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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 23-1163
PARKER O’NEIL WIDEMAN,
Plaintiff – Appellant,
v.
INNOVATIVE FIBERS LLC; STEIN FIBERS LTD,
Defendants – Appellees.
No. 23-1167
RILEY C. DRAPER,
Plaintiff – Appellant,
v.
INNOVATIVE FIBERS LLC; STEIN FIBERS LTD,
Defendants – Appellees.
No. 23-1169
WILLIAM F. DOUGLASS; JESSICA L. DOUGLASS,
Plaintiffs – Appellants,
v.
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INNOVATIVE FIBERS LLC; STEIN FIBERS LTD,
Defendants – Appellees.
Appeals from the United States District Court for the District of South Carolina, at
Spartanburg. Judge Donald C. Coggins, Jr., District Judge. (7:22-cv-00418-DCC; 7:22-
cv-00419-DCC; 7:22-cv-00420-DCC)
Argued: January 23, 2024 Decided: May 2, 2024
Before DIAZ, Chief Judge, and NIEMEYER and RICHARDSON, Circuit Judges.
Vacated and remanded by published opinion. Judge Richardson wrote the opinion, in
which Chief Judge Diaz and Judge Niemeyer joined.
ARGUED: Bert Glenn Utsey, III, CLAWSON FARGNOLI UTSEY, LLC, Charleston,
South Carolina, for Appellants. Hamlet Sam Mabry, III, HAYNSWORTH SINKLER
BOYD, PA, Greenville, South Carolina, for Appellees. ON BRIEF: Samuel R. Clawson,
Jr., Christina Rae Fargnoli, CLAWSON FARGNOLI UTSEY, LLC, Charleston, South
Carolina; Charles T. Slaughter, MORGAN LITIGATION GROUP, LLC, Lexington,
South Carolina, for Appellants. Patrick H. Allan, LEE LAW OFFICES, Spartanburg,
South Carolina, for Appellants. Riley C. Draper, William F. Douglass, and Jessica L.
Douglass. Jonathan D. Klett, HAYNSWORTH SINKLER BOYD, P.A., Greenville, South
Carolina; Kevin Lindsay Terrell, THE WARD FIRM PA, Spartanburg, South Carolina, for
Appellees.
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RICHARDSON, Circuit Judge:
South Carolina law provides that certain workers’ compensation disputes are within
the exclusive cognizance of the state Workers’ Compensation Commission. This means
that covered employees cannot bring common-law actions, like tort claims, in state courts.
But state law cannot circumscribe federal subject matter jurisdiction. So when these
injured workers arrived in federal court and were met with a motion to dismiss for lack of
subject matter jurisdiction, which cited the state law, a procedural mess ensued. Despite
the understandable confusion about the state law’s effect on federal jurisdiction, we
conclude that the district court erred in dismissing the workers’ complaint for lack of
subject matter jurisdiction. We thus vacate that decision and remand for further
proceedings.
I. Background
A. Calamity at the Spartanburg Plant
Innovative Fibers LLC and Stein Fibers Ltd. (together, “Defendants”) owned and
operated a plant in Spartanburg, South Carolina. That plant converted recycled plastics
into polyester fibers. In June 2020, to dry the plastic material, Defendants installed two
large, natural-gas-fueled ovens (sometimes called “crystallizers”) in a 33-foot-tall
chamber. Each oven was encased in a steel scaffolding “superstructure” that supported
two platforms above the oven, providing access for maintenance and cleaning. The ovens
and superstructures were located is an area known as the crystallizer room.
The drying procedure generated plastic dust that accumulated on surfaces
throughout the crystallizer room. While there is significant dispute about how the room
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was cleaned, Defendants’ direct employees at least semi-regularly cleaned and reused the
plastic dust that collected on the floor and on top of the ovens. But the dust on the
superstructures was too fine to be reused and did not interfere with the manufacturing
process. It was also less accessible. And the record on appeal suggests that, in the year
after the ovens’ installation, Defendants’ direct employees cleaned the superstructures no
more than twice, when the ovens were shut off for maintenance. 1
Regardless of the dispute about cleaning, dust accumulated in the crystallizer room.
And management knew that the growing accumulation of plastic dust posed a problem.
After testing showed that the plastic waste was combustible, a contractor noted the danger
posed by excessive combustible plastic dust throughout the area, including on the
superstructures. The contractor thus recommended that Defendants hire an industrial-
cleaning contractor to remove the plastic dust.
Chip Stein, co-owner of both Defendants, agreed with the contractor’s
recommendation—though arguably for a purpose other than workplace safety. Starting in
October 2021, Stein sent the plant managers a series of increasingly frantic emails about
the plastic-dust problem. He emphasized the need to clean the entire crystallizer room,
including the superstructures, before an imminent insurance inspection, as a poor showing
could cost Defendants over half a million dollars. As the weeks passed and Stein became
increasingly unsatisfied with their progress, he recommended that Defendants engage a
1
Our narrative here should not be understood to resolve any factual disputes. We
provide it only to aid the reader’s understanding.
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third-party industrial-cleaning contractor to get the job done before the insurance
inspection.
So Defendants called in a third-party contractor, VLS Recovery Services, to clean
the crystallizer room starting on October 14. Before starting the work, the VLS supervisor
took photographs reflecting the same excessive plastic dust accumulation described in the
earlier report. He later testified that he had never seen that amount of dust and that he
doubted the crystallizer room was cleaned daily. After cleaning began, the supervisor
noticed that an oven was still operating. He immediately stopped work and alerted
Defendants’ maintenance manager that his employees would not clean above the ovens
until Defendants shut them off. Defendants refused, so VLS left the job without cleaning
the superstructures.
But the insurance inspection remained impending. Fortunately, Defendants were
already negotiating with another industrial-cleaning contractor—Plaintiffs’ employer,
Advanced Environmental Options (“AEO”). On October 28, Defendants and AEO
contracted for AEO to supply four employees and a vacuum truck to clean the crystallizer
room on November 1.
Plaintiffs Parker Wideman, Riley Draper, William Douglass, 2 and a fourth AEO
employee arrived at the Spartanburg plant as scheduled on November 1. Defendants’
maintenance manager escorted Plaintiffs to the crystallizer room and left them there to
begin working. Video evidence from the plant shows Plaintiffs cleaning Pompeian
2
Mr. Douglass’s wife, Jessica, is also a plaintiff.
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amounts of plastic dust in the crystallizer room. They swept and shoveled the dust from
the tops of the ovens and the superstructures onto the floor, where one of the workers
vacuumed it up. When a worker swept one large batch of dust, the dust brushed against
the oven and immediately ignited, engulfing the oven in a fireball. Moments later, the
entire room was aflame.
The inferno caused Plaintiffs to suffer severe, disfiguring “burns to their bodies of
75%, 83%, and 43% respectively.” J.A. 714. According to the South Carolina
Occupational Safety and Health Administration, the “ovens were kept on during the
cleaning process per [Defendants’] management request to not interrupt production at the
plant.” J.A. 716.
B. Procedural History
Plaintiffs sued Defendants in state court in January 2022, alleging negligence under
state common law. Defendants removed the case to federal court, invoking federal
diversity jurisdiction. Defendants then performed a (permissible) volte-face and moved to
dismiss the action for lack of subject matter jurisdiction under Federal Rule of Civil
Procedure 12(b)(1). In their motion, they argued that Plaintiffs were “statutory employees”
covered by The South Carolina Workers’ Compensation Law, S.C. Code Ann. § 42-1-10
et seq. (the “Law”). And they maintained that, because the Law prohibits statutory
employees from suing in tort in state courts, § 42-1-540, it also deprives federal courts of
subject matter jurisdiction over such claims. They alleged that Plaintiffs must instead
submit their claims to South Carolina’s Workers’ Compensation Commission.
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The district court granted Defendants’ motion on December 16, 2022. It agreed
with Defendants that “[t]he decision as to whether a worker directly employed by one entity
is the statutory employee of another is a jurisdictional question resolved by the court . . .
on motion to dismiss under Rule 12(b)(1).” J.A. 1068. And it found by a preponderance
of the evidence that Plaintiffs were, indeed, Defendants’ statutory employees barred from
suit by the Law. The district court therefore dismissed the dispute for lack of subject matter
jurisdiction.
II. Discussion
On appeal, Plaintiffs argue that they were not Defendants’ statutory employees and
that, because of this, the district court improperly dismissed their suit for lack of subject
matter jurisdiction. We agree that the district court erred, but for a different reason.
Whether a federal court has subject matter jurisdiction over a case is wholly determined by
federal law. While states can define the substantive rights asserted in federal diversity
jurisdiction, they cannot strip federal courts of subject matter jurisdiction over any category
of claims. Accordingly, we hold that the district court erred in dismissing this suit for lack
of subject matter jurisdiction. 3
3
Defendants argue that, even if the district court erroneously treated the Law as
depriving us of jurisdiction, Plaintiffs forfeited this argument by failing to raise it. But we
conclude that it is within our authority to address this issue.
The principle of party presentation often requires that we ignore errors not briefed
by the parties. See United States v. Sineneng-Smith, 590 U.S. 371, 374–75 (2020). But
“[t]he party presentation principle is supple, not ironclad.” Id. at 376. “When an issue or
claim is properly before the court, the court is not limited to the particular legal theories
advanced by the parties, but rather retains the independent power to identify and apply the
proper construction of governing law.” Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90,
(Continued)
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“The judicial Power of the inferior federal courts extends only as far as Article III
permits and Congress chooses to confer.” Navy Fed. Credit Union v. LTD Fin. Servs., LP,
972 F.3d 344, 352 (4th Cir. 2020). Article III of the Constitution provides that “[t]he
judicial Power shall extend . . . to Controversies . . . between Citizens of different States.”
Art. III, § 2, cl. 7. “Christened ‘diversity jurisdiction,’ this constitutional font allows for
the judicial Power to flow where the citizenship of any plaintiff differs from that of any
defendant.” Navy Fed., 972 F.3d at 352. The statutory font of diversity jurisdiction,
meanwhile, provides that district courts “have original jurisdiction of all civil actions where
the matter in controversy exceeds the sum or value of $75,000 . . . and is between . . .
citizens of different States.” 28 U.S.C. § 1332(a)(1). Unlike Article III jurisdiction,
99 (1991). And we may address a predicate legal question that disposes of this appeal,
even if the parties erroneously agree on its answer and dispute only subsequent, dependent
issues. See U.S. Nat’l Bank of Or. v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 447
(1993) (“[A] court may consider an issue ‘antecedent to . . . and ultimately dispositive of’
the dispute before it, even an issue the parties fail to identify and brief.” (alteration in
original) (quoting Arcadia v. Ohio Power Co., 498 U.S. 73, 77 (1990)); cf. Van Emburgh
ex rel. Est. of Van Emburgh v. United States, 95 F.4th 795, 800 (4th Cir. 2024) (exercising
discretion to excuse a party’s failure to raise an argument in favor of subject matter
jurisdiction).
These principles permit us to look past the forfeiture here. Plaintiffs allege that the
district court improperly dismissed their suit for lack of subject matter jurisdiction by
finding that they were statutory employees under the Law. Logically antecedent to this
question is whether the Law restricts our subject matter jurisdiction in the first place. To
ignore this question would be to affirm a proposition of law that we know to be
demonstrably false (as we will explain shortly). See United States v. Burke, 504 U.S. 229,
246 (1992) (Scalia, J., concurring in the judgment) (explaining that a court “need not render
judgment on the basis of a rule of law whose nonexistence is apparent on the face of things,
simply because the parties agree upon it”). And it would fly in the face of “the virtually
unflagging obligation of the federal courts to exercise the jurisdiction given them.” Colo.
River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976). Rather than
doing so, we choose to address it and dispose of the appeal on this basis.
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§ 1332(a)(1) requires diversity to be “complete,” meaning that each plaintiff must hail from
a different state than each defendant. Navy Fed., 972 F.2d at 352.
This dispute satisfies all the requirements of diversity jurisdiction. The parties enjoy
complete diversity: Plaintiffs are from North and South Carolina, while Defendants are
from New York. And the amount-in-controversy between them exceeds $75,000. 4 So the
district court possessed subject matter jurisdiction over this dispute.
Despite this clear application of established principles, the district court concluded
that it lacked subject matter jurisdiction over this suit because Plaintiffs’ claims fall under
South Carolina’s Workers’ Compensation Law. The Law creates a “quid pro quo
arrangement” for certain work-related injuries by which “an ‘employee receives the right
to swift and sure compensation in exchange for giving up the right to sue in tort.’” Zeigler
v. Eastman Chem. Co., 54 F.4th 187, 190 (4th Cir. 2022) (quoting Harrell v. Pineland
Plantation, Ltd., 523 S.E.2d 766, 772 (S.C. 1999)); see also Parker v. Williams &
Madjanik, Inc., 267 S.E.2d 524, 526 (S.C. 1980). To solidify this bargain, the Law contains
an exclusivity provision, which states that “[t]he rights and remedies granted by [the Law]
. . . shall exclude all other rights and remedies . . . at common law or otherwise.” S.C. Code
Ann. § 42-1-540. So the exclusive remedy for employment-related injuries suffered by
4
Plaintiffs’ complaints did not allege an amount in controversy, likely because they
first filed in state court. But in their notice of removal, Defendants alleged that the amount
in controversy exceeds $75,000, and Plaintiffs did not contest that claim. When a plaintiff
does not contest the amount in controversy, “a defendant’s notice of removal need include
only a plausible allegation that the amount in controversy exceeds the jurisdictional
threshold.” Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89 (2014);
28 U.S.C. § 1446(c)(2). Given the allegations of serious injury involved here, Defendants
have plausibly alleged an amount in controversy exceeding $75,000.
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covered employees—including so-called “statutory employees” 5—is before South
Carolina’s Workers’ Compensation Commission. See Sabb v. S.C. State Univ., 567 S.E.2d
231, 234 n.3 (S.C. 2002) (explaining that the Law vests the Commission with “exclusive
original jurisdiction” over covered claims). Applying this framework, the district court
found that Plaintiffs were Defendants’ statutory employees when they suffered their
injuries and thus dismissed their negligence claims for lack of subject matter jurisdiction.
The parties, and thus the district court, have confused the substantive right of action
enforced in diversity jurisdiction with a federal court’s jurisdiction to entertain that right
of action. Absent controlling federal law, federal courts sitting in diversity must look to
state law for the substantive rights of the parties. Erie R.R. Co. v. Tompkins, 304 U.S. 64,
78 (1938); Hanna v. Plumer, 380 U.S. 460, 468 (1965) (explaining that whether a state law
is substantive must be determined with reference “to the twin aims of the Erie Rule:
discouragement of forum-shopping and avoidance of inequitable administration of the
5
“Statutory employees” are not actual employees, as that word is typically
understood, but “subcontractors” hired by businesses to carry out “‘part of [their] trade,
business or occupation.’” Keene v. CAN Holdings, LLC, 870 S.E.2d 156, 162–63 (S.C.
2021) (quoting Marchbanks v. Duke Power Co., 2 S.E.2d 825, 836 (S.C. 1939)). The South
Carolina Supreme Court recently revamped its “statutory employee doctrine” by holding
that determining whether a subcontractor falls into that category requires a court to ask
“what the owner decided is part of its business.” Id. at 163. This question of “business
judgment” simply asks whether, at a given time, “a business manager reasonably believes
her workforce is not equipped to handle a certain job, or the financial or other business
interests of her company are served by outsourcing the work.” Id. If so, then “the
[company] has legitimately defined the scope of [its] business to not include th[e] particular
work” performed by those workers, and they are thus not statutory employees. Id.
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laws”). 6 So when state law prohibits plaintiffs from suing to enforce a state-law right in
any state court, federal courts sitting in diversity are bound to dismiss the suit for failure to
state a claim. See Woods v. Interstate Realty Co., 337 U.S. 535, 538 (1949) (“[A] right
which local law creates but which it does not supply with a remedy is no right at all for
purposes of enforcement in a federal court in a diversity case . . . .”); Angel v. Bullington,
330 U.S. 183, 192 (1947) (explaining that, when a federal court’s jurisdiction is “invoked
on grounds of diversity of citizenship, [the court] cannot give that which [the state] has
withheld”). Any other result would permit the kind of forum-shopping and inequitable
administration of the laws that Erie exists to prevent. See Woods, 337 U.S. at 538; Begay
v. Kerr-McGee Corp., 682 F.2d 1311, 1318–19 (9th Cir. 1982).
But even though states can define the substantive rights that are enforced in diversity
jurisdiction, they cannot limit the subject matter jurisdiction of federal courts, even in
diversity cases. Every court draws its power to hear cases and controversies from the laws
of the sovereign that created it. Marshall v. Marshall, 547 U.S. 293, 313–14 (2006);
Markham v. City of Newport News, 292 F.2d 711, 716 (4th Cir. 1961). As creatures of our
national Union, federal courts derive their jurisdiction exclusively from Article III and
federal statutes. Thus, state law cannot oust federal courts of jurisdiction that they already
possess pursuant to federal law. See, e.g., Ry. Co. v. Whitton’s Adm’r, 80 U.S. (13 Wall.)
6
Of course, the Erie doctrine is not without its critics. Many scholars have argued
that Erie misinterpreted the Rules of Decision Act and the jurisprudential assumptions of
the regime that preceded it. See, e.g., Caleb Nelson, A Critical Guide to Erie Railroad Co.
v. Tompkins, 54 Wm. & Mary L. Rev. 921 (2013); Stephen E. Sachs, Finding Law, 107
Calif. L. Rev. 527 (2019). But the Supreme Court has yet to reconsider the doctrine, so we
remain bound by its teachings.
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270, 286 (1871) (“Whenever a general rule as to property or personal rights, or injuries to
either, is established by State legislation, its enforcement by a Federal court in a case
between proper parties is a matter of course, and the jurisdiction of the court, in such case,
is not subject to State limitation.”); Popp v. Archbell, 203 F.2d 287, 288–89 (4th Cir. 1953).
Erie may command enforcement of substantive state law in diversity cases, but it does not
endow states with the power to limit the jurisdiction of federal courts under federal law.
Markham, 292 F.2d at 718. 7
In light of these principles, the Law cannot strip us of subject matter jurisdiction
over Plaintiffs’ claims. True, the Law excludes covered employees from enjoying rights
or remedies at common law, confers immunity from tort suits on employers, and vests
exclusive jurisdiction in the Workers’ Compensation Commission. Harrell, 523 S.E.2d at
7
We acknowledge that some of our past cases assumed that state law can limit our
jurisdiction. See Zeigler, 54 F.4th at 194 (accepting, without discussion, that the
applicability of the Law would preclude our jurisdiction); Evans v. B.F. Perkins Co., 166
F.3d 642, 647 (4th Cir. 1999) (accepting, without discussion, that the applicability of the
Virginia Workers’ Compensation Act would preclude our jurisdiction). But see Demetres
v. E. W. Constr., Inc., 776 F.3d 271, 272 n.1 (4th Cir. 2015) (noting the possibility that
such a dismissal should occur under Rule 12(b)(6) rather than Rule 12(b)(1)). But drive-
by jurisdictional rulings are not controlling. Nat’l Lab. Rels. Bd. v. Constellium Rolled
Prods. Ravenswood, LLC, 43 F.4th 395, 408 (4th Cir. 2022).
Nor is a contrary result compelled by our holding in Wiener v. AXA Equitable Life
Insurance Co., 58 F.4th 774 (4th Cir. 2023). In Wiener, we held that a state statute
providing for exclusive statutory remedies for a class of claims did not strip us of
jurisdiction over such claims. Id. at 782. We reached this result by distinguishing between
choice-of-forum statutes, which divest courts of jurisdiction, and choice-of-law statutes,
which do not divest courts of jurisdiction. Id. at 782–83. And we held that because the
statute governed choice of law, it did not divest our jurisdiction over the claims at issue.
Id. at 783. But we did not address the further question of whether, even if the statute were
a choice-of-forum provision, a state statute can legally divest federal courts of subject
matter jurisdiction. This question is squarely before us today, and we conclude that states
have no such authority.
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772; Parker, 267 S.E.2d at 526; Sabb, 567 S.E.2d at 234 n.3. Those facts reflect the
substantive policy of South Carolina, which, under Erie, we are required to enforce in
diversity jurisdiction. Cf. Byrd v. Blue Ridge Rural Electr. Coop., 356 U.S. 525, 534–40
(1958) (holding that whether a plaintiff was a statutory employee under South Carolina’s
workers’ compensation law should be decided by a federal jury instead of a federal judge);
Walker v. U.S. Gypsum Co., 270 F.2d 857, 858–59 (4th Cir. 1959). Even so, this limitation
only determines whether Plaintiffs have stated a claim upon which relief can be granted; it
cannot strip us of subject matter jurisdiction that we otherwise enjoy. 8 And since this
dispute satisfies the requirements of diversity jurisdiction, we conclude that the district
court erred in dismissing it for lack of subject matter jurisdiction. 9
8
In so holding, we align ourselves with other courts who have similarly found that
state workers’ compensation statutes do not deprive federal courts of subject matter
jurisdiction. See Begay, 682 F.2d at 1314–17; Goetzke v. Ferro Corp., 280 F.3d 766, 778–
80 (7th Cir. 2002); Williams v. Duke Energy Int’l, Inc., 681 F.3d 788, 798–99 (6th Cir.
2012); Blanyar v. Genova Prods. Inc., 861 F.3d 426, 431 n.5 (3d Cir. 2017).
9
Although we sometimes affirm a district court on grounds not relied upon by the
court itself, Jusino v. Fed. of Cath. Teachers, Inc., 54 F.4th 95, 100 (4th Cir. 2022), we
believe it would be inappropriate in this appeal to determine whether Plaintiffs have stated
a claim upon which relief could be granted. The district court decided this case under
Federal Rule of Civil Procedure 12(b)(1), which sometimes allows the court to go beyond
the complaint and resolve disputed jurisdictional facts by a preponderance of the evidence.
See U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 348 (4th Cir. 2009). But because the
Law determines whether Plaintiffs have stated a valid claim for relief, its applicability
should have been determined pursuant to a Rule 12(b)(6) motion, which does not permit a
district court to resolve disputed questions of material fact. Andrew v. Clark, 561 F.3d 261,
267 (4th Cir. 2009). And in disposing of that motion, the district court might have
converted the motion to a summary judgment motion, since Defendants asked the court to
consider materials outside the complaint. See Fed. R. Civ. P. 12(d). Given these procedural
complexities, we deem it more prudent to remand this case to the district court for further
proceedings than to decide these questions ourselves in the first instance.
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* * *
“A State may, of course, distribute the functions of its judicial machinery as it sees
fit.” Byrd, 356 U.S. at 536. But those choices cannot deprive a federal court of subject
matter jurisdiction. The district court’s decision is thus
VACATED AND REMANDED.
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