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Richard Moser v. Nikolas Papadopoulos


June 15, 2011


The opinion of the court was delivered by: Rufe, J.


Before the Court are Plaintiff's Motion to Remand [doc. no. 3] and Defendants' Motion to Dismiss [doc. no. 6]. Richard Moser originally filed his complaint in the Court of Common Pleas for Delaware County, Pennsylvania. In his two-count complaint, Plaintiff asserts state-law claims under the Pennsylvania Wage Payment and Collection Law ("WPCL"),*fn1 and seeks punitive damages based upon the state common-law standard. Specifically, Moser's WCPL claim alleges that Defendants failed to pay overtime wages in violation of the Pennsylvania Minimum Wage Act*fn2 ("PMWA") and the Fair Labor Standards Act ("FLSA").*fn3 But Moser does not seek relief pursuant to the FLSA; rather, he seeks to recover the wages Defendants are statutorily obligated to pay (under federal and state law) under the Pennsylvania Wage and Collection Law. Defendants argue that the alleged FLSA violation is an "essential element" of Plaintiff's state-law claim and thus the WPCL claim confers subject matter upon this court. For the reasons that follow, we disagree.

I. Background

Plaintiff Richard Moser, a Pennsylvania resident, filed this putative class action in the Pennsylvania Court of Common Pleas, Delaware County, on October 8, 2010, alleging that he and over 150 co-workers were not properly compensated by Defendants for overtime.*fn4

Defendant NTP Marble, Inc. d/b/a/ Colonial Marble & Granite ("NTP"), a company that installs marble and granite countertops, is a Pennsylvania corporation with its principal place of business in King of Prussia, Pennsylvania.*fn5 The individual defendants are allegedly officers of NTP.

Moser was employed by NTP as a granite tile and marble installer from June 22, 2008 until August 29, 2008.*fn6 When he was hired, NTP offered him a weekly salary of $1,350.00.*fn7 During his employment, Moser worked approximately 180 hours of overtime, but NTP did not pay him overtime wages. Moser contends that the PMWA and FLSA obligated NTP to pay him $33.76 per overtime hour.*fn8

Moser also claims that Defendants did not reimburse any of its over 150 employees for overtime.*fn9 He brings his claims on behalf of a class including all non-exempt employees who were employed by NTP from January 1, 2008 to the present.

On November 19, 2010, Defendants timely filed a Notice of Removal [doc. no. 1] in this Court pursuant to 28 U.S.C. §§ 1446 and 1331, on grounds that Plaintiff's claims arise under federal law.*fn10 Plaintiff has moved to remand, arguing that this Court lacks jurisdiction.*fn11 Because we may not consider a case over which we lack subject matter jurisdiction, we begin with the jurisdictional challenges that Moser raises in his motion to remand.

II. Discussion

A. The Law Governing Subject-Matter Jurisdiction

Removal of a civil action from state to federal court is proper only if the action initially could have been brought in federal court.*fn12 The removal statutes "are to be strictly construed against removal and all doubts should be resolved in favor of remand."*fn13 In this case, because there is no conceivable basis for federal jurisdiction apart from 28 U.S.C. § 1331,*fn14 the propriety of Defendants' removal hinges upon whether this Court has federal-question jurisdiction.

Section 1331 grants federal district courts original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States."*fn15 Although there is no mechanical test for determining when an "'action aris[es] under' federal law,"*fn16 it is generally accepted that the "well-pleaded complaint [must] establish[] either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law."*fn17

"Arising under" federal-question jurisdiction is generally appropriate in two types of actions. The first, most common category, involves suits in which the plaintiff pleads a cause of action created by federal law.*fn18 In the second "slim category"*fn19 of cases, a plaintiff pleads a state-law cause of action that "implicate[s] significant federal issues" or "turn[s] on substantial questions of federal law,"*fn20 and therefore contains an "embedded federal question.

In both categories, every putative federal-question case must adhere to the "well-pleaded complaint" rule. Under that rule, a suit "'arises under' federal law 'only when the plaintiff's statement of his own cause of action shows that it is based upon [federal law].'"*fn21 The existence of a federal defense to a state-law cause of action will not suffice;*fn22 instead, the plaintiff's well-pleaded complaint must include, within its four corners, either an explicit federal cause of action or a state-law cause of action that contains an embedded federal question that is both substantial and disputed.*fn23 Moreover, "[t]he fact that a complaint mentions, or even incorporates a federal law, does not determine whether it 'arises under' the Constitution, laws or treaties of the United States."*fn24

Here, Plaintiffs have pleaded only state-law causes of action. Consequently, the jurisdictional inquiry is whether Plaintiff's complaint contains an embedded-federal question. Because "the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction,"*fn25 embedded federal question jurisdiction only exists where three conditions are met: 1) the case necessarily raises a federal issue, 2) the federal issue is substantial and in actual dispute, and 3) the exercise of federal jurisdiction will not disturb "any congressionally approved balance of federal and state judicial responsibilities."*fn26

For instance, in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, a former landowner brought a quiet title action in state court against a tax sale purchaser, alleging that the IRS had given him inadequate notice of the sale.*fn27 There, the landowner premised his superior title claim on a failure by the IRS to give adequate notice, as defined by federal law.*fn28 Because his quiet title claim "necessarily raise[d] a stated federal issue, actually disputed and substantial, which a federal forum [could] entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities," it "arose under" federal law.*fn29 The Supreme Court noted that the meaning of the federal tax provision was "an important issue of federal law that sensibly belongs in federal court,"*fn30 in part, because it presented an issue of federal law "that could be settled once and for all and would thereafter govern numerous tax sale cases."*fn31

The next year, the Supreme Court limited Grable's reach in Empire Healthchoice Assurance, Inc. v. McVeigh.*fn32 There, a federal statue that authorized the creation of a health insurance plan for federal employees was the alleged "federal element" that justified federal jurisdiction over a state law insurance claim.*fn33 The government, acting pursuant to the statute, negotiated a master contract with insurance carriers. Under the agreement between one of the carriers, Empire Healthchoice ("Empire") and its enrollees, an enrollee who obtained a tort recovery was obligated to reimburse the carrier for the amounts that the carrier had paid for the enrollee's medical care.*fn34 After an enrollee's estate had obtained a settlement of a state-court tort action against a third party, Empire brought an action in federal court against the state to enforce its right to reimbursement, claiming that the federal law was a "necessary element" of its claim.*fn35

The Court distinguished Grable as a "special and small category"*fn36 of cases because: 1) unlike the "nearly 'pure issue of law'" presented in Grable, the claim in Empire's was "fact-bound and situation specific";*fn37 and 2) the dispute in Grable "centered on the action of a federal agency and its compatibility with a federal statute," whereas the reimbursement claim in Empire was triggered by the settlement of a personal-injury action launched in state court.*fn38 Although the Court acknowledged the federal interest in the health and welfare of federal workers at stake in Empire, that interest was not substantial enough to warrant "turning into a discrete and costly 'federal case' an insurer's contract-derived claim to be reimbursed from the proceeds of a federal worker's state-court initiated tort litigation."*fn39 In sum, the Court concluded that "Grable emphasized that it takes more than a federal element 'to open the arising under' door."*fn40

B. Pennsylvania Wage Payment and Collection Act

The Pennsylvania Wage Payment and Collection Law was enacted "to provide employees a means of enforcing payment of wages and compensation withheld by an employer."*fn41 The law "does not create a right to compensation . . . [r]ather, it provides a statutory remedy when the employer breaches a[n] . . . obligation to pay earned wages."*fn42 Here, Moser's WPCL claim is premised entirely on the claim that NPT breached its obligations under federal and state law to pay appropriate overtime wages. Moser does not assert a breach-of-contract claim.

The viability of a claim under the WPCL for wages owed pursuant to an employer's statutory (rather than contractual) obligations is an unsettled area of Pennsylvania Law. Prior to the Pennsylvania Superior Court's holding in Lugo v. Farmers Pride,*fn43 it was well-established that "[r]elief under the WPCL was implausible without existence of a contract."*fn44 In Lugo, however, the Superior Court held that "the WPCL is a statutory vehicle that the legislature has provided for employees to recover unpaid wages that are due them," and allowed plaintiffs to state a claim under the WPCL on a statutory-not contractual-basis.*fn45 Thus, Lugo adopts a broader interpretation of the WPCL as a vehicle for employees to recover unpaid wages, regardless of the source of their employer's obligation to pay the wages. That holding departs from the "contractual approach" adopted in earlier Superior Court opinions, under which the WCPL was interpreted only as a vehicle for plaintiffs to recover unpaid wages due to them under an employment contract.

Because, for the reasons that follow, we hold here that remand is appropriate under either the contractual or Lugo interpretation, we will leave the resolution of the breadth of a WCPL claim to the Pennsylvania courts.

III. Application

Defendants argue that the Plaintiff's claim arises out of a substantial question of federal law because the state law claim is premised, in part, on allegations that Defendants violated a federal statue (specifically, the FLSA).*fn46 As the party seeking removal, Defendants have the burden to show that Moser's claim: 1) necessarily raises a stated federal issue; 2) that is actually disputed and substantial; which 3) a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.*fn47

Plaintiff emphasizes that this action solely asserts state law claims under the Pennsylvania Wage Collection Law and utilizes state common-law standards for determining punitive damages.*fn48 Although Plaintiff alleges a violation of FLSA, he seeks relief for that violation only under the WCPL.

A. Necessary Element

To survive the motion to remand, the FLSA must be a necessary element that is "actually disputed and essential to the adjudication" of Moser's WCPL claim.*fn49

Under the contractual approach, the core allegation necessary to state a claim under WPCL is a breach of contact. Here, Moser has not alleged the existence of a contract, therefore whether or not his employer failed to pay wages at the overtime rate required by FLSA is entirely superfluous to evaluating the viability of his WPCL claim.

Under the Lugo approach, the WPCL is available to enforce Defendants' statutory obligations to pay wages at the overtime rate required under FLSA and the PMWA. The two statutes are substantially the same; both require that overtime (hours over forty worked in a week) be compensated at one and one-half times the regular rate at which the employee is paid. Although the federal and state laws parallel each other, they each create an independent statutory obligation for employers to pay employees a certain rate of overtime.*fn50 Thus, Plaintiff can potentially prevail on his WPCL claim regardless of how the state court resolves the FLSA question. Therefore, the FLSA is not a "necessary" element. Even if it were, it is not a substantial issue in the underlying litigation.

2. Substantial Issue

Necessity alone is insufficient to justify jurisdiction. "[F]ederal jurisdiction demands not only a contested federal issue, but a substantial one, indicating a serious federal interest in claiming the advantages thought to be inherent in a federal forum."*fn51

"In assessing the substantiality of a purported federal interest, courts assess the extent to which exercise of jurisdiction is consistent with Congressional intent, and look to whether the underlying federal issue is sufficiently 'substantial' to demonstrate a clear indication of 'a serious federal interest in claiming the advantages thought to be inherent in a federal forum.'"*fn52 In Grable, for instance, "the meaning of the [notice] provision directly impacted the ability of the IRS to fulfill its mission. Federal-court adjudication served the national interest because of the need for uniform interpretation of the tax law provision at issue."*fn53

In Empire Healthchoice,*fn54 the Supreme Court explained that four factors indicate the "substantiality" of a federal interest in the case or issue: (1) whether the case includes a federal agency, and particularly, whether that agency's compliance with the federal statute is in dispute;

(2) whether the federal question is important (i.e., not trivial); (3) whether a decision on the federal issue will resolve the case (i.e., the federal question is not merely incidental to the outcome); and (4) whether a decision as to the federal question will control numerous other federal cases.*fn55

Here, the first, third, and fourth factors weigh against jurisdiction. There is no federal agency involved in this dispute. Moreover, resolution of whether a FLSA violation occurred is not dispositive to this case. As the complaint is drafted, both state and federal laws allegedly obligate Defendants to pay the plaintiff overtime wages due and owing. Further, the viability of Plaintiff's complaint depends upon whether the WPCL creates an avenue by which Plaintiff may enforce statutory, rather than contractual obligations.*fn56

The fourth factor, whether a decision on this issue will control numerous other federal cases, also weighs against jurisdiction. The question of the Defendants' employees coverage under the FLSA is "fact-bound and situation specific."*fn57 This stands in contrast to Grable, which presented a nearly "pure issue of law."*fn58 Resolution of this case will have little impact on the body of law governing FLSA overtime claims.

3. Federalism and Comity

"Even when the state action discloses a contested and substantial federal question, the exercise of federal jurisdiction is subject to a possible veto . . . because courts must consider the nature of the federal and state interests and the resulting effect that exercise of jurisdiction would have on the traditional balance of responsibilities between state and federal courts."*fn59

Here, as discussed, evaluating the viability of Plaintiff's WPCL claim requires the Court to resolve an unsettled area of Pennsylvania Law. When state law is unsettled, federal courts should hesitate to exercise jurisdiction, as "[d]istrict courts . . . do not establish state law, but are limited to predicting it."*fn60 Thus, there is a strong state interest in resolving this issue and a correspondingly weak federal interest in doing so. This factor also weighs against exercising subject matter jurisdiction.


For the foregoing reasons, Plaintiff's Motion to Remand is granted. Defendants' motion to dismiss shall be dismissed as moot.

A corresponding order follows.



CIVIL NO. 10-6791

ORDER AND NOW, this 15th day of June 2011, upon review of the Notice of Removal by Defendants Nikolaos Papadopoulos, Athamasios Papadopoulos, Pamela Papadopoulos, Parthana Makropoulos, Angelo Bekas, and NTP Marble, Inc [doc. no. 1], Plaintiff's Motion to Remand [doc. no.3], and Defendants' Response thereto [doc. no. 5]. and for the reasons set forth in the accompanying Memorandum Opinion, it is hereby ORDERED that this matter is REMANDED to the Court of Common Pleas of Delaware County for lack of subject-matter jurisdiction.

It is further ORDERED that Defendants' Motion to Dismiss [doc. no. 6] is hereby DISMISSED as moot.

The Clerk of Court is directed to mark this case as CLOSED. It is so ORDERED.



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