SUSAN K. LEE, United States Magistrate Judge.
The Court ordered the parties to brief the issue of its subject matter jurisdiction over these related cases [4:11-cv-60, Doc. 27; 4:11-cv-61, Doc. 28]. In response, only Plaintiffs briefed the issue of subject matter jurisdiction [4:11-cv-60, Doc. 28; 4:11-cv-61, Doc. 29]. After considering the Plaintiffs' arguments and the applicable law, and for the reasons outlined below, the Court will
These actions assert state law contract and tort claims related to crop losses against an insurance agency located in Tennessee and an individual insurance agent residing in Tennessee and his estate. Both cases were removed to this Court from the Circuit Court for Grundy County, Tennessee on November 1, 2011. In the respective notices of removal, Defendants state that removal of each case is proper pursuant to 28 U.S.C. § 1331, because the case arises under federal question jurisdiction by virtue of the Federal Crop Insurance Act ("FCIA"), 7 U.S.C. § 1501 et seq. [4:11-cv-60, Doc. 1 at PageID#: 2; 4:11-cv-61, Doc. 1 at PageID#: 2]. Plaintiffs did not timely file a motion to remand either case to state court. However, as noted above, the Court directed the parties to address the issue of its subject matter jurisdiction in each case.
In compliance with the Court's order to address subject matter jurisdiction, Plaintiffs
As a preliminary matter, judicial economy does not create subject matter jurisdiction, and the parties cannot agree to federal question jurisdiction where it does not exist. See Holman v. Laulo-Rowe Agency, 994 F.2d 666, 668 n. 1 (9th Cir.1993) ("The parties cannot ... create federal court subject matter jurisdiction by stipulation"). Instead, it is afforded by diversity jurisdiction, which is not claimed to exist in this case, or by "federal question" jurisdiction. For federal question jurisdiction, 28 U.S.C. § 1331 states "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Removal of cases filed in state court to federal court is governed by 28 U.S.C. § 1441, which dictates that "state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). In conjunction with these statutes, the existence of federal question jurisdiction is governed by the "well-pleaded complaint rule," which focuses on whether federal questions are asserted in the complaint without regard to any federal defenses. City of Warren v. City of Detroit, 495 F.3d 282, 286 (6th Cir.2007).
The United States Court of Appeals for the Sixth Circuit has identified four ways in which a complaint can "arise under" federal law to establish federal question jurisdiction: "it ... (1) states a federal cause of action; (2) includes state-law claims that necessarily depend on a substantial and disputed federal issue; (3) raises state-law claims that are completely preempted by federal law; or (4) artfully pleads state-law claims that amount to federal-law claims in disguise." Ohio ex rel. Skaggs v. Brunner, 629 F.3d 527, 530 (6th Cir.2010) (citing Mikulski v. Centerior Energy Corp., 501 F.3d 555, 560 (6th Cir. 2007)). Applying these ways in which a complaint may arise under federal law here, there is no federal cause of action asserted on the face of either complaint at issue
The complete preemption doctrine is a very narrow exception to the well-pleaded complaint rule and is intended to be used sparingly for only a few "extraordinary" statutes. Palkow v. CSX Transp., Inc., 431 F.3d 543, 553 (6th Cir. 2005). It is important to note that complete preemption and simple, or defensive, preemption are different principles. While a plaintiff's individual state law claims may be preempted by federal law or regulation because the state law conflicts with federal law or regulation or the law explicitly invalidates certain types of state law claims, that does not equate to complete preemption, which is "designed to occupy the regulatory field with respect to a particular subject" and mandate that all claims asserted within that field, including state law claims, be addressed exclusively in federal court. Warner v. Ford Motor Co., 46 F.3d 531, 535 (6th Cir.1995), see Strong v. Telectronics Pacing Sys., Inc., 78 F.3d 256, 260 (6th Cir.1996). "[T]he doctrine of complete preemption makes removal available automatically in those extraordinary cases where a state law claim is completely preempted." NGS Am., Inc. v. Jefferson, 218 F.3d 519, 527 (6th Cir.2000) (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 64-67, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). Furthermore, the Sixth Circuit has recognized precedent that only Congress can effect complete preemption of a state law cause of action and that federal regulations promulgated by federal agencies do not carry equal weight in the analysis. AmSouth Bank v. Dale, 386 F.3d 763, 776 (6th Cir.2004) (citing cases).
The United States Supreme Court has determined that the doctrine of "complete preemption" applies to the Labor Management Relations Act, the Employee Retirement Income Security Act ("ERISA") and the National Bank Act. See Brunner, 629 F.3d at 531 (citing Metro. Life Ins. Co., Avco Corp. v. Aero Lodge No. 735, Int'l Ass'n of Machinists, 390 U.S. 557, 88 S.Ct. 1235, 20 L.Ed.2d 126 (1968), and Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003)), see also Palkow, 431 F.3d at 553 n. 6 (pointing out another area in which the Supreme Court has recognized complete preemption). The Sixth Circuit has expanded the doctrine to one other statute, the National Flood Insurance Act ("NFIA"), and has declined to further extend the doctrine. Mikulski, 501 F.3d at 564, see also Palkow, 431 F.3d at 553 n. 6 (acknowledging a number of circuit courts, including the Sixth Circuit, have also recognized preemption in a section of the Copyright Act). The Sixth Circuit does not follow a specific test for determination of complete preemption, instead looking to the statute at issue to ascertain Congress's intent. "Without evidence of Congress's intent to transfer jurisdiction to federal courts, there is no basis for invoking federal judicial power." Musson Theatrical, Inc. v. Fed. Express Corp., 89 F.3d 1244, 1253 (6th Cir.1996).
The FCIA contains two provisions regarding lawsuits, reproduced below as they appeared during the time relevant to these cases:
7 U.S.C. § 1506(d) (emphasis added).
7 U.S.C. § 1508(j) (emphasis added). These provisions specifically provide for exclusive federal jurisdiction over lawsuits filed arising from crop insurance policies, but only provide for such jurisdiction as to suits against the "Corporation," meaning the Federal Crop Insurance Corporation ("FCIC"), or the "Secretary," meaning the Secretary of Agriculture. See 7 U.S.C. § 1502(b)(4), (7).
The FCIA also includes the following provision with respect to the interplay of state law with crop insurance policies:
7 U.S.C. § 1506(l) (emphasis added). This provision establishes simple or defensive preemption, invalidating state laws, rules, and claims that are specifically addressed as inapplicable in the contracts or regulations or those which conflict with the federal statutes or regulations governing crop insurance. As other courts have found, this provision does not completely preempt the field of crop insurance as to exclude all state law claims and mandate jurisdiction in federal courts. See Rio Grande Underwriters, Inc. v. Pitts Farms, Inc., 276 F.3d 683, 686 (5th Cir.2001), Reimers v. Farm Credit Servs. AgCountry, ACA, No. CIV. A3-00-168, 2001 WL 1820379, at *5 (D.N.D. June 22, 2001) ("[T]he FCIC regulations do preempt and limit certain state and local government action and interference ... [but] this type of preemption is merely a defense to a lawsuit; it is not a jurisdictional limitation."), Horn v. Rural Cmty. Ins. Servs., 903 F.Supp. 1502, 1505 (M.D.Ala. 1995) (noting the section provides a preemption defense), Hyzer v. Cigna Prop. Cas. Ins. Co., 884 F.Supp. 1146, 1151 (E.D.Mich. 1995) (discussing § 1506(k), the predecessor to this section, and criticizing the Brown court's reliance on this section to find complete preemption).
Id. at 686-87.
The Eleventh Circuit noted that the evolution of 7 U.S.C. § 1508(j)(2)(A) during the legislative process changed it from mandating lawsuits against either the FCIC or a reinsured private insurance company to be filed in federal court to permissibly allowing suits to be filed in federal district court only if the suit was against the FCIC. Williams Farms of Homestead, Inc. v. Rain & Hail Ins. Servs., Inc., 121 F.3d 630, 634 (11th Cir. 1997). The Williams court further noted that had Congress intended to require such suits against private insurance companies be filed in federal court, it could have included a provision much like that in the National Flood Insurance Act; as it had not, the Williams court "infer[red] that Congress intended to leave insureds with their traditional contract remedies against their insurance companies ... includ[ing] a state law breach of contract claim."
A Ninth Circuit case, Holman, has been cited by several courts reaching the conclusion that there is no complete preemption. In Holman, the Ninth Circuit reviewed the legislative history of the FCIA and noted the review "uncovers no congressional intent that claims against insurance agents for the agents' own errors or omissions are to be deemed to create federal-question jurisdiction." Id. at 669. The Holman court found, therefore, that the FCIA did not have the preemptive force to satisfy the doctrine of complete preemption. Id. at 670.
Several district courts have also determined the FCIA does not completely preempt the field of crop insurance. For example, the United States District Court for the District of North Dakota in Bullinger
In Agre v. Rain & Hail, LLC, 196 F.Supp.2d 905 (D.Minn.2002), the United States District Court for the District of Minnesota analyzed the applicable regulations and statutes to find Congress had no intent to preempt state claims arising from a crop insurance policy. Id. at 912. The Agre court held that, in the FCIA, "Congress did confer exclusive federal jurisdiction over cases in which the FCIC is a party. It also granted exclusive jurisdiction over indemnity suits against the FCIC. These specific grants of exclusive jurisdiction lead the Court to consider one of the traditional canons of statutory interpretation: est inclusio unius est exclusio alterius." Id. (citing 7 U.S.C. § 1506(d) and § 1508(j)(2)(A)) (emphasis in original).
Similarly, the court in Reimers noted the "FCIA contains no section or language expressly limiting the right to bring state causes of action against private insurers in state court. In contrast, the FCIA grants exclusive federal jurisdiction over actions against the FCIC.... It can only be concluded from such a provision that Congress knew how to create exclusive federal jurisdiction yet chose not to do so with regard to private insurers." Reimers, 2001 WL 1820379, at *3-4.
Although the Brown decision finding complete preemption was issued by the United States District Court for the Southern District of Texas (and has theoretically been cast into doubt by Rio Grande, referenced above), two other districts in Texas — the Northern and Eastern — have reached the opposite conclusion. As in Rio Grande, the court in Halfmann v. USAG Ins. Servs., 118 F.Supp.2d 714 (N.D.Texas 2000) reviewed the Fifth Circuit's three-part test to find that there was no specific provision in the FCIA or its regulations mandating federal jurisdiction
The court in Bullard rejected the analysis in Brown as erroneously equating suits against the FCIC with suits against private insurance companies and found that the FCIA contained no explicit grant of federal jurisdiction for suits against the insurance companies or agents. Bullard, 984 F.Supp. at 535-36. The Bullard court compared the specific grant of jurisdiction over any action in the ERISA statute with the FCIA's grant of jurisdiction only over suits involving the FCIC or Secretary and also referenced the legislative history which omitted the term "or insurance provider" from the final version of the statute. Id. at 536-37. The Bullard court held that "the FCIA fails to express the clear manifestation of congressional intent necessary for a finding of complete preemption. Neither the legislative history of the FCIA nor its express provisions clearly establish Congress' intent to create a federal cause of action against private insurance companies, or to grant federal jurisdiction over such suits." Id. at 538.
A few other district courts, including this one, have reached the same conclusion for largely the same reasons. See Skymont Farms v. North, 862 F.Supp.2d 755, No. 4:09-cv-77, 2012 WL 996619 (E.D.Tenn. Mar. 22, 2012)
The Court agrees with the majority of courts that have addressed this issue and concludes that the complete preemption doctrine does not apply to the FCIA. First, focusing on the statutory provisions referenced above, the sole federal jurisdictional grants in the FCIA apply only to lawsuits filed against the FCIC or the Secretary of Agriculture. There is no similar jurisdictional grant to private insurance companies issuing reinsured policies and, without unnecessarily echoing prior cases or belaboring the point, several of the courts cited above have reviewed the legislative history on this issue to bolster the point that the lack of such a grant was not accidental because an intermediate version included insurance providers in the federal jurisdictional grant and the final version removed them. See Williams, 121 F.3d at 634, Bullinger, 245 F.Supp.2d at 1067, Halfmann, 118 F.Supp.2d at 721, Bullard, 984 F.Supp. at 537. Moreover,
Finally, the Court finds the reasoning in O'Neal provides another relevant basis for refusing to find complete preemption: "no express prohibition exists against a private insurer selling crop insurance ... it is possible for a private insurer to sell crop insurance [because] [t]he federal regulations apply only to crop insurance that is reinsured or insured by the FCIC. Because of this possibility of private crop insurance, federal law cannot be said to have occupied the field." O'Neal, 878 F.Supp. at 852.
Accordingly, the Court
The only other available avenue to maintain the cases in this Court, then, is if the complaints involve a substantial question of federal law. The parties did not address this issue and the case law is against them. For example, the Agre court addressed whether state law claims arising from a crop insurance policy could be said to create a "substantial federal question" (such that the federal court should maintain jurisdiction) and determined "[t]he mere fact that a case touches on questions of federal law — here crop insurance — does not alone provide this Court with subject matter jurisdiction." Agre, 196 F.Supp.2d at 913. The court further stated, "In our modern society, federal regulations impact almost every conceivable activity" and if the opposite conclusion prevailed, "it would difficult to find any complex case that could not be removed to federal court." Id. at 913. The court in Halfmann reached the same conclusion, stating that "[r]emoval cannot be based simply on the fact that federal law may be referred to in some context in the case. If the claim does not `arise under' federal law, it is not removable on federal question grounds." Halfmann, 118 F.Supp.2d at 721.
As noted above, there is a pending related case, Civil Action No. 4:11-cv-29, in
For the reasons outlined above, the Court
SO ORDERED.
