Rogers, Timothy A. v. Tyson Foods Inc

• Court: Court of Appeals for the Seventh Circuit
• Decided: October 22, 2002
• Docket: 02-1040
• Status: Published

Opinion

In the United States Court of Appeals For the Seventh Circuit ____________

No. 02-1040 TIMOTHY A. ROGERS, WENDY A. ROGERS, and ALAN WESTFALL, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v.

TYSON FOODS, INCORPORATED, Defendant-Appellee. ____________ Appeal from the United States District Court for the Southern District of Illinois. No. 01 C 610—Michael J. Reagan, Judge. ____________ ARGUED SEPTEMBER 18, 2002—DECIDED OCTOBER 22, 2002 ____________

Before BAUER, MANION, and ROVNER, Circuit Judges. MANION, Circuit Judge. Plaintiffs, who are consumers of Tyson chicken, sued in state court alleging that Tyson fraudulently infused its chicken products with water and concealed the deceptive practice from consumers. Tyson removed the lawsuit to federal court. Plaintiffs appeal the district court’s denial of their motion to remand to state court and the subsequent dismissal of this case. Because we conclude that the district court lacked the federal ques- 2 No. 02-1040

tion jurisdiction necessary to remove this action from state court, we reverse with instructions to remand this suit to state court.

I. Tyson Foods, Incorporated (“Tyson”) sells chicken throughout the United States. Timothy and Wendy Rogers, and Alan Westfall, (“plaintiffs”) consume Tyson chicken. On August 14, 2001, plaintiffs filed a putative class action in the Madison County, Illinois Circuit Court against Ty- son, alleging that Tyson violated the Illinois Consumer Fraud and Deceptive Trade Practices Act, 815 ILES § 505/1, et seq., by inflating the weight of chicken carcasses with water during the processing of the chicken, and by conceal- ing this practice from the public. Plaintiffs’ first claim was for consumer fraud under the Illinois statute. Plain- tiffs’ second claim was for unjust enrichment. Pursuant to 28 U.S.C. § 1441(a), Tyson timely removed this case to the United States District Court for the South- ern District of Illinois. In its notice of removal, Tyson al- leged that the district court had federal question jurisdic- tion because the Poultry Products Inspection Act, 21 U.S.C. § 451, et seq. (“PPIA”), triggers the doctrine of complete preemption. Plaintiffs filed a motion to remand, and Ty- son filed a motion to dismiss. The district court denied the motion to remand, basing its decision on the PPIA’s pre- emption clause, 21 U.S.C. § 467e. Section 467e declares that “[m]arking, labeling, packaging, or ingredient require- ments (or storage or handling requirements found by the Secretary to unduly [sic] interfere with the free flow of poultry products in commerce) in addition to, or differ- ent than, those made under this chapter may not be im- posed by any State or Territory or the District of Colum- No. 02-1040 3

bia . . . .” 21 U.S.C. § 467e. The district court reasoned that § 467e “completely preempts [state] marking, labeling, packaging, and ingredient requirements for poultry [and that] [p]laintiffs’ claims fall within the scope of the pre- empted field.” The district court then granted Tyson’s motion to dismiss, reasoning that the PPIA provides plaintiffs with no basis for relief. On appeal, plaintiffs contend that the district court lacked jurisdiction over this case and therefore erred in denying their motion to remand.

II. Because the propriety of removing a state action to fed- eral court is a question of federal jurisdiction, we review de novo the denial of a motion to remand to state court. Seinfeld v. Austen, 39 F.3d 761, 763 (7th Cir. 1994). Removal of a state civil suit to federal court is proper where “the district courts of the United States have original juris- diction.” 28 U.S.C. § 1441(a). As diversity of citizenship is not alleged, the removal’s propriety hinges on wheth- er the district court had federal question jurisdiction. See Seinfeld, 39 F.3d at 763. Plaintiffs’ complaint asserts solely state law claims. Un- der the well-pleaded complaint doctrine it would thus ap- pear at first blush that the district court lacked subject matter jurisdiction and that the complaint was not re- movable. See Moran v. Rush Prudential HMO, Inc., 230 F.3d 959, 966 (7th Cir. 2000). Tyson argues, and the dis- trict court held, however, that removal was justified under the doctrine of complete preemption, which is a corollary to the well-pleaded complaint rule. Rice v. Panchal, 65 F.3d 637, 640 n.2 (7th Cir. 1995). Complete, or field, preemp- tion exists where “Congress has so completely preempted 4 No. 02-1040

a particular area that no room remains for any state reg- ulation and the complaint would be ‘necessarily federal in character.’ ” Bastien v. AT&T Wireless Serv., Inc., 205 F.3d 983, 986 (7th Cir. 2000) (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987)). We find com- plete preemption where there is a “congressional intent in the enactment of a federal statute not just to provide a federal defense to a state created cause of action but to grant a defendant the ability to remove the adjudica- tion of the cause of action to a federal court by transform- ing the state cause of action into a federal cause of action.” 14B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 3722.1 (3d ed. 1998 & Supp. 2002) (emphasis added); see also Jass v. Prudential Health Care Plan, Inc., 88 F.3d 1482, 1490 (7th Cir. 1996) (reasoning that complete preemption “converts a state law claim into an action arising under federal law”) (in- ternal quotation omitted). In that vein, plaintiffs argue that “ ‘complete preemp- tion’ cannot exist here because there is no private right of action under the PPIA” into which either of their state law causes of action could be transformed. Significantly, Tyson concedes that the PPIA does not create a private right of action. Nevertheless, it argues that a private right of action is not a prerequisite to complete preemption. On this dispositive point, precedent compels us to agree with plaintiffs. As this circuit interprets the law, the “ability to bring suit under [federal law] is an element of ‘complete pre- emption.’ ” Vorhees v. Naper Aero Club, Inc., 272 F.3d 398, 404 (7th Cir. 2001) (citing Rice, 65 F.3d at 641). Logically, complete preemption would not be appropriate if a fed- eral remedy did not exist in the alternative. Otherwise, a plaintiff would be forced into federal court with no relief No. 02-1040 5

available for “vindicating the same interest.” Railway Labor Executives Ass’n v. Pittsburgh & L.E.R.R., 858 F.2d 936, 942 (3d Cir. 1988). “Preemption is what wipes out state law, but the foundation for removal is the creation of federal law to replace state law.” Rice, 65 F.3d at 641 (quoting Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1075 (7th Cir. 1992)). Accordingly, “unless the federal law has created a federal remedy—no matter how limited—the federal law, of necessity, will only arise as a defense to a state law action” and will thus not give rise to the fed- eral question jurisdiction underlying complete preemp- tion. Id.; see also McQuerry v. American Med. Sys., Inc., 899 F. Supp. 366, 370 (N.D. Ill. 1995) (reasoning that, where there is no federal private right of action, “complaints in such cases do not even arguably raise a federal ques- tion and therefore are inappropriate for removal”). Most circuits share our view that the existence of a pri- vate right of action under federal law is an antecedent of complete preemption. See Wayne v. DHL Worldwide Ex- press, 294 F.3d 1179, 1184 (9th Cir. 2002); Schmeling v. NORDAM, 97 F.3d 1336, 1342 (10th Cir. 1996); Strong v. Telectronics Pacing Sys., Inc., 78 F.3d 256, 260 (6th Cir. 1996); Hudson Ins. Co. v. American Elec. Corp., 957 F.2d 826, 830 (11th Cir. 1992); Aaron v. National Union Fire Ins. Co., 876 F.2d 1157, 1164-65 (5th Cir. 1989); Railway Labor Execu- tives Ass’n, 858 F.2d at 942. But cf. Husmann v. Trans World Airlines, Inc., 169 F.3d 1151, 1152-54 (8th Cir. 1999) (find- ing complete preemption without discussing whether there was a replacement federal cause of action); id. at 1154-55 (Morris Sheppard Arnold, J., dissenting) (argu- ing that the defendant’s failure to point to a private right of action in the statute should have been fatal to its ar- gument for complete preemption). Tyson cites two decisions of this court as standing for the opposite proposition. First, Tyson maintains that, in 6 No. 02-1040

Bastien v. AT&T Wireless Serv., Inc., this court “flatly rejected the assertion that a federal remedy must exist for com- plete preemption.” Second, Tyson quotes Lister v. Stark, 890 F.2d 941 (7th Cir. 1989) for the proposition that “the availability of a federal remedy is not a prerequisite for federal preemption.” Id. at 946. We find both arguments unpersuasive. In Bastien, the district court held that the Federal Com- munications Act of 1934, 47 U.S.C. § 332(c)(3)(A) (“FCA”), completely preempted claims regarding mobile-phone rates and market entry, and then granted the defendant’s motion to dismiss for failure to state a claim. Bastien, 205 F.3d at 986. The plaintiff only appealed the former rul- ing, that the FCA effected complete preemption; he did not appeal the dismissal for failure to state a claim. Id. Concluding that Congress intended the FCA completely to preempt the field, we affirmed the district court’s de- cision that the FCA completely preempted the plain- tiff’s claims; we did not, however, address the question of whether complete preemption could exist where the 1 federal statute provided no private right of action. Id. Ty- son would have us infer that a federal remedy is not a necessary element of complete preemption from the Bastien panel’s failure to discuss whether the FCA created a private right of action. For two reasons, we decline Ty- son’s invitation to read Bastien so broadly. First, the FCA creates a private cause of action. See 47 U.S.C. § 207; Gilmore v. Southwestern Bell Mobile Sys., 156 F. Supp. 2d 916, 922 (N.D. Ill. 2001); DeCastro v. AWACS,

1 Bastien’s text does not make it clear whether the plaintiff’s failure to appeal the district’s court’s ruling that he had failed to state a claim led this court to conclude that it did not need to discuss the “no federal remedy” issue. No. 02-1040 7

Inc., 935 F. Supp. 541, 549-50 (D.N.J. 1996). The holding of Bastien is therefore not incompatible with the settled rule that a federal remedy is a precondition to the exis- tence of complete preemption. Second, it would be a mistake to read Bastien for the broad proposition that this Circuit has “flatly rejected the assertion that a federal remedy must exist for complete preemption.” Not only did the Bastien panel not “flatly reject” the federal remedy requirement, it did not even address the issue. As discussed above, this court’s ear- lier opinion in Rice specifically held that a private right of action under federal law is an antecedent to com- plete preemption. This holding was in place before Bastien and the Bastien decision says nothing that alters the hold- ing in Rice. Therefore, Rice remains good law and Bastien does not undermine the rule that a federal private right of action is an element of complete preemption. Tyson also relies on Lister v. Stark to support its claim that for complete preemption a private right of action is unnecessary. In Lister, we held that the Employee Retire- ment Income Security Act of 1974, 29 U.S.C. §§ 1001 et seq. (“ERISA”), completely preempted the plaintiff’s state law claims, and that the plaintiff failed to state a claim under the civil enforcement provisions of ERISA. Lister, 890 F.2d at 946. Unlike the PPIA, however, ERISA does create a private right of action. See id. at 944 (citing 29 U.S.C. § 1132). It is true that in Lister the plaintiff’s claim for breach of an oral contract was not available under ERISA’s remedial provisions. Id. at 946. Nevertheless, Lister stands for the unexceptional proposition that com- plete preemption can exist even where a particular plain- tiff seeks a remedy that Congress chose not to provide when it effected complete preemption. “The policy choices reflected in the inclusion of certain remedies and the 8 No. 02-1040

exclusion of others under the federal scheme would be completely undermined if ERISA-plan participants and beneficiaries were free to obtain remedies under state law that Congress rejected in ERISA.” Id. (quoting Pilot Life Ins. Co. v. Dedaux, 481 U.S. 41, 54 (1987)). A federal cause of action need not provide the same remedies as the pre- empted state cause of action. “The chance that the ‘nature of relief’ available under federal law might be different from that under state law does not affect the jurisdictional analysis.” Schmeling, 97 F.3d at 1343 (discussing Avco v. Aero Lodge No. 735, 390 U.S. 557 (1968)). Finally, Tyson contends that the PPIA expressly denies plaintiffs’ causes of action, and then cites Aaron v. Na- tional Union Fire Ins. Co., 876 F.2d at 1165 for the proposi- tion that “express denial of a cause of action may serve the same function as the creation of a federal cause of action” for purposes of complete preemption. Tyson’s argument is without merit. In Aaron, the Fifth Circuit rejected the precise contention that Tyson makes here: The language from Franchise Tax [Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983)] quoted above suggests that the express denial of a cause of action may serve the same function as the creation of a fed- eral cause of action. . . . However, the “express denial” of a cause of action will always be present where fed- eral law preempts state law. Every time federal pre- emption is asserted as a defense, and the defendant seeks to use that defense as a basis for removal juris- diction, the defendant can assert that the “express denial” language of Franchise Tax is justified. Something more must therefore be required to create removal juris- diction if the well-pleaded complaint rule is to have con- tinued vitality, a result clearly indicated by the cases. No. 02-1040 9

Aaron, 876 F.2d at 1165 (emphasis added). We agree with the Fifth Circuit on this point because, as we made clear in Rice, the “something more . . . required to create re- moval jurisdiction” includes a private right of action un- der the federal statute. We also note that district courts within the Fifth Circuit interpret Aaron as holding that a private right of action is a prerequisite to complete pre- emption. See, e.g., Sherron v. Private Issue by Discover, 977 F. Supp. 804, 807 (N.D. Miss. 1997); City of Laredo v. Texas Mexican Railway Co., 935 F. Supp. 895, 897 (S.D. Tex. 1996). Tyson’s reliance on Aaron is, accordingly, misplaced.

III. Tyson does not dispute the fact that the PPIA provides no private right of action, yet complete preemption can only exist where, inter alia, the federal statute provides a private right of action. Therefore, the PPIA does not trigger complete preemption. We accordingly conclude that removal of this action to federal court was improper, and we must reverse and remand this case to the dis- trict court with directions to remand the action to state court for lack of federal subject matter jurisdiction. Given the absence of complete preemption, we are obligated to rule in plaintiffs’ favor. Clearly, however, this prelimi- nary decision is not the last word on preemption. Al- though the PPIA provides no private right of action, it and the existing and pending federal regulations main- tain wide control over the processing and distribution of poultry products nationally. Tyson contends that plaintiffs’ complaint essentially attacks Tyson for failing to meet labeling requirements that exceed the PPIA’s labeling strictures, and that the PPIA preempts state regulation of labeling that exceeds 10 No. 02-1040

federal requirements. Assuming that Tyson correctly char- acterizes plaintiffs’ complaint, there is certainly prece- dent for its preemption claims. See National Broiler Council v. Voss, 44 F.3d 740, 743-47 (9th Cir. 1994) (holding that the PPIA’s preemption clause expressly preempted state labeling requirements in addition to, or different than, federal labeling requirements). National Broiler Council, however, was a case of ordinary, and not complete, pre- emption. See Hue v. Farmboy Spray Co., Inc., 896 P.2d 682, 691 (Wash. 1995) (citing National Broiler Council in support of ordinary preemption). Ordinary preemption is an af- firmative defense that Tyson may assert in state court; it is not a basis for federal jurisdiction under the com- plete preemption doctrine. See Smith v. GTE Corp., 236 F.3d 1292, 1313 (11th Cir. 2001) (reasoning that “our con- clusion that the complete preemption doctrine does not provide a basis for federal jurisdiction in this action does not preclude the parties from” pleading the defense of ordinary preemption in state court). But for the lack of a federal remedy, the federal preemption, although now labeled “ordinary,” nevertheless appears to be extensive. Just how extensive this ordinary preemption may be, how- ever, must now be determined in the Illinois state court system. REVERSED and REMANDED.

A true Copy: Teste:

_____________________________ Clerk of the United States Court of Appeals for the Seventh Circuit

USCA-02-C-0072—10-22-02