Hunt v. Meridian Sec. Ins. Co. State Auto Ins. Cos.

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JOHNETTA ASKEW HUNT, Plaintiff, v. MERIDIAN SECURITY INSURANCE COMPANY STATE AUTO INSURANCE COMPANIES, Defendant.

No. 3:23-cv-441-G-BN

United States District Court, N.D. Texas, Dallas Division

August 24, 2023

MEMORANDUM OPINION AND ORDER CONCERNING SUBJECT MATTER JURISDICTION

DAVID L. HORAN, UNITED STATES MAGISTRATE JUDGE

Invoking 28 U.S.C. § 1332, the Court's diversity jurisdiction, as the sole basis for federal subject matter jurisdiction, “Meridian Security Insurance Company incorrectly named in the underlying state court action as ‘Meridian Security Insurance Company State Auto Insurance Companies'” removed this case from a Dallas County state court on February 27, 2023. See Dkt. No. 1.

This action is now referred to the undersigned United States magistrate judge for pretrial management under 28 U.S.C § 636(b) and a standing order of reference from Senior United States District Judge A. Joe Fish. See also Dkt. No. 50.

And this matter is now before the Court under its independent duty to examine its own subject matter jurisdiction. See Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583-84 (1999) (“Subject matter limitations ... keep the federal courts within the bounds the Constitution and Congress have prescribed. Accordingly, subject matter delineations must be policed by the courts on their own initiative even at the highest level.” (cleaned up)).

Although the case has been pending for some time, the undersigned's review of the notice of removal reveals a concern that Meridian Security Insurance Company - which removed the case and is invoking the Court's jurisdiction - has failed to demonstrate that there is federal subject matter jurisdiction. See St. Paul Reinsurance Co., Ltd v. Greenberg, 134 F.3d 1250, 1253 (5th Cir. 1998) (“The burden of establishing subject matter jurisdiction in federal court rests on the party seeking to invoke it.” (footnote omitted)).

As the United States Supreme Court has recently explained,

“[f]ederal courts are courts of limited jurisdiction.” Article III, § 2, of the Constitution delineates “[t]he character of the controversies over which federal judicial authority may extend.” And lower federal-court jurisdiction “is further limited to those subjects encompassed within a statutory grant of jurisdiction.” Accordingly, “the district courts may not exercise jurisdiction absent a statutory basis.”

Home Depot U.S.A., Inc. v. Jackson, 139 S.Ct. 1743, 1746 (2019) (cleaned up). “Subject matter jurisdiction defines the court's authority to hear a given type of case.” Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 639 (2009) (cleaned up).

“The basic statutory grants of federal-court subject matter jurisdiction are contained in 28 U.S.C. §§ 1331 and 1332.” Arbaugh v. Y&H Corp., 546 U.S. 500, 513 (2006) (cleaned up).

In 28 U.S.C. §§ 1331 and 1332(a), Congress granted federal courts jurisdiction over two general types of cases: cases that “aris[e] under” federal law, [28 U.S.C.] § 1331, and cases in which the amount in controversy exceeds $ 75,000 and there is diversity of citizenship among the parties, [28 U.S.C.] § 1332(a). These jurisdictional grants are known as “federal-question jurisdiction” and “diversity jurisdiction,” respectively. Each serves a distinct purpose: Federal-question jurisdiction affords parties a federal forum in which “to vindicate federal rights,” whereas diversity jurisdiction provides “a neutral forum” for parties from different States.

Home Depot, 139 S.Ct. at 1746 (cleaned up).

“In addition to granting federal courts jurisdiction over certain types of cases, Congress has enacted provisions that permit parties to remove cases originally filed in state court to federal court.” Id. 28 U.S.C. § 1441(a) generally governs removal of actions from state court and provides that,

[e]xcept as otherwise expressly provided by Act of Congress, 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).

“Section 1441(a), the general removal statute, permits ‘the defendant or the defendants' in a state-court action over which the federal courts would have original jurisdiction to remove that action to federal court.” Home Depot, 139 S.Ct. at 1746.

The Supreme “Court has long held that a district court, when determining whether it has original jurisdiction over a civil action, should evaluate whether that action could have been brought originally in federal court.” Id. at 1748. “This requires a district court to evaluate whether the plaintiff could have filed its operative complaint in federal court, either because it raises claims arising under federal law or because it falls within the court's diversity jurisdiction.” Id. (citations omitted). And, so, “[w]hen a plaintiff files in state court a civil action over which the federal district courts would have original jurisdiction based on diversity of citizenship, the defendant or defendants may remove the action to federal court, 28 U.S.C. § 1441(a), provided that no defendant ‘is a citizen of the State in which such action is brought,' [28 U.S.C.] § 1441(b).” Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). And Congress has dictated that, “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded” to state court. 28 U.S.C. § 1447(c).

The Supreme Court has also held that, “because the ‘civil action ... of which the district cour[t]' must have ‘original jurisdiction' is the action as defined by the plaintiff's complaint, ‘the defendant' to that action is the defendant to that complaint.” Home Depot, 139 S.Ct. at 1748. The Supreme Court explained that,

in other removal provisions, Congress has clearly extended the reach of the statute to include parties other than the original defendant. For instance, § 1452(a) permits “[a] party” in a civil action to “remove any claim or cause of action” over which a federal court would have bankruptcy jurisdiction. And §§ 1454(a) and (b) allow “any party” to remove “[a] civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights.” Section 1441(a), by contrast, limits removal to “the defendant or the defendants” in a “civil action” over which the district courts have original jurisdiction.

Home Depot, 139 S.Ct. at 1749; accord F.D.I.C. v. Loyd, 955 F.2d 316, 326 n.10 (5^th Cir. 1992) (“Under ordinary circumstances, only the defendant(s) may remove. See 28 U.S.C. § 1446(a); American International Underwriters, (Philippines), Inc. v. Continental Ins. Co., 843 F.2d 1253, 1260 (9th Cir. 1988).”).

And, “[t]o remove under [Section 1441(a)], a party must meet the requirements for removal detailed in other provisions.” Id. at 1746.

For one, a defendant cannot remove unilaterally. Instead, “all defendants who have been properly joined and served must join in or consent to the removal of the action.” [28 U.S.C.] § 1446(b)(2)(A). Moreover, when federal jurisdiction is based on diversity jurisdiction, the case generally must be removed within “1 year after commencement of the action,” § 1446(c)(1), and the case may not be removed if any defendant is “a citizen of the State in which such action is brought,” [28 U.S.C.] § 1441(b)(2).

Home Depot, 139 S.Ct. at 1746. These and other requirements and limitations that the removal statute imposes fall within what courts refer to as “removal jurisdiction” and “removal procedure.” See Baris v. Sulpicio Lines, Inc., 932 F.2d 1540, 1543-44 (5th Cir. 1991)

Section 1441(a) and the other provisions of the removal statutes (28 U.S.C. §§ 1441-1455) implicate a distinction between a federal court's removal jurisdiction and its subject matter jurisdiction over a case that was first filed in state court.

Subject matter jurisdiction (or, as the removal statute refers to it, “original jurisdiction”) and “removal jurisdiction” are not the same thing. See, e.g., Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Tr. for S. Cal., 463 U.S. 1, 10 n.9, 17 (1983); Baris, 932 F.2d at 1543-44.

“Removal jurisdiction ... is totally dependent on satisfaction of the requirements for original jurisdiction.” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 592 (2004) (citing 28 U.S.C. § 1441(a)). But parties and courts run into trouble “by conflating ‘removal jurisdiction' with subject matter jurisdiction.” Cox, Cox, Filo, Camel & Wilson, L.L.C. v. Sasol N. Am., Inc., 544 Fed.Appx. 455, 456 n.6 (5th Cir. 2013) (cleaned up).

The Supreme Court has pointed to the distinction between the two, for purposes of removal and remand, when interpreting 28 U.S.C. § 1447, which “differentiates between removals that are defective because of lack of subject matter jurisdiction and removals that are defective for some other reason, e.g., because the removal took place after relevant time limits had expired.” Wisconsin Dep't of Corr. v. Schacht, 524 U.S. 381, 392 (1998) (cleaned up).

As the United States Court of Appeals for the Fifth Circuit has explained,

section 1447(c) mentions original subject matter jurisdiction, rather than removal jurisdiction, in providing that ‘[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction the case shall be remanded.' That phrase ‘refers to want of federal subject matter jurisdiction.' When Congress has intended to refer to removal jurisdiction, it has distinguished that concept from the doctrine of original subject matter

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