© 2014 The Texas Lawbook.
By David Coale
Special Contributing Writer to The Texas Lawbook
(June 18) – In a recent published opinion, the Fifth Circuit revisited the recurring question of how substantial a federal question must be to create federal jurisdiction and allow removal of a case from state to federal court. Davoodi v. Austin ISD, No. 13-50823 (June 16, 2014).
This question has great strategic importance in areas where state and federal law overlap, such as consumer claims against financial institutions and mortgage servicers, employment law, antitrust, and some environmental disputes.
Plaintiffs often try to avoid invoking federal law to prevent removal, while defendants argue that substantial federal issues remain that justify jurisdiction in federal court.
Davoodi may have shifted the applicable test for federal jurisdiction in a way that encourages future removals.
Davoodi was an employment dispute about an alleged wrongful retaliation. Notably, the Court did not analyze whether the plaintiff made a claim under federal law in the specific causes of action alleged. Instead, it focused entirely on how much the pleaded facts involved an alleged violation of federal law.
This focus contrasts with the framework used by Howery v. Allstate Ins. Co., which rejected federal jurisdiction because “[f]rom its context, it appears that [Plaintiff’s] mention of federal law merely served to describe types of conduct that violated the DTPA, not to allege a separate cause of action under the FCRA,” and because a violation of federal law was not an “essential element” of the plaintiff’s state law claims. 243 F.3d 912, 918-919 (5th Cir. 2001).
Davoodi sued in Texas state court, alleging state law claims for “national origin discrimination” and intentional infliction of emotional distress, and a claim for “retaliation” without a specified basis in state or federal law. The first of the two paragraphs in the “Facts” section of the petition said:
“On or about June 2, 2011 Plaintiff filed a Charge of Discrimination with the EEOC and the Texas Human Rights Commission. (See Charge attached as Exhibit ‘A’ and fully incorporated herein). This charge alleged that Defendant discriminated against Plaintiff based on his National Origin (Iranian). On February 3, 2012 the EEOC issued a Dismissal and Notice of Rights. The Texas Human Rights Commission did not issue a dismissal/right to sue.”
The Court noted that the incorporation of the Charge made it “part of [plaintiff’s] complaint for all purposes,” and created federal jurisdiction because the Charge contained the claim:
“I have been and continue to be discriminated against, in violation of Title VII of the 1964 Civil Rights Act, as amended, [and] the Texas Commission on Human Rights Act, as amended, because of my national origin (Iranian).”
The Court then remanded to the district court as to the dismissal of Davoodi’s claims under Fed. R. Civ. P. 12(b)(6), to give the plaintiff a chance to replead under Lozano v. Ocwen Federal Bank, 489 F.3d 636 (5th Cir. 2007).
The movant’s Rule 12 arguments, as reflected in the district court opinion, address whether the plaintiff properly pleaded the elements of a claim for “retaliation” under either state or federal law.
The Fifth Circuit did not engage the basis for that claim in its analysis of jurisdiction, focusing entirely on the allegations incorporated into the fact section as described above. That focus can be reconciled with Allstate because the mention of federal law in the Allstate pleading is substantially smaller, as a percentage of the overall allegations, than what Davoodi pleaded. But the Davoodi analytical framework — focusing on the relative significance of fact allegations, as opposed to the basis for legal claims specifically pleaded by the plaintiff — may well invite new removals based on a “percentage-based” analysis of a pleading’s factual allegations.
The framework used by Davoodi expands the potential arguments for removal suggested by Allstate.
David Coale is a partner at Lynn Tillotson Pinker & Cox, where he is an expert in appellate law and publishes a popular Blog about the Fifth Circuit called 600Camp.com.
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