Gardiner v. St. Croix District Governing Board of Directors

859 F.Supp.2d 728

Walter GARDINER, Individually and as Member of Healthquest, LLC, d/b/a Virgin Islands Kidney Center and the Caribbean Kidney Center, Plaintiffs,

v.ST. CROIX DISTRICT GOVERNING BOARD OF DIRECTORS, Individually and Collectively in their official capacity, Governor Juan F. Luis Hospital and Medical Center, a Corporation of the Virgin Islands, Jeff Nelson, CEO, CFO, COO, and Dr. Coleridge T. Franklin, Jr. and John Does 1–10, Defendants.

Civil Action No.2012–027.

District Court of the Virgin Islands, Division of St. Croix.

March 30, 2012.

Scot F. McChain, Esq., Yohana Manning, Esq., St. Croix, U.S.V.I., for Plaintiffs.

Warren B. Cole, Esq., St. Croix, U.S.V.I., for Defendants.

MEMORANDUM OPINION

Lewis, District Judge.

This matter comes before the Court on Plaintiffs' Emergency Motion to Remand to State Court, (Dkt. No. 2), filed on March 18, 2012. A hearing was held on March 22, 2012. For the reasons that follow, the Court will grant Plaintiffs' Motion and remand this matter to the Superior Court of the Virgin Islands.

I. Background and Procedural History

This case originated in the Superior Court of the Virgin Islands on March 9, 2012, when Plaintiffs filed a Complaint alleging seven causes of action arising from the February 29, 2012, termination of Plaintiff Dr. Gardiner's hospital privileges at Juan F. Luis Hospital (“Hospital”). Plaintiffs' Emergency Motion for Remand was precipitated by Defendants' Notice of Removal, (Dkt. No. 1), which was filed on March 15, 2012, and through which this case came before the District Court.

Plaintiffs' seven-count Complaint asserts the following causes of action: 1) Wrongful Termination of Hospital Staff Privileges; 2) Violation of the Virgin Islands Antitrust Statute, Title 11 V.I.C. 1501, et seq.; 3) Tortious Interference with Prospective Economic Advantage; 4) Breach of the Implied Covenant of Good Faith and Fair Dealing; 5) Defamation; 6) Unfair Competition; and 7) Criminally Influenced & Corrupt Practices Act. The gravamen of the Complaint is that Defendants terminated the hospital privileges of Dr. Gardiner—a kidney disease specialist and medical director of the Caribbean Kidney Center—as part of a conspiracy to monopolize the provision of dialysis services in the Virgin Islands. Plaintiffs allege that the incident for which Dr. Gardiner'sprivileges were terminated was merely a pretext to eliminate the competition posed by Dr. Gardiner because, without hospital privileges, he will not be able to provide full dialysis treatment to his patients. Compl. at §§ 2–3.

Together with the Complaint, Plaintiffs also filed a Motion for Temporary Restraining Order and Preliminary Injunction in the Superior Court on March 9, 2012. (Dkt. No. 1–2). On March 12, 2012, the Superior Court issued a Temporary Restraining Order, requiring the reinstatement of Dr. Gardiner's hospital privileges and enjoining Defendants from terminating or otherwise impairing such privileges. (Dkt. No. 1–3).¹ During the pendency of the Temporary Restraining Order, Defendants filed their Notice of Removal in this Court on March 15, 2012, (Dkt. No. 1), which was followed by the filing of Plaintiffs' Emergency Motion for Remand on March 18, 2012, (Dkt. No. 2). ² On March 19, 2012, the Court ordered Defendants to file a response to Plaintiffs' Motion to Remand, (Dkt. No. 5), and, on March 21, 2012, Defendants filed their Opposition to Plaintiffs' Remand Motion, (Dkt. No. 8). Oral arguments were presented to the Court on March 22, 2012. The following day, the Court ordered the parties to submit memoranda on another aspect of the jurisdictional issue, (Dkt. No. 12), and the parties submitted their additional memoranda to the Court on March 26, 2012, (Dkt. Nos. 15–16).

As the basis for removal under 28 U.S.C. § 1441(c),³ Defendants assert that three of the seven claims in Plaintiffs' Complaint are “founded on a claim or right arising under the Constitution, treaties or laws of the United States.” Defs.' Not. of Removal at 2.⁴ First, Defendants argue that Count I, entitled “Wrongful Termination of Hospital Privileges,” is “based on federal law,” because Plaintiffs allege that “Dr. Gardiner was entitled to the constitutional safeguards of the due process clause of the fourteenth amendment prior to the termination of his hospital privileges.” Id. at 3 (quoting Compl. at § 98). Second, Defendants assert that because Plaintiffs allege violations of federal law in Count VII (Criminally Influenced and Corrupt Practices Act)—namely, 18 U.S.C. § 1341 (mail fraud)—and 18 U.S.C. § 1343 (wire fraud) and also claim that Defendants engaged in activities affecting foreign and interstate commerce, these alleged federal violations form a “predicate part” of Plaintiffs' state-law claim. Defs.' Not. of Removal at 3. Accordingly, Defendants argue that Plaintiffs have “stated a claim that arises under the laws of the United States.” Id. at 4.

Third, in Defendants' Supplemental Brief, they claim that Count IV, entitled Breach of the Implied Covenant of Good Faith and Fair Dealing does not properly allege a due process violation under the hospital bylaws because it fails to cite to an express provision of the bylaws. Defendants argue that the claim must therefore arise under the Fourteenth Amendment of the United States Constitution. (Dkt. No. 16).⁵

In their Emergency Motion for Remand, Plaintiffs argue that Defendants' Notice of Removal is “based on unsound law” because Counts I and VII are “simply local issues that reference federal law as guideposts....” Pls.' Mot. for Remand at 3. Specifically, Plaintiffs claim that Count I does not give rise to federal jurisdiction because Dr. Gardiner's constitutional rights are granted and governed by the Revised Organic Act of 1954 rather than the United States Constitution. Id. at 4. Plaintiffs additionally argue that the allegations of wire and mail fraud in Count VII “are merely two predicate acts alleged,” and that “the federal issue is not significantly weighty to confer federal question jurisdiction.” Id. at 5.

II. Discussion

A. Applicable Legal Principles

Removal of cases from state to federal court is governed by 28 U.S.C. § 1441, which provides that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). Here, Defendants allege that removal was proper pursuant to § 1441(c), which provides for original jurisdiction over “a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of section 1331 of this title).” § 1441(c). ⁶o Accordingly, the Court must decide whether Counts I, IV, and VII of the Complaint “arise under the Constitution, laws, or treaties of the United States.” Id.

As a preliminary matter, the Court emphasizes that the party seeking removal—here, Defendants—bears the burden of establishing federal jurisdiction. See Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921); Samuel–Bassett v. KIA Motors America, Inc., 357 F.3d 392, 397 (3d Cir.2004) (“The party asserting jurisdiction bears the burden of showing that at all stages of the litigation the case is properly before the federal court.”). Further, removal statutes “are to be strictly construed against removal and all doubts should be resolved in favor of remand.” Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d 1006, 1010 (3d Cir.1987); Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 810, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986) (because removal jurisdiction raises substantial federalism concerns, it is to be strictly construed: “determinations about federal jurisdiction require sensitive judgments about congressional intent, judicial power, and the federal system.”); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108, 61 S.Ct. 868, 85 L.Ed. 1214 (1941); KIA Motors, 357 F.3d at 396 (“28 U.S.C. § 1441 is to be strictly construed against removal.”).

In considering removal jurisdiction under § 1441(c), and when evaluating original “arising under” jurisdiction under § 1331, federal courts apply the rule of the “well-pleaded complaint,” under which “federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint.” Caterpillar Inc., 482 U.S. at 391–92, 107 S.Ct. 2425. When reviewing the Complaint and deciding whether the exercise of “arising under” jurisdiction is appropriate, the Court must first decide whether state or federal law creates the cause of action in question. The vast majority of cases brought under § 1331 “are those in which federal law creates the cause of action.” Merrell Dow, 478 U.S. at 809, 106 S.Ct. 3229. In those cases, federal courts unquestionably have federal subject-matter jurisdiction. Id.

However, “a case may [also] arise under federal law ‘where the vindication of a right under state law necessarily turn[s] on some construction of federal law.’ ” Merrell Dow, 478 U.S. at 808, 106 S.Ct. 3229 (quoting Franchise Tax Board of State of Cal. v. Constr. Laborers, 463 U.S. 1, 9, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). This is so as long as “the plaintiff's right to relief necessarily depends on a substantial question of federal law.” Franchise Tax Board, 463 U.S. at 28, 103 S.Ct. 2841. In describing this basis for “arising under” federal jurisdiction, the Supreme Court in Grable & Sons Metal Products v. Darue Eng'g, 545 U.S. 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005), explained that federal courts may exercise jurisdiction over state-law claims with an embedded issue of federal law only when the state-law claim contains a federal issue that is “disputed” and “substantial,” and when the exercise of federal jurisdiction is “consistent with congressional judgment about...