas Antitrust Act. Id. Ford removed the case
to federal court on the theory that “the Texas Antitrust Act does not prohibit
price discrimination, and, therefore, Metro’s antitrust claim for price
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No. 07-20618
discrimination could arise, if at all, only under the federal Robinson-Patman Act,
conferring federal question jurisdiction.” Id.
After the district court denied Metro’s motion for remand, Metro filed an
amended complaint asserting claims against Ford for price discrimination and
vertical price fixing in violation of federal law, and Ford amended its third-party
complaint against Metro’s principal to include a RICO claim. Id. The district
court granted Ford summary judgment on Metro’s antitrust claims, and
remanded the entire case, including Ford’s federal RICO claim, to state court.
Id. at 324. Metro appealed the district court’s grant of summary judgment, and
Ford appealed the court’s remand of its third-party RICO claim and the state
law claims. Id.
In arguing that the district court had no authority under section 1441(c)
to remand its RICO claim, Ford relied on several cases, including Buchner, in
which “the court sought to remand federal claims which would have been
otherwise removable.” Id. at 328. We explicitly rejected Ford’s reliance on these
authorities, explaining that Ford’s RICO claim did not confer removal
jurisdiction:
The essential concept governing in this appeal, perhaps overlooked
by Ford, is that the district court’s jurisdiction was derived from a
§ 1441 removal. When an action is brought to federal court through
the § 1441 mechanism, for both removal and original jurisdiction,
the federal question must be presented by plaintiff’s complaint as it
stands at the time the petition for removal is filed and the case
seeks entry into the federal system. It is insufficient that a federal
question has been raised as a matter of defense or counterclaim.
Similarly, the defendant’s third-party claim alleging a federal
question does not come within the purview of § 1441 removability.
Id. at 326–28 (footnotes and internal quotation marks omitted).
Were this the extent of Metro Ford’s analysis, the case would lend no
support to Poche’s position—unlike the RICO claim at issue in Metro Ford, her
FLSA claim is indisputably “otherwise removable.” After discussing the fact
that Ford’s RICO claim “could not, and did not, confer removal jurisdiction,”
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No. 07-20618
however, we cited Eastus for the proposition that “the new § 1441(c) permits
courts to remand an entire action, or distinct claims, both state and federal, if
state law predominates.” This statement “could be characterized either as an
alternate holding or as dicta,” cf. Republic of Tex. Corp. v. Bd. of Governors of the
Fed. Reserve Sys., 649 F.2d 1026, 1038 (5th Cir. 1981), though at least one
unpublished, non-precedential decision of our court has relied upon it in holding
that district courts can remand claims conferring removal jurisdiction. See
Jones v. Belhaven College, 98 F. App’x 283, 284 (5th Cir. Apr. 8, 2004) (citing
Metro Ford, 145 F.3d at 328). We need not navigate the murky waters between
alternate holdings and dicta, however, because an earlier precedent, Laurents
v. Arcadian Corp., No. 94-41183, 1995 WL 625394 (5th Cir. Oct. 4, 1995),
controls.1
C. Laurents
In Laurents, employees of a chemical plant owned by Arcadian Corporation
filed a class action lawsuit against the company and others (collectively
“Arcadian”) in state court, alleging “a host of state law tort and contract claims
involving the collective bargaining agreement between Arcadian and the Lake
Charles Metal Trades Council.” 1995 WL 625394, at *1. Arcadian removed the
case to federal court on the theory that federal question jurisdiction existed
under the federal Labor Relations Management Act of 1947. Id. The district
court denied the employees’ motion to remand. Id.
On appeal, the employees argued that “the district court abused its
discretion by failing to remand the entire case to state court pursuant to 28
U.S.C. § 1441(c) because the state law issues overwhelmingly predominate any
preempted claims.” Id. at *2 (internal quotation marks omitted). We squarely
1
See 5th Cir. R. 47.5.3 (providing that unpublished opinions issued before
January 1, 1996, are precedent).
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No. 07-20618
rejected this argument, holding that the district court had no authority to
remand claims that conferred removal jurisdiction:
Although the district court had discretion to remand state law
claims that were removed along with one or more federal question
claims, it may not remand the component claims that are
conclusively deemed to have arisen under federal law, absent a
defect in the removal procedure or circumstances rendering the
retention of jurisdiction “inappropriate.”
Id. To the extent Laurents conflicts with the later-decided Metro Ford, we are
bound to follow Laurents. See United States v. Walker, 302 F.3d 322, 324–25
(5th Cir. 2002) (noting “this circuit’s rule that one panel may not overrule a prior
panel opinion and the earlier precedent controls”). We are thus compelled to
conclude, irrespective of the arguments advanced by the parties’ very able
counsel, that the district court in the present case was without authority to
remand Poche’s FLSA claim. Having so concluded, we leave the disposition of
Poche’s state law claims and TAC’s counterclaims to the discretion of the district
court.
IV. Conclusion
For the reasons set forth above, we REVERSE the district court’s order
remanding this case to state court and REMAND for proceedings consistent with
this opinion.
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