The opinion of the court was delivered by: ACKERMAN
This matter comes before the court on defendant's appeal of Magistrate Judge Chesler's decision to remand the case to state court. For the reasons detailed below, the magistrate's judge's ruling shall be REVERSED.
Section 4261 of the Internal Revenue Code required airline passengers to pay a ten percent excise tax on all domestic air transportation commenced on or before December 31, 1995, and required the airlines to collect the tax from their customers. See 26 U.S.C. §§ 4261, 4291 (1995). President Clinton vetoed a bill in the middle of December that would have extended the excise tax and the tax expired. Thus, no excise tax applied to travel commenced after December 31.
Nevertheless, Continental Airlines continued to collect the "excise tax" on tickets for travel on or after January 1, 1996. In December, 1995, the plaintiff, Jody Eisenman, bought a ticket from Continental for a flight in 1996. Continental charged the plaintiff an additional 10% as a "federal excise tax."
In February, Eisenman filed this suit individually and on behalf of those persons who purchased tickets for air transportation from Continental for travel on or after January 1, 1996. Her complaint asserts four state law claims -- conversion, unjust enrichment, violation of the New Jersey Consumer Fraud Act, and breach of fiduciary duty -- but does not explicitly allege any federal cause of action. Yet, in March, 1996, the defendant removed the matter to federal court on the ground that federal question jurisdiction existed. Subsequently, plaintiff filed a motion to remand the case to state court. This court referred plaintiff's motion to Magistrate Judge Chesler who granted it. In an opinion filed in June, 1996, the court found that it lacked federal question jurisdiction because the complaint is rooted in state law. See Magistrate Opinion (filed June 28, 1996) ("June Opinion"). Thereafter, on September 24, 1996, Judge Chesler heard reargument, but still decided to remand the case. See Magistrate Opinion (filed October 29, 1996) ("October Opinion").
II. Jurisdiction to Hear this Appeal
Apart from the jurisdictional issues decided by the magistrate judge for which Continental seeks review, the plaintiff argues that this court does not have jurisdiction to even hear this appeal. Plaintiff relies upon the fact that on October 30, 1996, the Clerk of the Court sent two certified copies of both the order of remand and the case file to the state court. According to the plaintiff, the delivery of the case file to the state court divested this court of jurisdiction to hear the appeal.
Later, Judge Chesler held a hearing for reargument. In October, after the hearing, the judge issued an opinion and filed an order which once again, granted the motion to remand. See October Opinion and Order. This order has become the source of confusion and the root of plaintiff's current jurisdictional argument because it did not include any language referencing the original stay. Upon the entering of the October Order, the Clerk of the Court, without considering the July Order extending the stay, sent the case file to the state court. When Continental brought this error to the attention of Judge Chesler, he filed another order "clarifying" the original extension. See Order (November 12, 1996) ("November Order). The November Order states that the July order extending the stay "shall remain in full force and effect." See Id. Additionally, the magistrate judge stayed the October order until November 18, 1996. Id.
The general rule articulated by the Third Circuit and implicated here is that "a district court loses jurisdiction over a case once it has completed the remand by sending a certified copy of the remand order to the state court." Trans Penn Wax v. McCandless, 50 F.3d 217, 225 (3d Cir. 1995) (citing Hunt v. Acromed Corp., 961 F.2d 1079, 1081 (3d Cir. 1992)). Adopting such a bright line rule "prevents delay in the trial of remanded cases by avoiding protracted litigation of jurisdictional issues." Hunt, supra, at 1082. Three district courts in this circuit have interpreted that rule to mean that once a magistrate grants a motion to remand and the clerk mails a copy of the order to the state court, the district court's power to hear the appeal is negated. See DeCastro v. Awacs, 940 F. Supp. 692, 696 (D.N.J. 1996); Tinkham v. Massachussetts Mutual Life Insurance Co., 1996 WL 673527, *3 (D.N.J. 1996); Campbell v. International Business Machines, 912 F. Supp. 116 (D.N.J. 1996). In Decastro, pursuant to FED. R. CIV. P. 72(a),
the defendant brought an appeal to the district court of the magistrate's decision to remand the case to state court for lack of federal jurisdiction. See Decastro, supra, at 693. The magistrate judge had entered the order remanding the case on the docket and the Clerk of the Court had already sent a copy to the state court. The district court followed other courts that have found that "even in cases where a court clerk mailed the certified copy of a magistrate judge's remand order to the state court prior to the district court's review of that order . . . the clerk's act terminate[s] . . . jurisdiction." See 940 F. Supp. at 696 (citing Campbell, supra; Tinkham, supra ; and City of Jackson v. Lakeland Lounge, 147 F.R.D. 122 (S.D. Miss. 1993)). According to the court, allowing the rule to be triggered even after the "erroneous sending" of a remand order fulfills the rule's articulated purpose. See DeCastro, supra, 940 F. Supp. at 696-97. Use of the term "erroneous" refers to occasions where the Clerk has sent the file even though the losing party could still seek review of the order, through either a motion for reargument or appeal.
In the instant case, the plaintiff has invoked DeCastro to argue that the transmittal of the magistrate judge's remand order to the state court by the Clerk of the Court, "effectively denied the defendant the right to district court review." See Plaintiff's Br. at 5. In the opinion of this court, the plaintiff's position reflects a complete misunderstanding of Third Circuit jurisprudence because it is not consistent with the underlying purpose of the rule. Contrary to the view held by the plaintiff, the Third Circuit's bright line jurisdictional rule is not triggered every time that the Clerk of the Court, however misdirected, delivers a case file to a state court. Rather, the rule is triggered when remand is effectively "completed." See McCandless, supra, at 225. Because a remand order is not "self-executing," courts use the "physical mailing of the certified copy" as the "key jurisdictional event to divest the district court of jurisdiction." Id. Thus, the delivery of the case file is not a substantive event, in itself. Rather, this situation is analogous to one where a cook uses a meat thermometer to determine if the turkey is done. When a certain temperature is reached, the thermometer rings and the cook knows the turkey is done. As with the thermometer, the "mailing" tells the court when the remand is "complete."
Plaintiffs in the instant case have focused solely on the mailing and not whether an effective remand order exists. In all of the lower court cases -- DeCastro, Campbell, Tinkham, and City of Jackson -- the district did not have power to hear the appeal because there existed evidence of both an effective remand order and a "physical" mailing. The instant case may be distinguished because while there exists a mailing, there is no effective remand order. As I have noted, in contrast to the other cases cited by the plaintiff, the magistrate judge stayed the remand order until after the disposition of its appeal. For all intents and purposes, because the stay had not expired, the magistrate judge had not yet ordered to remand the case. Here, the Clerk of the Court mailed the file to the state court only because it misunderstood the judge's decree. The thermometer rang, but there was no turkey in the oven. Such a administrative error does not fall within the scope of the kind of "erroneous sending" mentioned by other courts. Therefore, I find that this court does have power to hear the appeal.
Before reaching the merits of this appeal, I must address one additional threshold matter: the applicable standard of review. Both parties agree that the court should apply the "clearly erroneous or contrary to law" standard reserved for non-dispositive motions. See 28 U.S.C. § 636 (b)(1)(A). This view represents the position taken by the "vast majority of the district courts, within this district and elsewhere, that have confronted this issue, have held that a motion to remand is 'non-dispositive,'" DeCastro v. Awacs, 940 F. Supp. 692, 695 (D.N.J. 1996); see also Campbell v. International Business Machines, 912 F. Supp. 116; but see, Giangola v. Walt Disney World Company, 753 F. Supp. 148, 152 (D.N.J. 1990) (holding that remand orders are dispositive). Notably, even if this were a dispositive motion meriting a "de novo" and plenary review, this case would not be resolved differently. See 28 U.S.C. § 636 (b)(1). My opinion deals with pure issues of law and under both standards, conclusions of law are reviewed "de novo." See Albright v. FDIC, 21 F.3d 419, 1994 WL 109047, *5 (1st Cir 1994).
Under 28 U.S.C. § 1441, the defendant may remove from state court to federal court, "any civil action . . . of which the district court . . . [has] original jurisdiction." However, the jurisprudence of the Supreme Court and the Third Circuit dictates that under the "well pleaded complaint rule," the defendant may not remove a case unless the federal question is presented on the face of the plaintiff's properly pleaded complaint. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 96 L. Ed. 2d 318, 107 S. Ct. 2425 (1987); Gully v. First National Bank, 299 U.S. 109, 112-113, 81 L. Ed. 70, 57 S. Ct. 96 (1936); Railway Labor Executives Association v. Pittsburgh and Lake Erie R.R., 858 F.2d 936 (3d Cir. 1988). Most importantly, it is "settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint . . . ." Caterpillar, 482 U.S. at 393. The well pleaded complaint rule "makes the plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on state law." 482 U.S. at 392. Nevertheless, the Supreme Court has developed an "independent corollary" to the well pleaded complaint rule which recognizes that "Congress may so completely preempt a particular area, that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 95 L. Ed. 2d 55, 107 S. Ct. 1542 (1987); see Railway, supra, at 939.
This independent corollary, known as "complete preemption" doctrine, acknowledges that there may exist some circumstances where federal law creates a federal remedy for some wrong and displaces all state law remedies regardless of what law the plaintiff relies upon in the complaint. Because the Supreme Court has only invoked the doctrine in "extraordinary" cases, this court must construe it narrowly. See Caterpillar, supra, at 393.
The instant case raises the question of whether Section 7422 of the Internal Revenue Code ("IRC"), completely preempts plaintiff's state law claims and thereby creates removal jurisdiction in this court
even though the plaintiff did not plead any federal claims. Section 7422 of the IRC provides that "no suit or proceeding shall be maintained in any court for the recovery of any internal revenue tax alleged to have been erroneously or illegally assessed or collected . . . until a claim for refund or credit has been duly filed with the Secretary." 26 U.S.C. § 7422. Thus, this court must determine whether Section 7422 compels the plaintiff to recharacterize the complaint as one rooted in federal law which would permit the defendant to remove the case.
Following Avco Corp v. Aero Lodge No. 735, 390 U.S. 557, 20 L. Ed. 2d 126, 88 S. Ct. 1235 (1968) (finding that Section 301 of the Labor Management Relations Act ("LMRA") completely preempted state law claims involving violations of collective bargaining agreement) and Metropolitan Life, supra, (holding that Section 502 of ERISA completely preempted state law), the Third Circuit has developed a two part test to determine whether a defendant may invoke the "complete preemption" doctrine. See Railway, supra. Under the test articulated by the Third Circuit in Railway, the court must first determine that the "statute relied upon by the defendant as preemptive contains civil enforcement provisions within the scope of which the plaintiff's claim falls." 858 F.2d at 942. Second, the court must find a "clear indication of a Congressional intention to permit removal despite the plaintiff's exclusive reliance on state law." Id. In the instant case, the magistrate judge's opinion expresses skepticism as to whether Continental has satisfied the first prong, but its holding relies upon Continental's failure to satisfy the second prong. the magistrate judge's opinion granted the remand motion, because according the judge, Continental did not point to any evidence of Congressional intent. In this review, the court will analyze both prongs.
A. Railway's First Prong: whether the IRC contains civil enforcement provisions within the ...