USCA1 Opinion
March 21, 1995
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1525
CLYDE ARMISTEAD,
Plaintiff, Appellant,
v.
C & M TRANSPORT, INC., ET AL.,
Defendants, Appellees.
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ERRATA SHEET
The opinion of this Court issued on March 13, 1995, is
amended as follows:
On page 9, line 9, change "chose" to "choose".
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
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No. 94-1525
CLYDE ARMISTEAD,
Plaintiff, Appellant,
v.
C & M TRANSPORT, INC., ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
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Before
Selya, Circuit Judge,
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Campbell, Senior Circuit Judge,
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and Boudin, Circuit Judge.
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Clyde Armistead on brief pro se.
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John H. Montgomery, Diane S. Lukac, Mary Elizabeth Fougere,
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and Bernstein, Shur, Sawyer & Nelson on brief for appellee, The
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Travelers Insurance Company.
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March 9, 1995
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Selya, Circuit Judge. Defendant-appellee Travelers
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Insurance Company ("Travelers") removed this action to the
federal district court despite the provision in 28 U.S.C.
1445(c) forbidding removal of cases arising under state
workers' compensation laws. Plaintiff-appellant Clyde
Armistead unsuccessfully resisted the removal on
jurisdictional grounds, but overlooked the bar of section
1445(c). The district court granted summary judgment in
Travelers' favor. On appeal, Armistead for the first time
invokes section 1445(c). We hold that the district court
lacked subject matter jurisdiction in this case.
Accordingly, we vacate the judgment below and direct that the
case be remanded to state court.
I
I
Armistead, a citizen and resident of Maine, worked
as a truck driver for C & M Transport, Inc. ("C & M"), a
Maine corporation. He was injured on May 7, 1987, while
driving a C & M truck in Maryland. Appellee Travelers, a
Connecticut corporation, was at one time C & M's workers'
compensation insurer.
Armistead filed a petition for benefits under the
Maine Workers' Compensation Act, 39 M.R.S.A. 1-195
(repealed),1 in October, 1987. The Workers' Compensation
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1. The legislature retrofitted the Act with neoteric
provisions which took effect on January 1, 1993. See 39-A
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M.R.S.A. 101-409. The new law alters benefits and
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Commission issued a benefits award in February, 1988 (after C
& M defaulted), but no compensation payments were made. The
Commission's award indicates "no record of insurance," and as
for C & M, it filed for Chapter 7 protection, was adjudicated
bankrupt, and ceased doing business. According to the
record before us, Travelers had notified the Commission that
it had canceled C & M's coverage for nonpayment of premiums,
effective some three weeks before the date of injury.
In July of 1992, Armistead resumed his quest for
benefits by seeking a Commission determination that Travelers
was liable on the award because it had failed to send a prior
notice of the cancellation to C & M, as required by state
law. See 39 M.R.S.A. 23(1) (1987) (repealed); see also 39-
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A M.R.S.A. 403(1) (1992). After informal proceedings
failed to resolve the claim, Armistead filed a formal motion
for enforcement of the award. Travelers denied liability and
cross-moved for a review of Armistead's alleged disability.
The statute contemplates an evidentiary hearing before a
Commissioner on such motions, subject to appellate review in
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replaces the Workers' Compensation Commission with an
administrative board. See 39-A M.R.S.A. 151, 152.
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Transitional provisions preserve benefits under the former
law for injuries sustained before January 1, 1993, and
continue the Commission's authority over pending claims for a
limited period. See generally Clark v. International Paper
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Co., 638 A.2d 65 (Me. 1994). In all procedural respects
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relevant here, the current law is parallel to the former law.
The transitional provisions and other changes do not affect
our analysis.
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the Commission and a discretionary appeal to Maine's highest
court. See 39 M.R.S A. 94-B, 98-99, 103-A, 103-B, 103-C.
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While these motions were pending before the
Commission, Armistead also filed a complaint in the state
superior court for enforcement of the Commission's original
award. The complaint alleged a right to relief by virtue of
the superior court's equitable power to enforce Commission
orders under the Workers' Compensation Act, 39 M.R.S.A.
103-E. Count 1 sought enforcement of the award against C &
M; count 2 sought a declaration that Travelers afforded
coverage to C & M under the Act on the date of injury, and
also sought enforcement of the Commission's award against
Travelers and C & M jointly.
Travelers promptly removed the action to federal
district court, claiming diversity of citizenship between
Travelers and Armistead, and describing the action as one for
"breach of contract." Seven months later, Armistead moved
for a remand to the state court, arguing that C & M's Maine
citizenship destroyed complete diversity between the parties.
But there was a rub; C & M had not been served with process,
and its very existence was dubious.2 The district judge
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2. Armistead renews here the claim that C & M retains its
corporate existence under Maine's corporation laws, and is a
"necessary" party to this suit. The argument was not fully
developed below, and we deem it waived. See Ryan v. Royal
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Ins. Co., 916 F.2d 731, 734 (1st Cir. 1990). At any rate,
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Armistead still has not explained his failure to serve
process on C & M.
-4-
dismissed the claim against C & M and, applying the holding
of White v. United States Fidelity & Guar. Co., 356 F.2d 746
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(1st Cir. 1966), rejected Armistead's alternative argument
that Travelers should be deemed to have the same citizenship
as its insured under 28 U.S.C. 1332(c)(1). The court
thereafter addressed the parties' cross-motions for summary
judgment and decided the merits in favor of Travelers. This
appeal ensued.
On appeal, Armistead adds for the first time the
argument that the removal violated 28 U.S.C. 1445(c).
Travelers urges that section 1445(c) is inapplicable because
Armistead's suit does not "arise under" Maine's workers'
compensation law, and, alternatively, that Armistead waived
the argument.
II
II
Section 1445(c) renders nonremovable suits "arising
under" the workers' compensation laws of the state in which
the federal court sits. The statute reflects a congressional
concern for the states' interest in administering their own
workers' compensation schemes, the burdens on injured
claimants of maintaining a federal court suit, and the
incidence of federal court congestion. See generally Horton
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v. Liberty Mut. Ins. Co., 367 U.S. 348, 350 (1961)
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(explaining purpose of limitation on removal); 14A Charles A.
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Wright et. al, Federal Practice & Procedure 3729 (2d ed.
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Supp. 1994) (listing cases).
Travelers does not directly assert a right to
remove the proceedings pending before the Commission, but
focuses solely on the subsequent superior court complaint.
While the complaint was a separate filing, however, it did
not comprise independent litigation based on a separate
common law right to relief. Rather, the complaint sought
statutory compensation under a provision of the workers'
compensation law vesting in the superior court equitable
powers to enforce Commission orders and to issue pro forma
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decisions enforcing Commission benefit awards.3 As an
integral part of the administrative enforcement scheme, the
superior court action was merely supplementary to the
Commission proceeding, and both proceedings obviously arose
under the workers' compensation law within the meaning of 28
U.S.C. 1445(c). Cf. Spearman v. Exxon Coal USA, 16 F.3d
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3. Commission orders are enforceable only by petition to
the superior court, which may issue "any suitable process" in
aid of Commission proceedings. See 39 M.R.S.A. 93, 103-E.
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The Commission itself has no general equity powers. See
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Clark v. International Paper Co., 638 A.2d at 66. Benefit
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awards and Commission decisions become enforceable on
presentation of a certified copy to the superior court, which
"shall render a pro forma decision in accordance therewith."
39 M.R.S.A. 103-E. The Commission's decisions thus acquire
the same force as if rendered by the superior court. See 39
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M.R.S.A. 103-E. Moreover, an award may be confirmed by the
superior court even if it remains subject to post-order
administrative proceedings or a pending appeal. See Cilley
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v. Georgia-Pac. Corp., 519 A.2d 191, 192 (Me. 1986); see also
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39 M.R.S.A. 104-A.
-6-
722, 725 (7th Cir.) (holding that a claim did not arise under
a workers' compensation law when it stated a right to relief
in tort and sought common law damages distinct from statutory
compensation scheme), cert. denied, 115 S. Ct. 377 (1994).
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Removal of the case thus was doubly barred, once
under section 1445(c), and again because the supplementary
superior court proceeding does not independently qualify as a
removable "civil action" under 28 U.S.C. 1441(a). See
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Barrow v. Hunton, 99 U.S. 80, 82 (1879) (explaining that a
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supplementary action so connected with an original action as
to form a mere incident or continuation of it is not
removable as a separate suit); Bank v. Turnbull & Co., 83
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U.S. (16 Wall.) 190, 193 (1873) (same); Federal Savings &
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Loan Ins. Corp. v. Quinn, 419 F.2d 1014, 1018 (7th Cir. 1969)
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(same, but making claim that federal standards determine
independence of action); Overman v. Overman, 412 F. Supp.
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411, 412 (E.D. Tenn. 1976) (same, discussing possible Erie
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concerns). Recent cases in which parties attempt to remove
state supplementary proceedings are scarce, but the federal
bar to entertaining "satellite elements" of pending state
suits and judgments clearly remains intact as the "sensible"
judicial rule. 14A Wright et al., supra, 3721 (Supp.
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1994); see also 1A James Wm. Moore et al., Moore's Federal
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Practice 0.157[4-11] (2d ed. Supp. 1994) (distinguishing
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the principle from the "independent" claim concept embodied
in 28 U.S.C. 1441(c)).
III
III
Under 28 U.S.C. 1447(c), a motion challenging
subject matter jurisdiction may be made at any time, but
objections based on a "defect in removal procedure" must be
made within thirty days of the removal. Travelers argues
that Armistead waived any objection to the lack of removal
jurisdiction by failing to move for a remand within this
period.
In Williams v. AC Spark Plugs Div. of Gen. Motors
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Corp., 985 F.2d 783 (5th Cir. 1993) the Fifth Circuit decided
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that removal of a Texas workers' compensation case in
violation of section 1445(c) should be treated as the
embodiment of a procedural defect and, thus, subject to
section 1447(c)'s thirty day waiver rule. The court
interpreted section 1447(c) as meaning that any wrongful
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removal is subject to waiver so long as the district court
would have had original subject matter jurisdiction had the
plaintiff initiated the action in federal court. Id. at 787.
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Since the plaintiff in Williams could have chosen to bring
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her Texas claim as an original diversity action, the court
held that she waived her objection to federal court
jurisdiction by waiting more than thirty days to seek a
remand. Id. at 788.
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The Eighth Circuit, however, has taken the view
that where Congress expressly restricts removal jurisdiction
over a particular class of cases, wrongful removal should not
be treated as a "mere procedural irregularity" waivable by
the parties, but as a violation of the court's limited
subject matter jurisdiction.
The fact that [plaintiff] could have invoked the
original jurisdiction of the federal court
initially is irrelevant. . . . The jurisdiction of
the lower federal courts, both original and removal
is entirely a creature of statute. . . . If one of
the statutory requirements is not met, the district
court has no jurisdiction.
Hurt v. Dow Chem. Co., 963 F.2d 1142, 1145 (8th Cir. 1992)
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(determining that a failure to object to lack of removal
jurisdiction under 1441(b) did not operate as a waiver).
We need not choose between these contradictory views
because in this case there was neither removal jurisdiction
nor original diversity jurisdiction. Unlike the Texas
statute at issue in Williams, Maine's compensation scheme
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does not permit a de novo state court action for workers'
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compensation benefits. See Dorey v. Forster Mfg. Co., 591
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A.2d 240, 241 (Me. 1991). By reason of the policies
expressed in Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938),
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the state's rule barring suitors from bringing such an action
de novo in its own courts must be applied to bar an original
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diversity action in the forum's federal courts. See
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Feinstein v. Massachusetts Gen. Hosp., 643 F.2d 880, 888 (1st
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Cir. 1981) (stating that Erie policies requiring adherence to
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state door-closing statutes likewise require a federal court
to apply state-created administrative limitations on rights
to recovery) (citing Woods v. Interstate Realty Co., 337 U.S.
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535 (1949)); Construction Aggregates Corp. v. Rivera de
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Vicenty, 573 F.2d 86, 96 (1st Cir. 1978) (holding that if
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Puerto Rico does not give its own courts jurisdiction over a
claim collaterally attacking workers' compensation rates for
locally hired workers, a federal court cannot exercise
diversity jurisdiction over the claim); accord Dial v.
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Hartford Accident & Indem. Co., 863 F.2d 15 (5th Cir. 1989)
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(examining Mississippi workers' compensation law); Trapp v.
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Goetz, 373 F.2d 380 (10th Cir. 1966) (examining state pension
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law); Shultz v. Lion Oil Co., 106 F. Supp. 119 (D. Ark. 1952)
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(examining Arkansas workers' compensation law), appeal
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dismissed, 202 F.2d 752 (8th Cir. 1953).
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Moreover, the limited supplementary and appellate
authority exercised by the Maine courts over Commission
proceedings finds no analog in federal diversity
jurisdiction. As courts of original jurisdiction, federal
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district courts sitting in diversity jurisdiction do not have
appellate power, nor the right to exercise supplementary
equitable control over original proceedings in the state's
administrative tribunals. See Rooker v. Fidelity Trust Co.,
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263 U.S. 413, 416 (1923) (noting that the jurisdiction
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possessed by federal district courts is "strictly original");
Barrow v. Hunton, 99 U.S. 80, 82 (1879) (explaining that
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federal courts may not exercise control over state
proceedings by entertaining supplementary actions which are
but incidents of state suits); MacKay v. Pfeil, 827 F.2d
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540, 545 (9th Cir. 1987) (holding that a request for
declaratory relief that does not state a new case arising
upon new facts, but in reality seeks review and correction of
a state court judgment is not within federal court's original
jurisdiction); cf. 1A Moore's Federal Practice, supra,
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0.167[6] (Supp. 1994) (where state courts have only
appellate, quasi-administrative review over the claim, the
proceeding "is not a civil action within the cognizance of
the original jurisdiction of the federal court").4
We need go no further. In the absence of federal
subject matter jurisdiction, we cannot proceed to the merits
of this appeal, and the case must be remanded to the state
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4. Any claim in this case not covered by the foregoing
principles would be subject to dismissal under the related
doctrine of Burford-type abstention. The state has signalled
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its interest in regulatory coherency by concentrating all
claims in an exclusive administrative process, and parallel
federal suits could "in a very real sense . . . disrupt the
regulatory scheme." Allstate Ins. Co. v. Sabbagh, 603 F.2d
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228, 233 (1st Cir. 1979); see also Bath Memorial Hosp. v.
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Maine Health Care Fin. Com., 853 F.2d 1007, 1013 (1st Cir.
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1988) (holding that a court should abstain when an exercise
of jurisdiction might lead to a parallel federal `regulatory
review' mechanism, complicating state administration);
Construction Aggregates Corp., 573 F.2d at 91-93, 96
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(applying principles of Burford-type abstention to various
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claims relating to workers' compensation law).
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court. See Halleran v. Hoffman, 966 F.2d 45, 47-48 (1st Cir.
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1992).
Accordingly, the judgment is vacated and this case
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is remanded to the district court which shall immediately
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remand the action to the state court. All parties shall bear
their own costs.
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