The opinion of the court was delivered by: SAMUEL CONTI, Senior District Judge
TO DISMISS FOR LACK OF
Presently before the Court are Respondent Dana Klussman's
("Respondent," "Plaintiff" or "Klussman") Motion to Dismiss for lack of
federal jurisdiction and Cross County Bank's ("CCB") and Applied Card
System, Inc.'s ("ACS") (collectively "Petitioners" or "Defendants")
Petition to Compel Arbitration. For the reasons set forth below, this
Court hereby: (1) declines to address the arbitration issue raised in the
motion filed by CCB and ACS, (2) dismisses the action commenced by CCB
and ACS against Dana Klussman, and (3) remands Dana Klussman's action
against CCB, ACS, et al. to the Superior Court of the State of
California, Alameda County, for lack of federal subject matter jurisdiction
On October 9, 2001, Dana Klussman, on behalf of herself and all others
similarly situated, filed a class action against CCB, ACS, and others in
the Superior Court for the State of California, Alameda County. (Klussman
v. Cross County Bank et. al., Case No. 2001-02668). In her original
complaint, Plaintiff set forth seven causes of action which all sounded
in state law. Plaintiff's claims all related to interactions that
Klussman and other class members had with the Defendants in connection
with credit cards issued to them by CCB.
On November 9, 2001, pursuant to the Federal Arbitration Act,
9 U.S.C. § 4, CCB and ACS filed a Petition to Compel Arbitration in this
Court in an action styled Cross County Bank et al. v. Dana Klussman. In
their Petition Defendants argue that an arbitration provision in the
agreements between Plaintiff and Defendants obligate Plaintiff to submit
to binding arbitration for resolution of Plaintiff's underlying claims.
On November 13, 2001, CCB and ACS filed a Notice of Removal, pursuant
to which Klussman's state court action was removed to this Court. CCB and
ACS asserted that this Court had subject matter jurisdiction because
Section 521 of the Depository Institutions Deregulation and Monetary
Control Act of 1980 ("DIDA"), 12 U.S.C. § 1831d, completely preempts
Klussman's state law claims. The removed action was related to the Petition filed by CCB and ACS, and on May 15, 2002 this Court
heard Petitioner's Motion to Compel Arbitration and Klussman's motions to
dismiss the action against her and remand her complaint back to state
court. In its May 15, 2002 Order this Court (1) declined to address the
arbitration issue raised in the motion filed by CCB and ACS, (2)
dismissed the action commenced by CCB and ACS against Dana Klussman, and
(3) remanded Dana Klussman's action against CCB, ACS, et al. to the
Superior Court of the State of California, Alameda County, for lack of
subject matter jurisdiction.
On September 8, 2003, the Ninth Circuit vacated this Court's Order in
light of the United States Supreme Court's decision in Beneficial Nat'l
Bank v. Anderson, 123 S.Ct. 2058
(2003). See Cross Country Bank v.
Klussman, 74 Fed.Appx. 796, 2003 WL 22088801 (9th Cir. Sept. 8, 2003).
The Ninth Circuit remanded the case to this Court to decide whether the
allegations in Klussman's complaint are completely preempted under the
reasoning in Anderson:
While it appears that the rationale of the Supreme
Court's decision in Anderson would extend to usury
claims against state chartered, federally insured
banks such as CCB, we do not decide this question.
Instead, we remand to the district court for it to
consider and decide, in the first instance, whether
and the extent to which any of these allegations are
preempted under Anderson and applicable law, providing
a basis for federal jurisdiction. The district court
is also instructed to consider the impact, if any, of federal
regulations, such as 12 C.F.R. § 7.4001(a), on the
issue of whether the charges at issue in the complaint
constitute "interest" or are otherwise of a nature as
to require preemption of state law challenges.
78 Fed.Appx. at 797-98, 2003 WL 22088801, at *1.
Consequently, this Court is again asked to decide whether the
allegations in Klussman's complaint are completely preempted so as to
confer original subject matter jurisdiction on this Court and provide a
basis for Defendant's removal of Klussman's state court action.*fn1
Defendants argue that Klussman's allegations amount essentially to a
claim for usury and thus are completely preempted according to the
rationale of the Supreme Court's decision in Anderson. Plaintiff
adamantly argues that she has not asserted any usury claims against
Defendants, and thus the case was improperly removed because there is no
federal subject matter jurisdiction over this action. Plaintiff
completely disavows any interpretation of her complaint which would
include a claim alleging that she had been charged a rate of interest which is usurious under state law. Having read Plaintiff's
complaint and the papers submitted in connection with this motion and for
the reasons articulated below, the Court Hereby Grants Plaintiff's motion
to dismiss for lack of federal subject matter jurisdiction and Hereby
Remands this action to the Superior Court of the State of California,
Alameda County, for lack of subject matter jurisdiction.
Federal courts have limited subject matter jurisdiction. A suit filed
in state court may be removed to federal court only if the federal court
would have had original subject matter jurisdiction over the suit.
28 U.S.C. § 1441 (a); Caterpillar, Inc. v. Williams, 482 U.S. 386
(1987). Remand to state court may be ordered for lack of subject matter
jurisdiction under 28 U.S.C. § 1447©). Ordinarily, "jurisdiction must be
analyzed on the basis of the pleadings filed at the time of the removal
without reference to subsequent amendments". Sparta Surgical Corp. v.
Nat'l Ass'n of Secs. Dealers, Inc., 159 F.3d 1209, 1213 (9th Cir. 1998).
A plaintiff may not compel remand under 28 U.S.C. § 1441 (b) by amending
a complaint to eliminate the federal question on which the notice of
removal was based. Id.
Out of respect for the independence of state courts, and in order to
control the federal docket, the removal statute is narrowly construed and
the court must reject jurisdiction if there is any doubt as to whether
removal was proper. Duncan v. Steutzle, 76 F.3d 1480, 1485 (9th Cir. 1996); Gaus v. Miles, Inc.,
980 F.2d 564, 566 (9th Cir. 1992). Moreover, the burden of establishing
federal jurisdiction is on the party seeking removal. Duncan, 76 F.3d at
1485. When the removal of an action to federal court is contested, "the
burden falls squarely upon the removing party to establish its right to a
federal forum by `competent proof'." R.G. Barry Corp. v. Mushroom
Makers, Inc., 612 F.2d 651, 655 (2nd Cir. 1979). Here, Defendants bear
the burden of establishing by competent proof that the Court has subject
matter jurisdiction over Plaintiff's claims.
B. Federal Question Jurisdiction and Complete Preemption
In this case Defendants argue that the Court has federal question
jurisdiction over Plaintiff's claims. Federal question jurisdiction
depends on whether the "action arise[s] under the Constitution, laws, or
treaties of the United States." 28 U.S.C. § 1331. In making this
determination, a court generally must apply the "well-pleaded complaint
rule." Toumajian v. Frailey, 135 F.3d 648, 652 (9th Cir. 1998) (citing
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1987)). Under this
rule, the existence of a federal jurisdiction must be determined from the
face of the plaintiff's well-pleaded complaint, without consideration of
any defenses that are raised or anticipated. Caterpillar. Inc., 482 U.S.
at 393. Moreover, the plaintiff is generally the master of his lawsuit
and can avoid federal jurisdiction by relying exclusively on state law in
his complaint. Id. Federal preemption is typically raised as a defense to a plaintiff's
cause of action. As such, this defense "does not appear on the face of a
well-pleaded complaint, and, therefore, does not authorize removal to
federal court." Metropolitan Life, 481 U.S. at 63. However, the Supreme
Court has recognized an exception to the well-pleaded complaint rule:
"Congress may so completely preempt a particular area that any civil
complaint raising this select group of claims is necessarily federal in
character." Id. at 63-64. Where an area of law is "completely preempted,"
any state-law complaint falling under that area of the law arises under
federal law for purposes of the well-pleaded complaint rule.
Caterpillar, Inc., 482 U.S. at 393. The complete preemption doctrine
rests on the notion that, "on occasion . . . the pre-emptive force of a
statute is so extraordinary that it converts an ...