The opinion of the court was delivered by: SOTOMAYOR
SONIA SOTOMAYOR, U.S.D.J.
The motion before the Court in these ten related cases represents a small but procedurally complex skirmish in the tobacco wars raging throughout the courts of this country. The plaintiffs are various employee benefit plans (collectively referred to hereinafter as the "Funds") which seek to recoup from the defendants, cigarette manufacturers and tobacco industry organizations (collectively referred to hereinafter as the "Companies"), medical and health care benefits which the Funds claim they have paid to their beneficiaries because of the allegedly tortious conduct of the Companies. Plaintiffs originally filed these actions in New York State Supreme Court but the defendants removed the actions to this Court, claiming federal question jurisdiction. The Funds now move to remand the actions to the state court on the ground that this Court lacks subject matter jurisdiction. For the reasons that follow, the Court grants the Funds' motion to remand.
The complaints in these cases allege the following facts. Each of the plaintiffs is an employee benefit plan governed by the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001 et seq., and are established to provide health-care benefits to participants and their dependents. The Funds assert various common-law tort and statutory causes of action stemming from the Companies' marketing of tobacco products. The first twelve claims allege torts committed directly against the Funds themselves -- e.g., that the Companies' alleged fraudulent concealment of the health hazards of tobacco use resulted in the Funds' failure to take actions to discourage smoking among its participants and in correspondingly higher benefit payments to those participants.
The claim which provides the alleged federal jurisdictional basis is the thirteenth cause of action of the Complaint, entitled "Subrogation." Although the details of the parties' arguments will be discussed in much greater detail below, in essence the dispute over subject matter jurisdiction is that the Funds claim that they have a cause of action, arising solely under New York state law, for subrogation of the tort claims which their plan participants could assert against the Companies. That is, as subrogees of their participants, the Funds claim a state-law based right to recover the medical costs of their participants attributable to the Companies' allegedly tortious conduct towards those participants, up to and including the amount actually paid out by the Funds to the beneficiaries.
The Funds' actions were filed in the Supreme Court of New York, New York County. The Companies removed each case to this district, and the Funds have now moved, pursuant to 28 U.S.C. § 1447(c), to remand for lack of subject-matter jurisdiction.
Under 28 U.S.C. § 1441(a), any action filed in state court "of which the district courts of the United States have original jurisdiction" may be removed by the defendants to federal district court, assuming the procedural requirements of 28 U.S.C. § 1446, not in dispute here, are met. The question, in other words, is whether the case originally could have been filed in federal court. See Marcus v. AT&T Corp., 138 F.3d 46, 52 (2d Cir. 1998). There being no dispute about the propriety of the Companies' removal procedure, the only dispute to be resolved by this Court is whether there is subject matter jurisdiction over these cases. Defendants do not assert that diversity of citizenship is present in any of these cases; therefore, federal question jurisdiction is required for removal. See id. The Companies, as the parties asserting federal jurisdiction, bear the burden of establishing any facts necessary to support removal. See Gilman v. BHC Securities, Inc., 104 F.3d 1418, 1421 (2d Cir. 1997).
The Companies make two arguments for federal question jurisdiction. First, they assert that the resolution of the Funds' subrogation claims depends upon this Court's answering several substantial issues of federal law. Second, the Companies claim that ERISA so completely preempts New York subrogation law that any subrogation claim necessarily arises under federal law and is removable on that basis.
The Companies do not contest that the first twelve causes of action arise under state law, not federal; only the subrogation action is asserted as a possible federal-law claim. As will be discussed, the Funds, for their part, have completely disclaimed any federal cause of action for subrogation and have chosen instead to rely solely on the validity of their state-law claim. The Companies assert in arguing this motion, and almost certainly will continue to argue after this jurisdictional question is decided, that a state-law subrogation claim is preempted by ERISA and must be dismissed.
There are thus two possible scenarios following this motion to remand. If the Court decides to remand, then the New York courts will decide all thirteen claims, including the question of whether ERISA preempts the state law of subrogation. If the Court decides not to remand, then this Court will determine the preemption question; if the state-law cause of action is determined to be preempted, then the Funds' disclaimer of a federal subrogation claim will require dismissal of the thirteenth count, and if the state law cause of action is not preempted, of course, the state-law subrogation claim remains. In either case, only state law causes of action will remain, and this Court is almost certain to decline to exercise supplemental jurisdiction. In other words, these cases look to be heading back to state court under any conceivable scenario.
The only issue at stake in this motion, then, is which court -- federal or state -- will decide whether the Funds' New York subrogation claim is preempted by ERISA. See Stanley Blumenfeld Jr., Artful Pleading and Removal Jurisdiction, 35 UCLA L. Rev. 315, 354-55 (1987). The Court does not minimize the importance of this question, at least to the parties. The parties may very well feel that the courts of New York and the federal courts differ in their disposition towards deciding federal preemption questions. Regardless of the accuracy of that view, Congress has given certain defendants the right to invoke the jurisdiction of the federal courts and a converse right to certain plaintiffs not to be subject to such jurisdiction, and it is not for this Court to assess the motives for invoking either right. The Court is mindful, however, that it must attempt to avoid mooting the only question at stake in this motion by passing upon the merits of the preemption question on the way to deciding the jurisdictional issue.
I. Federal Removal Jurisdiction
The general principles of federal question removal jurisdiction are easy to state, although their precise contours are less clear. The federal-question jurisdiction statute, 28 U.S.C. § 1331, gives the district courts original jurisdiction of "all civil actions arising under the Constitution, laws, or treaties of the United States." The scope of this statutory grant of jurisdiction (as opposed to that found in Article III of the Constitution
) has, virtually from its inception, been limited by the basic principle of the "well-pleaded complaint rule": "Federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Rivet v. Regions Bank, 139 L. Ed. 2d 912, 118 S. Ct. 921, 925 (1998) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987)).
The well-pleaded complaint rule implies several corollary principles which are crucial to this motion. First, pursuant to the well-pleaded complaint rule, it is well-settled that because "a defense is not part of a plaintiff's properly pleaded statement of his or her claim," Rivet, 118 S. Ct. at 925, federal question jurisdiction may not be predicated on an anticipated federal defense, see Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10, 103 S. Ct. 2841, 2845, 77 L. Ed. 2d 420 (1983). Concomitantly, because removal is only proper if the suit could have been filed in federal court originally, "a case may not be removed to federal court on the basis of a federal defense." Rivet, 118 S. Ct. at 925.
Second, by determining jurisdiction solely on the basis of the plaintiff's complaint, the well-pleaded complaint rule makes the plaintiff "master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 2429, 96 L. Ed. 2d 318 (1987); see also Merrell Dow, 478 U.S. at 809 n.6, 106 S. Ct. at 3233 n.6 ("Jurisdiction may not be sustained on a theory that the plaintiff has not advanced"). Thus, even if both federal and state law provide a remedy to the plaintiff, the plaintiff can avoid federal jurisdiction by pleading state law -- at the price, of course, of foregoing the federal remedies. See Caterpillar, 482 U.S. at 394-95, 107 S. Ct. at 2431.
It is this second principle that makes removal jurisdiction, contrary to the defendant's assertion, a somewhat different animal than original federal question jurisdiction -- i.e., where the plaintiff files originally in federal court. When a plaintiff files in federal court, there is no clash between the principle that the plaintiff can control the complaint -- and therefore, the choice between state and federal forums -- and the principle that federal courts have jurisdiction over federal questions; the plaintiff, after all, by filing in a federal forum is asserting reliance upon both principles, and the only question a defendant can raise is whether plaintiff has a federal claim.
On the other hand, when plaintiff files in state court and purports to only raise state law claims, for the federal court to assert jurisdiction it has to look beyond the complaint and partially recharacterize the plaintiff's claims -- which places the assertion of jurisdiction directly at odds with the principle of plaintiff as master of the complaint. It is for this reason that removal jurisdiction must be viewed with a somewhat more skeptical eye; the fact that a plaintiff in one case chooses to bring a claim as a federal one and thus invoke federal jurisdiction does not mean that federal removal jurisdiction will lie in an identical case if the plaintiff chooses not to assert a federal claim.
Both of the above principles -- that a federal defense will not support jurisdiction, and that the plaintiff can avoid federal jurisdiction by pleading state-law claims only -- give way to one very limited exception -- the "complete preemption doctrine." A claim that the state law upon which plaintiff relies in his or her complaint is preempted by federal law is normally a defense which will not support federal jurisdiction. See Caterpillar, 482 U.S. at 392-93, 107 S. Ct. at 2430. However, in certain circumstances,
the preemptive force of a statute is so "extraordinary" that it "converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Once an area of state law has been completely preempted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law.
Id. at 393, 107 S. Ct. at 2430 (quoting Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S. Ct. 1542, 1547, 95 L. Ed. 2d 55 (1987)). The requirements for complete preemption to obtain will be discussed in greater detail below, but for now suffice it to note that unless those requirements are met, a claim that state law is preempted by federal law is a defense which will not support removal.
In conjunction with the well-pleaded complaint rule, there are two principles for determining whether the claims in the well-pleaded complaint "arise under" federal law so as to support federal question jurisdiction. The first is Justice Holmes' statement that "a suit arises under the law that creates the cause of action." American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260, 36 S. Ct. 585, 586, 60 L. Ed. 987 (1916); see also Franchise Tax Board, 463 U.S. at 89, 103 S. Ct. at 2846. Thus, a complaint which pleads a federal cause of action will support federal jurisdiction. In addition to this first principle, which describes the "vast majority of cases" falling within federal district court jurisdiction, see Franchise Tax Board, 463 U.S. at 9, 103 S. Ct. at 2846, is a second, broader principle: "a case may arise under federal law 'where the vindication of a right under state law necessarily turned on some construction of federal law.'" Merrell Dow, 478 U.S. at 808-09, 106 S. Ct. at 3232 (quoting Franchise Tax Board, 463 U.S. at 9, 103 S. Ct. at 2846); see also Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 199, 41 S. Ct. 243, 245, 65 L. Ed. 577 (1921). The incorporated federal question must, however, be "substantial" to support federal jurisdiction. See Merrell Dow, 478 U.S. at 813, 106 S. Ct. at 3234; Franchise Tax Board, 463 U.S. at 13, 103 S. Ct. at 2848 (federal-question jurisdiction when "it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims").
Finally, the above principles of federal jurisdiction are by no means bright-line rules. Rather, the Supreme Court has repeatedly stressed "the need for careful judgments about the exercise of federal judicial power in an area of uncertain jurisdiction." Merrell Dow, 478 U.S. at 814, 106 S. Ct. at 3235; see also id. at 810, 106 S. Ct. at 3233 ("In exploring the outer reaches of § 1331, determinations about federal jurisdiction require sensitive judgments about congressional intent, judicial power, and the federal system."); Franchise Tax Board, 463 U.S. at 20, 103 S. Ct. at 2852 ("We have always interpreted . . . 'the current of jurisdictional legislation . . .' with an eye to practicality and necessity") (quoting Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 673, 70 S. Ct. 876, 879, 94 L. Ed. 1194 (1950)). With these principles in mind, the Court now turns to see if the Companies have met their burden of demonstrating that removal is proper in these cases.
A roadmap of the discussion to come will be helpful. First, the Court will look at the plaintiffs' Complaint to see whether it asserts a federal question, unaided by any anticipated preemption defense. The Companies assert that it does, on two grounds. First, the Companies note that the basis of the subrogation claim -- that is, whether it is asserted under federal or state law -- is unstated on the face of the Complaint, and they urge this Court to resolve this ambiguity in favor of federal jurisdiction, either because other language in the Complaint makes it clear that a federal claim is being pled or because the preemption of state subrogation law by ERISA means that the plaintiffs must be pleading a federal claim. The Court rejects these arguments, primarily in light of the plaintiffs' express disclaimer of any federal subrogation claim but also because principles of removal jurisdiction warrant resolution of ambiguity against a finding of jurisdiction, not in favor of it.
Second, the Companies argue that, because ERISA must preempt state subrogation laws insofar as they relate to ERISA plans, several substantive issues -- including whether there is any subrogation right at all -- raised by the plaintiffs' subrogation claim must be resolved by reference to federal law, thus injecting the necessary federal questions into the plaintiff's Complaint. The Court rejects these arguments because the state law subrogation claim asserted by the Funds does not require the references to federal law asserted by the Companies; rather, the Companies' asserted federal issues are all preemption defenses which cannot support federal jurisdiction under the well-pleaded complaint rule.
The Court does address one argument not expressly raised by the Companies -- namely, that as an element of the New York subrogation claim, the Funds must prove their obligation to make payments to the purported subrogors (i.e., the plan participants), an obligation which arises from the terms of the ERISA plans and thus is a matter of federal law. This argument will not support jurisdiction, however, because the federal question, though present in the well-pleaded complaint, is insufficiently substantial.
Next, the Court turns to the "complete preemption" doctrine -- that is, whether ERISA has so completely preempted the plaintiffs' subrogation claim that it must be said to arise under federal law regardless of the plaintiffs' reliance on state law principles only. The Court rejects this argument as well, because the subrogation claim raised by the Funds does not fall within the scope of the civil enforcement provisions of ERISA § 502, which is a necessary ...