Revised May 21, 1999
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT _______________
No. 98-10042 _______________
ANDRE L. COPLING,
Plaintiff-Appellee,
VERSUS
THE CONTAINER STORE, INC.,
Defendant-Appellant.
_________________________
Appeal from the United States District Court for the Northern District of Texas _________________________
May 6, 1999
Before DAVIS, SMITH, and WIENER, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
The Container Store appeals the remand of Andre Copling's
breach of contract claim. Because Congress has denied us
jurisdiction over appeals from such remands, we dismiss the appeal.
I.
Copling was an employee of The Container Store, Inc. (“the
Store”), which had established a plan that provides employees and their dependents with medical benefits, one of which is a “flexible
benefit” that allows employees to deduct pretax dollars from their
paycheck to cover eligible medical expenses. The deducted money is
placed in a healthcare reimbursement account, from which the
employee may draw funds for eligible expenses. In compliance with
tax regulations, any unused funds in the account at the end of the
plan year must be forfeited.
Copling informed the Store that he planned to have some
orthodontic work performed. The Store alleges that he entered into
a flexible benefit plan providing for the Store to deduct $1,500
from his salary to fund unreimbursed medical and dental expenses;
Copling signed a form, entitled “The Container Store 1995 Flexible
Benefit Enrollment Form,” authorizing these deductions and
providing that any contributions not used during the plan year are
forfeited. Copling was paid $300 from the account for orthodontic
expenses.
Copling argues that he was not informed that any unused funds
would be forfeited. He thought he bargained for a simple payroll
deduction to fund unreimbursed medical expenses, but the Store gave
him an ERISA1 health care reimbursement account instead. The Store
contends that Copling forfeited the remainder of the money pursuant
to the terms of the plan.
Copling filed a breach of contract action in state court. The
1 See the Employee Retirement and Income Security Act of 1974 (“ERISA”), 29 U.S.C. §§ 1001 et seq.
2 Store removed to federal court and sought summary judgment. The
district court granted Copling's motion to remand.
II.
The Store seeks reversal on the ground that Copling's claim is
not subject to the doctrine of conflict preemption. Because we
conclude that the district court remanded because it decided that
it was without subject matter jurisdiction, we have no appellate
jurisdiction and thus cannot reach the merits of the conflict
preemption issue.
A.
We must examine the basis of our appellate jurisdiction, sua
sponte if necessary. See Castaneda v. Falcon, 166 F.3d 799, 801
(5th Cir. 1999); Jones v. Collins, 132 F.3d 1048, 1051 (5th Cir.
1998). Likewise, a district court must inquire into its
jurisdiction, even if the parties have not questioned it. See Free
v. Abbott Labs., Inc., 164 F.3d 270, 272 (5th Cir. 1999). A well-
pleaded complaint raising a federal question provides one basis for
subject matter jurisdiction.2
2 See 28 U.S.C. § 1331 (“The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”); see also Louisville & Nashville R.R. v. Mottley, 211 U.S. 149, 152-54 (1908) (explaining well-pleaded complaint rule).
3 B.
As we recently explained in McClelland v. Gronwaldt, 155 F.3d
507 (5th Cir. 1998), there are two types of preemption under ERISA.
First, ERISA may occupy a particular field, resulting in complete
preemption under § 502(a), 29 U.S.C. § 1132(a). See Metropolitan
Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1987); McClelland,
155 F.3d at 516-17.3 This functions as an exception to the well-
pleaded complaint rule; “Congress may so completely pre-empt a
particular area that any civil complaint raising this select group
of claims is necessarily federal in character.” Metropolitan Life,
481 U.S. at 64-65. Section 502, by providing a civil enforcement
cause of action, completely preempts any state cause of action
seeking the same relief, regardless of how artfully pled as a state
action.
Furthermore, because such a claim presents a federal question,
it provides grounds for a district court's exercise of jurisdiction
on removal from a state court.4 If the plaintiff moves to remand,
all the defendant has to do is demonstrate a substantial federal
claim, e.g., one completely preempted by ERISA, and the court may
3 As in McClelland, we make no comment on the breadth of ERISA's complete preemption under § 502(a). See McClelland, 155 F.3d at 517 n.34. 4 See 28 U.S.C. § 1441 (providing for exercise of removal jurisdiction whenever district court could have exercised original jurisdiction); 29 U.S.C. § 1132(f) (conferring federal jurisdiction over ERISA civil enforcement claims); see also, e.g., Anderson v. Electronic Data Sys. Corp., 11 F.3d 1311, 1315 (5th Cir. 1994) (holding that state claim that falls within § 502 civil enforcement provision is a federal claim, creating removal jurisdiction).
4 not remand. Once the court has proper removal jurisdiction over a
federal claim, it may exercise supplemental jurisdiction over state
law claims, see 28 U.S.C. § 1367, even if it dismisses or otherwise
disposes of the federal claim or claims.
C.
At issue here, however, is conflict preemption, also known as
ordinary preemption, under § 514. See 29 U.S.C. § 1144. “State
law claims which fall outside the scope of ERISA's civil
enforcement provision, § 502, even if preempted by § 514(a), are
still governed by the well-pleaded complaint rule and, therefore,
are not removable under the complete-preemption principles
established in Metropolitan Life.” Dukes v. U.S. Healthcare, Inc.,
57 F.3d 350, 355 (3d Cir. 1995).5
Conflict preemption simply fails to establish federal question
jurisdiction. Rather than transmogrifying a state cause of action
into a federal one, as occurs with complete preemption, conflict
preemption serves as a defense to a state action.6 “When the
5 See also Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 23-27 (1983) (holding that preemption under § 514(a) does not permit a defendant to remove where the plaintiff's state claim falls without the scope of ERISA's civil remedy provisions); McClelland, 155 F.3d at 516. 6 See Soley v. First Nat'l Bank of Commerce, 923 F.2d 406, 408-09 (5th Cir. 1991) (relying on distinction between complete preemption and preemption defense and holding that defense does not confer removal jurisdiction); see also Rice v. Panchal, 65 F.3d 637, 639-40 (7th Cir. 1995) (noting that if issue is “merely” conflict analysis, it serves only as a defense, and the complaint is not recharacterized as federal).
5 doctrine of complete preemption does not apply, but the plaintiff's
state claim is arguably preempted under § 514(a), the district
court, being without removal jurisdiction, cannot resolve the
dispute regarding preemption. It lacks power to do anything other
than remand to the state court where the preemption issue can be
addressed and resolved.” Dukes, 57 F.3d at 355 (citing Franchise
Tax Bd., 463 U.S. at 27-28).7
Hence, when a complaint raises state causes of action that are
completely preempted, the district court may exercise removal
jurisdiction; but when a complaint contains only state causes of
action that the defendant argues are merely conflict preempted, the
court must remand for want of subject matter jurisdiction. When a
complaint raises both completely preempted claims and arguably
conflict preempted claims, the district court may exercise removal
jurisdiction over the completely preempted claims and supplemental
jurisdiction over the remaining claims.8
D.
7 See also Soley, 923 F.2d at 409 (holding that, because remand after rejection of complete preemption is jurisdictional, district court's comments on substantive preemption defense are irrelevant); 28 U.S.C. § 1447(c) (stating that “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded”). This assumes that the court lacks an independent basis for original jurisdiction, such as diversity under 28 U.S.C. § 1332. 8 See, e.g., Memorial Hosp. Sys. v. Northbrook Life Ins. Co., 904 F.2d 236, 241 (5th Cir. 1990) (ensuring that § 502 preemption of one claim provides basis for jurisdiction, and then addressing conflict preemption of supplemental claims).
6 The Store contends only that ERISA conflict-preempts Copling's
claim. It nowhere cites § 502, but does cite to § 514(a) and
relies on conflict-preemption arguments and authority.9 Because
conflict preemption does not function as an exception to the well-
pleaded complaint rule, the district court had no federal claims
before it at any time. It never had valid subject matter
jurisdiction. It had an obligation, therefore, to remand
immediately. See § 1447(c).
The court did not remand immediately; instead, it commented
that ERISA conflict-preempted none of the claims and then
remanded.10 Nonetheless, the district court did remand pursuant to
9 The Store insists that it has preserved an argument of complete preemption and asks us to decide that issue for the first time on appeal. The record does not support the Store's assertion that it has argued complete preemption all along. The removal notice discusses only the “relates to” language of ordinary preemption; it does not allege complete preemption. The first amended answer to the complaint raises the affirmative defense of ERISA preemption pursuant to 29 U.S.C. §§ 1446 et seq. But complete preemption arises from 29 U.S.C. § 1432, not § 1446; and it is not an affirmative defense.
The Store's response to the remand motion again discusses the “relates to” standard of ordinary preemption and nowhere mentions complete preemption under § 502; the same is true of the Store's summary judgment motion. Although we invited the Store to address whether it had raised and preserved a complete preemption argument, the Store has failed to cite a single place in the record where it previously had raised the argument, but rather merely asserts that the argument is preserved and proceeds to make it. This legerdemain of parlaying an ordinary preemption argument into a new complete preemption argument does not suffice. 10 More properly, the court should have remanded without making any further determination; the state court can resolve whether the conflict preemption defense applies. Because the court lacked jurisdiction, its comments on ordinary preemption are void and can be ignored by the state court. See Bogle v. Phillips Petroleum Co., 24 F.3d 758, 762 (5th Cir. 1994) (holding that order granting partial nonsuit “is void and of no effect” because district court lacked subject matter jurisdiction after deciding it had no federal ERISA claims); Soley, 923 F.2d at 409 (holding that, because remand was jurisdictional, court's statements on substantive ERISA preemption defense would have no preclusive (continued...)
7 § 1447(c) because it lacked subject matter jurisdiction. Copling's
remand motion explicitly seeks remand pursuant to § 1447(c).
Furthermore, the district court noted that it could hear the
motion, untimely filed more than thirty days after removal, only
because it was based on a lack of subject matter jurisdiction. It
stated no other ground for the remand.
E.
Given this background, we must decide whether we have
jurisdiction to review the order of remand. We begin with
28 U.S.C. § 1447(d), which provides, “An order remanding a case to
State court from which it was removed is not reviewable on appeal
or otherwise . . . .” Interpreted in pari materia with § 1447(c),
this indicates that an appellate court lacks jurisdiction to review
a remand under § 1447(c); conversely, remands on other grounds may
be reviewed.11 Reviewable non-§ 1447(c) remands constitute a narrow
class of cases, meaning we will review a remand order only if the
district court “clearly and affirmatively” relies on a non-§
1447(c) basis. See Soley, 923 F.2d at 409; see also Tillman v. CSX
Transp., Inc., 929 F.2d 1023, 1027 (5th Cir. 1991).
10 (...continued) effect on state court consideration of the same issue). We likewise make no comment on the merits of the preemption defense. 11 See Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 127-28 (1995); Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 345-46 (1976); see also, e.g., Angelides v. Baylor College of Med., 117 F.3d 833, 835-36 (5th Cir. 1997); Soley, 923 F.2d at 407-08.
8 Under § 1447(d), we may not review a § 1447(c) remand, based
on a putative want of jurisdiction, even if the district court's
remand is plainly erroneous. See Thermtron, 423 U.S. at 351;
Angelides, 117 F.3d at 836; Tillman, 929 F.2d at 1028; Soley,
923 F.2d at 408. We refuse to review even erroneous remands, “to
prevent delay through protracted litigation of jurisdictional
issues.” Id. Although the district court, however briefly and
without preclusive effect, mistakenly felt compelled to address
conflict preemption, it also properly remanded for want of
jurisdiction. We cannot review this § 1447(c) remand under
§ 1447(d).12
F.
The Store seeks to avoid § 1447(d) by arguing that we can
review the merits as separable from, and collateral to, the remand.
We cannot. In Angelides, we explained that an order is separable,
and hence appealable notwithstanding § 1447(d), if two conditions
are satisfied: “First, it must precede the order of remand in
logic and in fact, so as to be made while the district court had
control of the case. Second, the order sought to be separated must
be conclusive. An order is conclusive if it will have the
12 Cf. Bogle, 24 F.3d at 762 (5th Cir. 1994) (dismissing appeal of remand that discussed discretionary factors because the district court had indicated its lack of a federal claim, and noting that “[t]he critical distinction for determining appealability is the presence of federal subject matter jurisdiction prior to the order of remand.”).
9 preclusive effect of being functionally unreviewable in the state
court.” Angelides, 117 F.3d at 837 (citations and quotations
omitted); see also Soley, 923 F.2d at 409-10.
The instant order meets neither condition. As we held in
Soley when we dismissed the same argument:
[T]he rejection of an ERISA preemption defense does not 'in logic and in fact' precede a remand order because, under the 'well-pleaded complaint' rule, a defense does not confer removal jurisdiction. Instead, if the district court considered the preemption defense, it did so only because of an erroneous belief that the defense was relevant to the jurisdictional issue . . . . In this case, . . . because we interpret the remand order as jurisdictional, the state court will have an opportunity to consider the appellants' preemption defense and the district court's order will have no preclusive effect.
Id.13 The Store offers no ground for distinguishing Soley, and we
know of none.14 The discussion of ERISA conflict preemption is not
13 Cf. Mitchell v. Carlson, 896 F.2d 128, 131-34 (5th Cir. 1990) (reviewing portion of remand order that resubstituted an individual defendant for the United States, and thus destroyed diversity jurisdiction, because it necessarily preceded the remand and would not be reviewed by the state court). 14 The Store argues that McClelland's “two-step inquiry” into complete preemption requires finding ordinary preemption before addressing whether the claim falls within § 502(a). It then argues that a rejection of an ordinary preemption defense in this process constitutes a separable, appealable order. The Store's argument eviscerates § 1447(d)'s limitation on appeals from jurisdictional remands in ERISA preemption cases, making all rejected preemption claims appealable whenever the court discusses ordinary preemption.
In McClelland, we described complete preemption as a “two-prong[ed] analysis” that requires finding the claim both (1) preempted within the meaning of § 514 (ordinary preemption) and (2) within § 502(a)'s civil enforcement provisions. McClelland, 155 F.3d at 517. Because a claim that falls within § 502(a)'s civil enforcement provisions usually, if not always, also will be preempted by § 514(a), a district court addressing complete preemption in a jurisdictional posture might address preemption the same way we did in McClellandSSassume, arguendo, ordinary preemption and address whether the claim falls within the scope of § 502(a). Cf. id. Indeed, the Supreme Court in Metropolitan Life addressed only § 502, ignoring conflict preemption under § 514. (continued...)
10 a separable, appealable order.
Because the district court remanded pursuant to § 1447(c), the
appeal is DISMISSED for want of jurisdiction under § 1447(d).
14 (...continued) See Metropolitan Life, 481 U.S. at 63-66.
If the court finds no preemption under § 502(a), it may remand without commenting on the ordinary preemption defense. But when a court addresses the two prongs sequentially, the ordinary preemption step does not become a separable, appealable order; it remains part of the jurisdictional analysis. When a court mistakenly feels compelled to address ordinary preemption even though complete preemption is not argued, and yet remands for want of subject matter jurisdiction, its error is irrelevant, and § 1447(d) denies us jurisdiction on appeal.
11 WIENER, Circuit Judge, specially concurring:
I concur in the foregoing opinion, but I write separately
(1) to emphasize the narrowness of our holding today, (2) to
encourage the state court to which this case is remanded to
recognize that counsel for Copling so grossly mischaracterized his
client’s cause of action as a state breach of contract claim as to
approach frivolousness; the most cursory of looks at the legal
document executed by Copling, a competent major, confirms beyond
cavil that he voluntarily signed an enrollment document in a dental
plan that is governed exclusively by ERISA, (3) to furnish
additional guidance to the courts and the litigants regarding the
interplay of ERISA preemption and the federal removal statute, and
(4) to note the importance of carefully pleading the appropriate
type of preemption —— conflict or complete —— in cases such as
this.
First, in concurring in the foregoing panel opinion, I start
with the observation that we are reaffirming the well-established
principle that 28 U.S.C. § 1447(d) precludes absolutely our review
of a district court’s order that, pursuant to § 1447(c), remands a
case to state court for lack of subject matter jurisdiction. As
the panel opinion correctly notes, not only is there no appellate
jurisdiction to review such a remand, but a district court that
concludes it lacks jurisdiction necessarily cannot adjudicate on
the merits any issue of ERISA conflict preemption. And, as I observe below, conflict preemption is the only kind of preemption
that the parties have placed before the district court in this
case.
Second, I acknowledge the important corollary that, when an
action is timely removed under § 1441(a), the district court to
which it has been removed does have jurisdiction to decide whether
a claim is completely preempted by ERISA, thereby making remand
improper. Importantly, in considering complete preemption, the
district court is not —— I repeat, not —— bound by a plaintiff’s
self-serving characterization of his claim; on the contrary, the
court can determine for itself whether in actuality the claim 15 asserted arises under an employee benefit plan covered by ERISA.
I cannot determine with any degree of certainty whether the able
trial judge in this case simply accepted the plaintiff’s
characterization of his claim as breach of contract under state
law, in a mistaken belief that the court was somehow bound under
the well-pleaded complaint doctrine (which it was not), or if the
court just failed to consider and discern the true ERISA nature of
the plaintiff’s complaint. I am satisfied, however, that the
district court was not bound to accept unquestioningly Copling’s
allegation that he entered into a contract with his employer
separate and apart from the very ERISA plan in which he enrolled,
15 See Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 66 (1997); Hansen v. Continental Ins. Co., 940 F.2d 971, 979 (5th Cir. 1991).
13 expressly and in writing. The court quite properly could have
considered whether Copling signed an election to have payroll
deductions used to fund his participation in the subject ERISA-
covered medical and dental plan (action that the limited record in
this case clearly confirms that he took), and could then have
treated the claim —— as none other than Copling himself elsewhere
characterized it —— as one for “misrepresentation of the terms of
the Plan,” undeniably a claim exclusively grist for the ERISA mill.
The saving grace of this misstep is that our colleague on the state
bench to which this case is remanded will have ample opportunity to
correct it.
Finally, I would urge the district courts of this Circuit to
remain mindful of the important burden they bear as a result of the
interaction of § 1447 and ERISA preemption: As § 1447(d) does not
permit appellate review of a remand order based on a conclusion
that no complete preemption exists, it is incumbent on the district
courts, when considering remand motions, to decide complete
preemption issues with the utmost of care, and —— importantly —— to
do so without addressing any conflict preemption issue that might
remain as an affirmative defense to be resolved subsequently,
regardless of whether the case is remanded to state court or
retained in federal court. In like manner, lawyers representing
defendants who are relying on ERISA preemption should remain ever
mindful that a federal district court cannot decide a question of
complete preemption unless it is asked to do so by a party —— the
14 court cannot “lawyer” the case on its own. As, alone, conflict
preemption will not sustain removal, it is the responsibility of
counsel for a defendant who seeks to remain in federal court by
meeting its burden of justifying remand, to articulate clearly and
with specificity —— and to establish —— a viable argument for
complete preemption. Even though a complete preemption issue
clearly lurks in the record of this case, it was not presented to
the district court. Thus, that court’s order of remand resolves no
preemption issue of any kind. Unless I miss my bet, however,
conflict preemption will be presented lucidly to the state court on
remand, where our learned state colleagues will, I am confident,
address these matters and decide them correctly.