Armistead v. C & M Transport, Inc

Opinion

USCA1 Opinion

March 21, 1995
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ___________________

No.  94-1525

CLYDE ARMISTEAD,
                                Plaintiff, Appellant,

                                          v.

                            C & M TRANSPORT, INC., ET AL.,
                                Defendants, Appellees.

                                 ____________________

ERRATA SHEET

The  opinion  of this  Court issued  on  March 13,  1995, is
          amended as follows:

               On page 9, line 9, change "chose" to "choose".



UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

___________________

No. 94-1525

CLYDE ARMISTEAD,

                                Plaintiff, Appellant,

                                          v.

                            C & M TRANSPORT, INC., ET AL.,

                                Defendants, Appellees.

__________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                              FOR THE DISTRICT OF MAINE

                     [Hon. Morton A. Brody, U.S. District Judge]
                                            ___________________

                                 ___________________

                                        Before

                                Selya, Circuit Judge,
                                       _____________
                           Campbell, Senior Circuit Judge,
                                     ____________________
                              and Boudin, Circuit Judge.
                                          _____________

                                 ___________________

               Clyde Armistead on brief pro se.
               _______________
               John H. Montgomery, Diane S. Lukac, Mary Elizabeth  Fougere,
               __________________  ______________  _______________________
          and Bernstein, Shur, Sawyer  & Nelson on brief for  appellee, The
              _________________________________
          Travelers Insurance Company.

__________________
                                    March 9, 1995
                                  __________________



Selya, Circuit Judge.  Defendant-appellee Travelers
                             _____________

            Insurance  Company ("Travelers") removed  this action  to the

            federal district court  despite the provision in  28 U.S.C.  

            1445(c) forbidding  removal  of  cases  arising  under  state

            workers'  compensation  laws.     Plaintiff-appellant   Clyde

            Armistead    unsuccessfully    resisted   the    removal   on

            jurisdictional  grounds, but  overlooked the  bar of  section

            1445(c).   The  district  court granted  summary judgment  in

            Travelers' favor.   On appeal,  Armistead for the  first time

            invokes section 1445(c).   We  hold that  the district  court

            lacked   subject   matter   jurisdiction   in    this   case.

            Accordingly, we vacate the judgment below and direct that the

            case be remanded to state court.

                                          I
                                          I

                      Armistead, a citizen and resident  of Maine, worked

            as  a truck driver  for C &  M Transport,  Inc. ("C &  M"), a

            Maine  corporation.   He was  injured on  May 7,  1987, while

            driving  a C &  M truck in  Maryland.  Appellee  Travelers, a

            Connecticut corporation, was  at one  time C  & M's  workers'

            compensation insurer.  

                      Armistead filed  a petition for benefits  under the

            Maine  Workers'  Compensation  Act,  39   M.R.S.A.      1-195

            (repealed),1 in  October,  1987.   The Workers'  Compensation

                                
            ____________________

            1.    The  legislature  retrofitted  the  Act  with  neoteric
            provisions  which took effect on  January 1, 1993.   See 39-A
                                                                 ___
            M.R.S.A.      101-409.   The  new  law  alters  benefits  and

                                         -2-



Commission issued a benefits award in February, 1988 (after C

            &  M defaulted), but no compensation payments were made.  The

            Commission's award indicates "no record of insurance," and as

            for C & M, it filed for Chapter 7 protection, was adjudicated

            bankrupt,  and ceased  doing  business.     According to  the

            record before us, Travelers  had notified the Commission that

            it  had canceled C & M's coverage for nonpayment of premiums,

            effective some three weeks before the date of injury.  

                      In July  of 1992,  Armistead resumed his  quest for

            benefits by seeking a Commission determination that Travelers

            was liable on the award because it had failed to send a prior

            notice of  the cancellation to  C & M,  as required  by state

            law.  See 39 M.R.S.A.   23(1) (1987) (repealed); see also 39-
                  ___                                        ________

            A  M.R.S.A.    403(1)  (1992).    After informal  proceedings

            failed to resolve the claim, Armistead filed a  formal motion

            for enforcement of the award.  Travelers denied liability and

            cross-moved for  a review of  Armistead's alleged disability.

            The  statute  contemplates an  evidentiary  hearing before  a

            Commissioner on such motions,  subject to appellate review in

____________________

            replaces  the  Workers'   Compensation  Commission  with   an
            administrative  board.    See  39-A  M.R.S.A.      151,  152.
                                      ___
            Transitional  provisions preserve  benefits under  the former
            law  for  injuries  sustained  before January  1,  1993,  and
            continue the Commission's authority over pending claims for a
            limited period.   See generally Clark  v. International Paper
                              _____________ _____     ___________________
            Co.,  638 A.2d  65 (Me.  1994).   In all  procedural respects
            ___
            relevant here, the current law is parallel to the former law.
            The transitional  provisions and other changes  do not affect
            our analysis.  

                                         -3-



the Commission and a  discretionary appeal to Maine's highest

            court.  See 39 M.R.S A.   94-B, 98-99, 103-A, 103-B, 103-C.  
                    ___

                      While  these   motions  were  pending   before  the

            Commission,  Armistead also  filed a  complaint in  the state

            superior court for enforcement  of the Commission's  original

            award.  The complaint alleged a right  to relief by virtue of

            the superior  court's equitable  power to  enforce Commission

            orders  under the  Workers' Compensation  Act, 39  M.R.S.A.  

            103-E.  Count 1 sought  enforcement of the award against C  &

            M;  count  2 sought  a  declaration  that Travelers  afforded

            coverage to C  & M under the  Act on the date  of injury, and

            also  sought enforcement  of the  Commission's  award against

            Travelers and C & M jointly.  

                      Travelers  promptly removed  the action  to federal

            district  court, claiming  diversity  of citizenship  between

            Travelers and Armistead, and describing the action as one for

            "breach of  contract."   Seven months later,  Armistead moved

            for a remand  to the state court, arguing that  C & M's Maine

            citizenship destroyed complete diversity between the parties.

            But there was a rub;  C & M had not been served with process,

            and  its very  existence was  dubious.2   The district  judge

                                
            ____________________

            2.  Armistead  renews here the claim  that C &  M retains its
            corporate existence under Maine's  corporation laws, and is a
            "necessary" party to this  suit.  The argument was  not fully
            developed  below, and we  deem it waived.   See Ryan v. Royal
                                                        ___ ____    _____
            Ins. Co.,  916 F.2d 731, 734  (1st Cir. 1990).   At any rate,
            ________
            Armistead  still  has  not  explained his  failure  to  serve
            process on C & M.

                                         -4-



dismissed the claim against  C & M and, applying  the holding

            of White  v. United States Fidelity & Guar. Co., 356 F.2d 746
               _____     __________________________________

            (1st  Cir. 1966),  rejected Armistead's  alternative argument

            that Travelers should be deemed to have the same  citizenship

            as  its  insured under  28 U.S.C.     1332(c)(1).   The court

            thereafter addressed  the parties' cross-motions  for summary

            judgment  and decided the merits in favor of Travelers.  This

            appeal ensued.

                      On appeal,  Armistead adds  for the first  time the

            argument  that  the removal  violated  28  U.S.C.    1445(c).

            Travelers  urges that section 1445(c) is inapplicable because

            Armistead's  suit  does  not "arise  under"  Maine's workers'

            compensation law, and,  alternatively, that Armistead  waived

            the argument.

                                          II
                                          II

                      Section 1445(c) renders nonremovable suits "arising

            under" the workers' compensation laws  of the state in  which

            the federal court sits.  The statute reflects a congressional

            concern for  the states' interest in  administering their own

            workers'   compensation  schemes,  the   burdens  on  injured

            claimants  of  maintaining  a  federal court  suit,  and  the

            incidence of federal court  congestion.  See generally Horton
                                                     _____________ ______

            v.  Liberty  Mut.   Ins.  Co.,  367  U.S.   348,  350  (1961)
                _________________________

            (explaining purpose of limitation on removal); 14A Charles A.

-5-



Wright  et. al, Federal Practice  & Procedure    3729 (2d ed.
                            _____________________________

            Supp. 1994) (listing cases).

                      Travelers  does  not  directly  assert  a  right to

            remove the  proceedings pending  before  the Commission,  but

            focuses solely  on the  subsequent superior court  complaint.

            While the  complaint was a  separate filing, however,  it did

            not  comprise   independent  litigation based  on a  separate

            common  law right to  relief.   Rather, the  complaint sought

            statutory compensation  under  a provision  of  the  workers'

            compensation  law vesting  in  the superior  court  equitable

            powers  to enforce Commission  orders and to  issue pro forma
                                                                ___ _____

            decisions  enforcing  Commission  benefit  awards.3    As  an

            integral part  of the administrative enforcement  scheme, the

            superior  court  action  was   merely  supplementary  to  the

            Commission proceeding,  and both proceedings  obviously arose

            under the workers'  compensation law within the meaning of 28

            U.S.C.   1445(c).   Cf. Spearman v.  Exxon Coal USA, 16  F.3d
                                ___ ________     ______________

                                
            ____________________

            3.    Commission orders  are enforceable only by petition  to
            the superior court, which may issue "any suitable process" in
            aid of Commission proceedings.  See 39 M.R.S.A.    93, 103-E.
                                            ___
            The  Commission itself  has  no general  equity powers.   See
                                                                      ___
            Clark  v. International Paper Co.,  638 A.2d at  66.  Benefit
            _____     _______________________
            awards  and  Commission   decisions  become  enforceable   on
            presentation of a certified copy to the superior court, which
            "shall render a pro  forma decision in accordance therewith."
            39 M.R.S.A.   103-E.  The Commission's decisions thus acquire
            the same force as if rendered  by the superior court.  See 39
                                                                   ___
            M.R.S.A.   103-E.  Moreover, an award may be confirmed by the
            superior  court  even if  it  remains  subject to  post-order
            administrative proceedings  or a pending appeal.   See Cilley
                                                               ___ ______
            v. Georgia-Pac. Corp., 519 A.2d 191, 192 (Me. 1986); see also
               __________________                                ________
            39 M.R.S.A.   104-A.  

                                         -6-



722, 725 (7th Cir.) (holding that a claim did not arise under

            a  workers' compensation law when it stated a right to relief

            in tort and sought common law damages distinct from statutory

            compensation scheme), cert. denied, 115 S. Ct. 377 (1994).
                                  ____________

                      Removal of  the case  thus was doubly  barred, once

            under section  1445(c), and  again because  the supplementary

            superior court proceeding does not independently qualify as a

            removable "civil  action"  under 28  U.S.C.    1441(a).   See
                                                                      ___

            Barrow  v. Hunton, 99 U.S.  80, 82 (1879)  (explaining that a
            ______     ______

            supplementary action so connected  with an original action as

            to  form a  mere  incident  or  continuation  of  it  is  not

            removable as a  separate suit);  Bank v. Turnbull  & Co.,  83
                                             ____    _______________

            U.S.  (16 Wall.)  190, 193 (1873)  (same); Federal  Savings &
                                                       __________________

            Loan Ins. Corp. v. Quinn, 419 F.2d 1014, 1018 (7th Cir. 1969)
            _______________    _____

            (same,  but  making claim  that  federal  standards determine

            independence  of action);  Overman v.  Overman, 412  F. Supp.
                                       _______     _______

            411, 412  (E.D. Tenn.  1976) (same, discussing  possible Erie
                                                                     ____

            concerns).  Recent cases  in which parties attempt to  remove

            state supplementary proceedings are  scarce, but the  federal

            bar  to entertaining  "satellite elements"  of pending  state

            suits and judgments clearly  remains intact as the "sensible"

            judicial  rule.   14A  Wright et  al.,  supra,    3721 (Supp.
                                                    _____

            1994);  see also 1A James  Wm. Moore et  al., Moore's Federal
                    ________                              _______________

            Practice    0.157[4-11] (2d ed.  Supp. 1994)  (distinguishing
            ________

-7-



the principle from  the "independent" claim concept  embodied

            in 28 U.S.C.   1441(c)).

                                         III
                                         III

                      Under 28  U.S.C.    1447(c),  a motion  challenging

            subject  matter jurisdiction  may be  made at  any time,  but

            objections  based on a "defect in  removal procedure" must be

            made within  thirty days  of the  removal.  Travelers  argues

            that  Armistead waived any  objection to the  lack of removal

            jurisdiction by  failing to  move for  a  remand within  this

            period.  

                      In Williams v.  AC Spark Plugs Div. of  Gen. Motors
                         ________     ___________________________________

            Corp., 985 F.2d 783 (5th Cir. 1993) the Fifth Circuit decided
            _____

            that  removal  of  a  Texas  workers'  compensation  case  in

            violation  of  section  1445(c)  should  be  treated  as  the

            embodiment  of  a procedural  defect  and,  thus, subject  to

            section  1447(c)'s  thirty  day   waiver  rule.    The  court

            interpreted  section 1447(c)  as  meaning that  any  wrongful
                                                            ___

            removal  is subject to waiver  so long as  the district court

            would have  had original subject matter  jurisdiction had the

            plaintiff initiated the action in federal court.  Id. at 787.
                                                              ___

            Since the  plaintiff in Williams  could have chosen  to bring
                                    ________

            her Texas claim  as an original  diversity action, the  court

            held  that   she  waived  her  objection   to  federal  court

            jurisdiction  by waiting  more  than thirty  days  to seek  a

            remand.  Id. at 788.
                     ___

-8-



The  Eighth  Circuit, however,  has taken  the view

            that where Congress expressly restricts  removal jurisdiction

            over a particular class of cases, wrongful removal should not

            be treated  as a  "mere procedural irregularity"  waivable by

            the  parties,  but as  a  violation  of the  court's  limited

            subject matter jurisdiction.

                 The fact  that [plaintiff]  could have  invoked the
                 original   jurisdiction   of   the  federal   court
                 initially is irrelevant. . . .  The jurisdiction of
                 the lower federal courts, both original and removal
                 is entirely a creature of statute. . .  . If one of
                 the statutory requirements is not met, the district
                 court has no jurisdiction.

            Hurt v.  Dow Chem. Co., 963  F.2d 1142, 1145 (8th  Cir. 1992)
            ____     _____________

            (determining  that a  failure to  object to  lack of  removal

            jurisdiction under   1441(b) did not operate as a waiver).

                     We need not choose between these contradictory views

            because in  this case there was  neither removal jurisdiction

            nor  original  diversity  jurisdiction.    Unlike  the  Texas

            statute  at issue  in  Williams, Maine's  compensation scheme
                                   ________

            does not permit  a de  novo state court  action for  workers'
                               __  ____

            compensation benefits.   See Dorey v.  Forster Mfg. Co.,  591
                                     ___ _____     ________________

            A.2d  240, 241  (Me.  1991).    By  reason  of  the  policies

            expressed in Erie R.R.  Co. v. Tompkins, 304 U.S.  64 (1938),
                         ______________    ________

            the state's rule barring suitors from bringing such an action

            de novo  in its own courts must be applied to bar an original
            __ ____

            diversity  action  in  the   forum's  federal  courts.    See
                                                                      ___

            Feinstein v. Massachusetts Gen. Hosp., 643 F.2d 880, 888 (1st
            _________    ________________________

-9-



Cir. 1981) (stating that Erie policies requiring adherence to
                                     ____

            state door-closing statutes likewise require a  federal court

            to apply  state-created administrative limitations  on rights

            to recovery) (citing Woods v. Interstate Realty Co., 337 U.S.
                                 _____    _____________________

            535  (1949)); Construction  Aggregates  Corp.  v.  Rivera  de
                          _______________________________      __________

            Vicenty, 573 F.2d  86, 96  (1st Cir. 1978)  (holding that  if
            _______

            Puerto  Rico does not give its own courts jurisdiction over a

            claim collaterally attacking workers' compensation  rates for

            locally  hired  workers,  a  federal  court  cannot  exercise

            diversity  jurisdiction  over  the  claim);  accord  Dial  v.
                                                         ______  ____

            Hartford Accident & Indem.  Co., 863 F.2d 15 (5th  Cir. 1989)
            _______________________________

            (examining Mississippi  workers' compensation law);  Trapp v.
                                                                 _____

            Goetz, 373 F.2d 380 (10th Cir. 1966) (examining state pension
            _____

            law); Shultz v. Lion Oil Co., 106 F. Supp. 119 (D. Ark. 1952)
                  ______    ____________

            (examining  Arkansas  workers'   compensation  law),   appeal
                                                                   ______

            dismissed, 202 F.2d 752 (8th Cir. 1953). 
            _________

                      Moreover, the limited  supplementary and  appellate

            authority exercised  by  the  Maine  courts  over  Commission

            proceedings    finds   no   analog   in   federal   diversity

            jurisdiction.   As courts  of original  jurisdiction, federal
                                          ________

            district courts sitting in diversity jurisdiction do not have

            appellate  power,  nor the  right  to  exercise supplementary

            equitable control  over original  proceedings  in the state's

            administrative tribunals.  See  Rooker v. Fidelity Trust Co.,
                                       ___  ______    __________________

            263  U.S.  413,  416  (1923) (noting  that  the  jurisdiction

-10-



possessed by federal district courts is "strictly original");

            Barrow  v. Hunton,  99 U.S.  80,  82 (1879)  (explaining that
            ______     ______

            federal   courts  may   not   exercise  control   over  state

            proceedings by entertaining  supplementary actions which  are

            but incidents of  state suits);   MacKay v.  Pfeil, 827  F.2d
                                              ______     _____

            540,  545  (9th  Cir.  1987)  (holding  that  a  request  for

            declaratory relief  that does  not state  a new case  arising

            upon new facts, but in reality seeks review and correction of

            a state court judgment is not within federal court's original

            jurisdiction);  cf. 1A  Moore's  Federal Practice,  supra,   
                            ___     _________________________   _____

            0.167[6]   (Supp.  1994)   (where  state  courts   have  only

            appellate,  quasi-administrative review  over the  claim, the

            proceeding "is not  a civil action  within the cognizance  of

            the original jurisdiction of the federal court").4 

                      We need go no  further.  In the absence  of federal

            subject matter jurisdiction, we  cannot proceed to the merits

            of this appeal,  and the case must  be remanded to the  state

                                
            ____________________

            4.   Any claim  in this  case not  covered  by the  foregoing
            principles would  be subject  to dismissal under  the related
            doctrine of Burford-type abstention.  The state has signalled
                        ____________
            its  interest in  regulatory coherency  by  concentrating all
            claims  in an exclusive  administrative process, and parallel
            federal  suits could "in a very real  sense . . . disrupt the
            regulatory scheme."   Allstate Ins. Co. v.  Sabbagh, 603 F.2d
                                  _________________     _______
            228, 233 (1st  Cir. 1979);  see also Bath  Memorial Hosp.  v.
                                        ________ ____________________
            Maine  Health Care Fin. Com.,  853 F.2d 1007,  1013 (1st Cir.
            ____________________________
            1988) (holding that a  court should abstain when an  exercise
            of jurisdiction might lead  to a parallel federal `regulatory
            review'   mechanism,   complicating  state   administration);
            Construction  Aggregates   Corp.,  573  F.2d  at   91-93,  96
            ________________________________
            (applying  principles of  Burford-type abstention  to various
                                      ____________
            claims relating to workers' compensation law).

                                         -11-



court.  See Halleran v. Hoffman, 966 F.2d 45, 47-48 (1st Cir.
                    ___ ________    _______

            1992).

                      Accordingly, the judgment is vacated and this  case
                                                   _______

            is  remanded to  the district  court which  shall immediately
                ________

            remand the action to the state court.  All parties shall bear

            their own costs.

-12-