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People ex rel Cuomo v. Dell

October 16, 2007



I. Background

Petitioner State of New York ("Petitioner" or "New York") filed this case against Respondents Dell, Inc. and Dell Financial Services (collectively, "Respondents") in the Supreme Court of the State of New York on May 14, 2007. Petition (Dkt. No. 1, Attach 2., Ex. A) at 2. Respondents removed the case to this Court on May 30, 2007. Id.; Notice by Dell, Inc. of Consent to Removal (Dkt. No. 6). Subsequently, on June 29, 2007, Petitioner filed a Motion to remand the case to the Supreme Court of the State of New York, Albany County. Dkt. No. 12. Petitioner's Motion to remand is currently before the Court.

The Petition alleges that Respondents engage in various acts of fraud and deception in the course of business in violation of Section 63(12) of New York Executive Law and Article 22-A of New York General Business Law. Petition (Dkt. No. 1, Attach. 2, Ex. A) at 4. The alleged violations include misleading financing practices, improper billing and collection activities, and refusal to honor warranties, service contracts and rebates. Id. at 4-20. Petitioner's claims are grouped into ten "causes of action," each of which asserts violations of New York Executive Law or General Business Law. Id. at 21-29. Three of the causes of action reference violations of federal law.

II. Discussion

Section 1441 of Title 28 of the United States Code allows defendants to remove to the district court of the United States any case over which the district courts of the United States have original jurisdiction. 28 U.S.C. § 1441(a). Respondents argue that original jurisdiction exists over this case because three of the claims asserted by Petitioner arise under the laws of the United States. Notice of Removal (Dkt. No. 1) at ¶ 6; 28 U.S.C. § 1441(b). Petitioner disputes this characterization, arguing instead that each claim asserted arises under state law, notwithstanding the references to violations of federal law. Mem. of Law (Dkt. No. 12, Attach. 2, Ex. A) at 4.

A. Standard

A defendant is entitled to remove to the appropriate federal district court any civil action over which district courts have original jurisdiction, including cases "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. See also 28 U.S.C. § 1441(a); City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 163 (1997). A cause of action "arises under" federal law when "the plaintiff's well-pleaded complaint raises issues of federal law." City of Chicago, 522 U.S. at 163 (quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987)).

A complaint can raise issues of federal law even if the cause of action was created by state law. Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal. ("Franchise Tax Bd."), 463 U.S. 1, 13 (1983). However, the mere presence of federal law in the complaint does not justify removal to federal court. Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986). Removal is not justified unless the federal questions presented are necessary to the resolution of the controversy or strong federal interests are implicated. Grable & Sons Metal Prods. v. Darue Eng'g & Mfg. ("Grable"), 545 U.S. 308, 314-315 (2005); Highland Capital Mgmt. LP. v. Schneider, 198 Fed. Appx. 41, 44 (2d Cir. 2006) (summary order).

The inquiry does not focus on the number of references to federal law, but on the centrality of federal law to the resolution of the case, or the special importance of the federal issue. "A single claim over which federal-question jurisdiction exists is sufficient to allow removal." Broder v. Cablevision Systems Corp. ("Broder"), 418 F.3d 187, 194 (2d Cir. 2005) (citing Exxon Mobile Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 563-4 (2005)).

However, a cause of action, as described by a plaintiff, does not necessarily comprise a "claim" for the purposes of evaluating federal jurisdiction. Broder, 418 F.3d at 194 ("[w]here a federal issue is present as only one of multiple theories that could support a particular claim...this is insufficient to create federal jurisdiction."). See also Caggiano v. Pfizer Inc., 384 F.Supp.2d 689, 691 (S.D.N.Y. 2005). Accordingly, if the federal causes of action listed in a petition or complaint merely restate state law claims under a federal theory, then there is no basis for federal question jurisdiction.

B. Application to the Present Case

Petitioner's claims are almost entirely contained in the first and second causes of action; the other causes of action primarily consist of alternate legal theories for those claims.

Generally, each cause of action describes a broad range of conduct. For example, the first cause of action asserts eight types of conduct in ...

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