Hinchman v. Performance Food Grp.

682 F.Supp.3d 520

Bridget HINCHMAN, Plaintiff, v. PERFORMANCE FOOD GROUP, INC., Defendant

Case No. 1:23-cv-594

United States District Court, E.D. Virginia, Alexandria Division

Signed July 14, 2023

Christine Kirchner, Alexander Phillip Faig, Law Office of Samuel C. Moore, PLLC, Alexandria, VA, Nicole Elizabeth Portnov, Pro Hac Vice, Kator, Parks, Weiser & Wright PLLC, Washington, DC, for Plaintiff.

John Edward Thomas, Jr., McGuireWoods LLP, McLean, VA, for Defendant.

MEMORANDUM OPINION

T. S. Ellis, III, United States District Judge

In this removed case, Plaintiff Bridget Hinchman sued her former employer alleging state-law claims for gender-and sex-based disparate treatment and harassment, in violation of the Virginia Human Rights Act, Va. Code. § 2.2-3900 et seq. ("VHRA"). Plaintiff also claims that she was retaliated against and terminated, in violation of the Virginia Whistleblower Protection Act, Va. Code § 40.1-27.3, when she reported to her employer that the employer's practice of recording goods as present in a warehouse even if the goods had not yet been received violated the Sarbanes-Oxley Act. See, e.g., 18 U.S.C. 1514A. Defendant Performance Food Group, Inc., responded by removing this case to federal court on the ground that the Complaint raised a federal question and then moving to dismiss the complaint, pursuant to Rule 12(b)(6), Fed. R. Civ. P. for failure to state a claim. Plaintiff has now moved to remand this case to state court, arguing that no federal question is raised in the Complaint. The motion to dismiss and the motion to remand have both been thoroughly briefed, and the motion to remand was also argued orally at a hearing on June 23, 2023. For the reasons that follow, the motion to remand must be granted, as plaintiff's state-law claims do not raise a federal question. Given this, it is neither necessary nor appropriate to address defendant's motion to dismiss.

I.

The Complaint alleges the following relevant facts:

• In 2018, defendant recruited plaintiff to apply for a management position. Throughout the interview process, defendant suggested that the position would be based in Louisville, Kentucky. But defendant was also interviewing another candidate—a male—who wanted to work in Louisville. So defendant offered plaintiff a management role in Manassas, VA.

• Plaintiff was initially offered a salary of $150,000.00. Plaintiff requested a salary of $185,000.00. Defendant denied the request, stating that the role was only budgeted for $150,000.00. This was untrue; the role was budgeted for $165,000.00.

• Plaintiff was also hired with the expectation that her title would be "President." But plaintiff was given the title of "General Manager," though her male counterpart in Louisville was given the title of "President."

• When plaintiff complained of her title and salary discrepancies, her employer stated that she was not supposed to know what others made, but that the title and salary discrepancies would be fixed in the next budget.

• In the Spring of 2019, plaintiff's team received calls from clients complaining that they had not received certain core deliveries. Plaintiff checked the inventory system, and there appeared to be no inventory issue. But when plaintiff further investigated the matter, she discovered that defendant engaged in a "pre-receiving" process for inventory management. Under that process, a purchase order was marked as present in the warehouse even if it was still in transit. This allowed for accelerated delivery if all went smoothly but posed a problem if there were shipping delays.

• Plaintiff informed her team, her supervisor, and her company's management that they could not engage in this pre-receiving practice, as she believed it violated the federal Sarbanes-Oxley Act. Plaintiff explained that the Sarbanes-Oxley Act requires accurate reporting to shareholders, and that, in her view, by engaging in the pre-receiving process, defendant's records did not accurately reflect the available inventory, but reflected instead more inventory than was actually available at any given time. Despite plaintiff's protests, defendant continued the pre-receiving process.

• The next year, in January 2020, defendant underwent a restructuring, and plaintiff received a new supervisor. Plaintiff's new supervisor called plaintiff "fat" and "lazy" based on her weight; told plaintiff that wearing short sleeves was unprofessional because women should cover their arms; and called plaintiff's same-sex relationship with her wife unnatural. This conduct continued throughout plaintiff's employment with defendant.

• In April 2022, plaintiff was terminated on the same day she failed to certify compliance with the Sarbanes-Oxley Act. Less than two weeks later, defendant hired a straight male candidate with less experience to replace plaintiff.

• On March 31, 2023, plaintiff filed a complaint against defendant in the Circuit Court for the County of Prince William. In the Complaint, plaintiff asserts six causes of action. The first four are for discrimination in violation of the VHRA. And the fifth and sixth counts are for retaliation in violation of the Virginia Whistleblower Protection Act, Va. Code § 40.1-27.3.

• Plaintiff does not assert any federal causes of action. Although plaintiff does mention the Sarbanes-Oxley Act in the complaint, she does so only because it is relevant as a factual matter to plaintiff's whistleblower claims because plaintiff argues that she was fired in retaliation for reporting perceived violations of the Sarbanes-Oxley Act.

• Despite the lack of diversity—both parties are citizens of Virginia—and the lack of a federal cause of action, defendant removed this case to federal court on May 3, 2023. In doing so, defendant argued that federal-question jurisdiction was proper with respect to the Virginia-whistleblower claims and supplemental jurisdiction was proper with respect to the VHRA claims. Although defendant acknowledged that the Virginia-whistleblower claims are not federal claims, defendant argued that they necessarily implicate legal questions surrounding the Sarbanes-Oxley Act.

II.

At issue now is whether the Complaint, which asserts only state-law causes of action, nonetheless supports defendant's claim that the Complaint raises a federal question and thus supports removal jurisdiction. The parties correctly acknowledge that courts have federal-question jurisdiction over civil actions "arising under" federal law. 28 U.S.C. § 1331. In general, cases "arise under" federal law only when federal law—not state law—creates the asserted cause or causes of action. Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). But there is a narrow exception to this general rule: federal-question jurisdiction over state-law causes of action is proper where "the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (emphasis added). Importantly, the Supreme Court has cautioned that this exception applies only to a "slim category" of cases. Gunn v. Minton, 568 U.S. 251, 258, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013). The Court has also made clear that this slim category of cases lies at "the outer reaches of § 1331," and courts must be cautious when applying this exception. Merrell Dow, 478 U.S. at 810, 106 S.Ct. 3229. Moreover, as the Court has also noted, "the mere presence of a federal issue in a state cause of action" is not enough to confer jurisdiction. Merrell Dow, 478 U.S. at 813, 106 S.Ct. 3229.¹ In summary, the Supreme Court has made clear that "federal jurisdiction over a state law claim" exists only if "a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress." Gunn, 568 U.S. at 258, 133 S.Ct. 1059. All four of these requirements must be satisfied before a federal court can exercise jurisdiction in non-diverse cases asserting state-law causes of action. Id. Given this, it is unmistakably clear that plaintiff's Virginia-whistleblower claims in this case do not confer federal-question jurisdiction.

The first and second factors—whether a federal issue is (1) necessarily raised and (2) actually disputed—are interrelated, and thus collapse together into a single inquiry. See Burrell v. Bayer Corp., 918 F.3d 372, 381 (4th Cir. 2019) (considering the first and second requirements together). In essence, the Supreme Court has emphasized that a federal question is raised and actually disputed only if a federal question is a "necessary element of one of the well-pleaded state claims" and the federal question must be resolved in order to resolve the state claim. Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. 2841.

In Burrell v. Bayer Corp., the Fourth Circuit elaborated on the test for determining when a state-law claim necessarily raises an actually disputed federal question. At issue there was whether a federal court properly exercised federal-question jurisdiction over state-law claims such as negligence, breach of warranties, and fraud. Burrell, 918 F.3d at 378. The defendant in Burrell argued that federal-question jurisdiction was proper because the plaintiff's complaint alleged "numerous violations of federal regulatory requirements that parallel[ed] state-law duties." Id. at 381. The Fourth Circuit rejected this argument, noting that federal-question jurisdiction was inappropriate because a federal question was not "necessarily raised" by the complaint in that case. Burrell, 918 F.3d at 381. According to the Fourth Circuit, the mere fact that a complaint is replete with references to federal law does not confer federal-question jurisdiction. Id. Rather, the Fourth Circuit emphasized that federal-question jurisdiction is improper unless a plaintiff's...