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Sandhu v. Hewlett-Packard Co.

United States District Court, E.D. California

September 18, 2014

MANVIR SANDHU, Plaintiff,
v.
HEWLETT-PACKARD COMPANY, Defendant.

ORDER

KIMBERLY MUELLER, District Judge.

Plaintiff's motion to amend his complaint and to remand the case to Placer County Superior Court is currently pending before the court. The court submitted the motions without argument. After considering the parties' arguments, the court REMANDS the action and so denies the motion to amend as moot.

I. BACKGROUND

On May 12, 2014, plaintiff filed a complaint in Placer County Superior Court, alleging generally that he had been employed by defendant Hewlett-Packard Company (HP) for seventeen years but had been laid off, ostensibly as the result of restructuring but really because of his race, and that HP improperly refused to pay him promised severance benefits. The complaint contains five claims: breach of contract and breach of the implied covenant of good faith and fair dealing, stemming from HP's refusal to pay severance benefits; misrepresentation; termination based on race, in violation of California's Fair Employment and Housing Act (FEHA); and intentional infliction of emotional distress. ECF No. 1 at 11-16.

HP answered the complaint on June 24, 2014. ECF No. 1 at 20-26.

On June 27, 2014, HP removed the case to this court, arguing that because the severance benefits were part of an ERISA plan, the claims relating to the denial of severance benefits arise under ERISA and confer jurisdiction on this court. ECF No. 1 at 3-4.

On July 24, 2014, plaintiff moved to amend his complaint and to remand the case to Placer County Superior Court. Mot. to Amend, ECF No. 7. The proposed amended complaint eliminates the breach of contract and misrepresentation claims, but retains the breach of the implied covenant of good faith and fair dealing, FEHA and intentional infliction of emotional distress claims. Proposed Am. Compl., ECF No. 7-1 at 4-8.

Counsel has provided a declaration, averring that when he drafted the original complaint, he did not have a copy of the Workforce Reduction Plan and so did not realize that ERISA governed the severance benefits. Decl. of Nilesh Choudhary, ECF No. 7-1 at 1 ¶ 3. Counsel avers he now realizes he must exhaust ERISA's administrative remedies for plaintiff to have standing to pursue the ERISA-based claims. Id. at 2 ¶ 3.

II. THE MOTION TO REMAND

Plaintiff argues that with any ERISA-based claims removed from the amended complaint, the court lacks jurisdiction over the case and should remand it to superior court. Defendant says because removal was proper, the court retains jurisdiction, even if the federal question claims have been dismissed. It also argues that if amended, the claim for breach of the implied covenant of good faith arises under ERISA.

"If, following removal, a federal court determines there was a defect in the removal procedure or an absence of subject matter jurisdiction, it may remand the action to state court sua sponte or on motion of a party." Borreani v. Kaiser Found. Hosps., 875 F.Supp.2d 1050, 1054 (N.D. Cal. 2012) (citing Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)); see also 28 U.S.C. § 1447(c). "In deciding whether removal was proper... the party invoking federal jurisdiction bears the burden of establishing that removal was appropriate." Borreani, 875 F.Supp.2d at 1054 (citing Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009)).

As defendant observes, "jurisdiction must be analyzed on the basis of the pleadings filed at the time of 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); see also Williams v. Costco Wholesale Corp., 471 F.3d 975, 976-77 (9th Cir. 2006) ("[P]ost-removal amendments to the pleadings cannot affect whether a case is removable, because the propriety of the removal is determined solely on the basis of the pleadings filed in state court.").

Defendant removed on the basis of federal question jurisdiction. "A cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law." Hansen v. Blue Cross of Cal., 891 F.2d 1384, 1386 (9th Cir. 1989). However, an exception to the well-pleaded complaint rule exists when state-law causes of action are preempted by § 502(a) of ERISA. Marin Gen. Hosp. v. Modesto & Empire Traction Co., 581 F.3d 941, 945 (9th Cir. 2009). Section 502(a) provides in relevant part:

A civil action may be brought - (1) by a participant or beneficiary -... (B) to recover benefits due to him under the terms of his plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. court disregards defendant's argument that ...

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