Jeffrey Fried v. Donna Parham Sanders ( 2019 )

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 19a0422n.06
Case No. 18-2385 FILED
Aug 14, 2019
UNITED STATES COURT OF APPEALS DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
JEFFREY FRIED and NANCY GUCWA, Full )
Co-Guardians of Mark Marusza, )
)
Plaintiffs-Appellants, ) ON APPEAL FROM THE UNITED
) STATES DISTRICT COURT FOR
v. ) THE EASTERN DISTRICT OF
) MICHIGAN
DONNA PARHAM SANDERS and )
ACCIDENT FUND INSURANCE )
COMPANY OF AMERICA, )
)
Defendants-Appellees. )
BEFORE: COLE, Chief Judge; SILER and CLAY, Circuit Judges.
SILER, Circuit Judge. Jeffrey Fried and Nancy Gucwa, both co-guardians of Mark
Marusza, appeal an order of the district court dismissing with prejudice their claim for intentional
infliction of emotional distress (“IIED”) and remanding their remaining state law claims to Wayne
County Circuit Court. Because the district court lacked jurisdiction, its order is REVERSED and
the case is REMANDED to the district court with instructions to dismiss all claims without
prejudice.
I.
Marusza was hit by a vehicle while on the job in 2011. He sustained a traumatic brain
injury, broken bones, and damage to his shoulders and spine. Following the accident, he was no
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longer able to work, required attendant care, and took on a pseudobulbar affect, often manifesting
in aggressive or inappropriate behavior toward other people.
Accident Fund Insurance Company of America insured Marusza’s employer for Michigan
workers’ compensation benefits. Accident Fund has paid for some, but not all, of Marusza’s
treatment since the accident. Defendant Donna Parham Sanders is the principal adjuster of
Marusza’s claim at Accident Fund.
In 2015, Marusza and Gucwa sued Accident Fund and its employees. They alleged that
the insurance company defrauded them in violation of the Racketeer Influenced and Corrupt
Organizations (“RICO”) Act; that doctors hired by Accident Fund tortiously interfered with
Marusza’s contractual relationship with Accident Fund; that Accident Fund falsely imprisoned
Marusza by requiring him to attend an examination with a neuropsychologist; and that they were
entitled to double damages under the Medicare Secondary Payer Act. Gucwa v. Lawley, 731 F.
App’x 408, 410 (6th Cir. 2018). This court upheld the district court’s dismissal of that complaint.
Id.
Meanwhile, Marusza also sought help from the Michigan Workers’ Compensation Agency.
In 2016, the Agency issued an “open award” of benefits to Marusza. The award entitled him to
four hours of attendant care per day, case management, and medication prescribed by his doctors
for mental and physical injuries.
In 2017, the guardians brought this lawsuit in Wayne County Circuit Court against
Accident Fund and Sanders (collectively, “Accident Fund”). The complaint alleges three claims:
(1) IIED under Michigan law, based in part on violations of federal law, (2) failure to timely pay
under Michigan Compiled Law § 500.2006, and (3) for enforcement of a final order of the workers’
compensation agency. Accident Fund removed the case to federal court, alleging federal question
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jurisdiction. It argued the first amended complaint “alleg[ed] liability against defendants and
entitlement to relief and damages pursuant to federal law, including 18 U.S.C. §§ 1341 and 1343
(mail and wire fraud), and 18 U.S.C. § 1960, et seq. ([RICO]).”
Once in federal court, plaintiffs twice attempted to amend their complaint, once to delete
reference to federal law violations, and again to strengthen their allegations of IIED. Plaintiffs
also argued the district court had no jurisdiction and the case should be remanded. The district
court denied leave to amend the complaint, dismissed with prejudice plaintiffs’ IIED claim, and
remanded the remaining two claims to state court. Plaintiffs appeal.
II.
A defendant who removes a case pursuant to 28 U.S.C. § 1441(b) must demonstrate that
“the case as pled falls within the federal question jurisdiction of the district court.” Warthman v.
Genoa Twp. Bd. of Trs., 549 F.3d 1055, 1061 (6th Cir. 2008). Decisions of the district court
concerning its subject-matter jurisdiction that raise pure questions of law are reviewed de novo;
when jurisdictional decisions are based on resolution of factual disputes, those findings are
reviewed for clear error. Mikulski v. Centerior Energy Corp., 501 F.3d 555, 560 (6th Cir. 2007).
III.
In the absence of diversity jurisdiction, which is not applicable, Accident Fund may remove
this case to federal court if it could have been brought there originally. Grable & Sons Metal
Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005). That is: the case may be removed
to federal court if the plaintiffs’ allegations “aris[e] under the Constitution, laws, or treaties of the
United States.” 28 U.S.C. § 1331. This is most obviously satisfied when litigants proceed under
a federal cause of action. Grable, 545 U.S. at 312.
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But the Supreme Court has recognized “another longstanding, if less frequently
encountered, variety of federal ‘arising under’ jurisdiction”—claims that arise under state law, but
nonetheless implicate a substantial federal issue. Id. This is a “special and small category” of
claims. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). To qualify,
a state law claim must contain a federal issue that is “(1) necessarily raised, (2) actually disputed,
(3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state
balance approved by Congress.” Gunn v. Minton, 568 U.S. 251, 258 (2013); Mikulski v. Centerior
Energy Corp., 501 F.3d 555, 568 (6th Cir. 2007).
The district court found that plaintiffs’ allegations regarding federal law were at the “core”
of plaintiffs’ IIED claim but did not explicitly analyze the multi-part test set out by the Supreme
Court. On appeal, Accident Fund argues plaintiffs’ IIED claim satisfies the test. Plaintiffs argue
it does not and must be remanded to state court along with the other claims. Plaintiffs are correct.
A. Necessarily Raised and Actually Disputed
It is not clear whether the federal issues in the complaint are actually disputed. After all,
plaintiffs have requested leave to amend their complaint to eliminate all allegations that Accident
Fund violated federal law. And after removal in this case, the underlying RICO claim was litigated
and dismissed in a separate suit in federal court. Gucwa v. Lawley, 731 F. App’x 408, 412 (6th
Cir. 2018).
But even assuming dispute, the federal issues are not necessary to plaintiffs’ IIED claim.
To prove IIED under Michigan law, plaintiffs must show: (1) extreme and outrageous conduct;
(2) intent or recklessness; (3) causation; and (4) severe emotional distress. Roberts v. Auto-Owners
Ins. Co., 374 N.W.2d 905, 908 (Mich. 1985). Plaintiffs’ complaint alleges these elements are met
by a number of actions by Accident Fund, most of which are not related to federal law:
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• “Defendants at times in 2012 refused to pay for attendant care though they had
no medical evidence Marusza did not need care . . . This was an intentionally
wrongful act inflicting severe emotional distress on Marusza.”
• “Defendants refused to pay for treatment by Meythaler, refused to pay for
Neudexta or propranolol, and refused to pay for attendant care.”
• “Defendants acted dishonestly or with reckless disregard of the truth, and or
willful blindness to the truth” concerning the reports of Dr. Baker and Dr. Ager,
including failing to the give the doctors relevant medical records, failing to
review inconsistencies in the reports after the errors were made known, and
continuing to deny benefits after incidents showed Marusza to be a danger
absent treatment.
• “Defendants continuously refused to admit that [Marusza] suffered from TBI
[and] needed treatment and medication” despite receiving Dr. Meythaler’s
regular reports confirming the need each year from 2012 through 2016.
• “Defendants[’] refusal to pay for nurse case management in 2016 and 2017 was
an outrageous and reckless act . . . .”
• “[Defendants’] refusal month after month and year after year before the hearing
to pay for Nuedexta, for other medications and treatment for Mark Marusza’s
TBI and other injuries, and for attendant care and nurse case management, was
outrageous, intentional, reckless and or the product of willful blindness, as was
their refusal to pay for increased attendant care and nurse case management
after the magistrate’s decision . . . Defendants’ acts inflicted severe emotional
distress on Mark Marusza.”
It is only after recitation of these allegations and beginning on page twenty-four of the
complaint that plaintiffs touch on federal law. The complaint states “[t]he commission of mail and
or wire fraud which inflicts severe emotional distress is the commission of the tort of intentional
infliction of emotional distress.” And the complaint alleges “Defendants committed mail and wire
fraud in a pattern of racketeering which violated [RICO], 18 U.S.C. § 1960, et seq, [and the
violation] inflicted severe emotional distress on Mark Marusza.”
According to the complaint, violations of federal law are proof of certain elements of
plaintiffs’ IIED claim. But they are not the only proof—the complaint details numerous actions
by defendants having nothing to do with federal law, but which are alleged as a basis for their IIED
claim. The federal issue is therefore not a necessary element of the claim. After all, plaintiffs may
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win or lose regardless of whether defendants violated federal law; such a connection is more
tenuous than what has previously made a federal issue necessarily raised. Gunn, 568 U.S. at 259
(causation element of state malpractice claim required application of federal patent law to prevail);
Grable, 545 U.S. at 315 (whether IRS gave adequate notice as defined by federal law was “the
only legal or factual issue contested in the case”); Merrell Dow Pharm. Inc. v. Thompson, 478 U.S.
804, 807 (1986) (“Because the jury could find negligence on the part of Merrell Dow without
finding a violation of the FDCA, the plaintiffs’ causes of action did not depend necessarily upon a
question of federal law.”) (quoting Sixth Circuit opinion below); Mikulski, 501 F.3d at 569 (“The
plaintiffs have certainly staked their [state law] claim on this federal [tax accounting] issue.”).
B. Substantial
Nor are the federal issues substantial. This court has previously explained that four aspects,
among others, affect an embedded federal issue’s substantiality:
(1) whether the case includes a federal agency[;] (2) whether the federal question
is important (i.e., not trivial); (3) whether a decision on the federal question 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
cases (i.e., the issue is not anomalous or isolated).
Mikulski, 501 F.3d at 570.
Here, these aspects weigh against federal jurisdiction. There is no federal agency in the
case. Nor is the federal issue particularly important. To frame importance, “[t]he substantiality
inquiry under Grable looks . . . to the importance of the issue to the federal system.” Gunn, 568
U.S. at 260. Accident Fund has identified no such issue. It is true that Congress created a private
cause of action under RICO and the federal courts have some interest in delineating its contours.
But that alone does not show substantiality. The Supreme Court has “disclaimed the adoption of
any bright-line rule[s]” in this area of the law, instead emphasizing the importance of tailored,
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careful considerations. Grable, 545 U.S. at 317. Here, plaintiffs have already tried and failed
under the RICO statute in federal court—this court has already weighed in on the contours of the
private cause of action as it relates to these facts. Gucwa, 731 F. App’x 408. According to
Accident Fund and the district court, all that remains is to apply preclusion principles. There is no
reason to believe such application is important to the federal system or will control numerous other
cases going forward.
Finally, and as discussed previously, the alleged federal violations offer only some support
for plaintiffs’ IIED claim and deciding the federal issues will not resolve the claim. The elements
required for the federal violations are not the same as those required for IIED, and a decision in
favor of plaintiffs will not end their proof. Compare Roberts, 374 N.W.2d at 908, with Sedima,
S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479, 496 (1985). If, on the other hand, the issues are decided
in favor of Accident Fund, plaintiffs will presumably continue forward, attempting to prove IIED
from the multiple pages of other allegations in their complaint.
C. Capable of Resolution Without Disruption
As this court has said previously: “[b]oth Grable and Merrell Dow noted that allowing
federal jurisdiction over typical negligence claims that implicated issues of federal law could
dramatically increase the volume of federal litigation over state-law claims.” Mays v. City of Flint,
871 F.3d 437, 450 (6th Cir. 2017). Plaintiffs’ IIED claim sounds in state tort law. In addition,
Michigan’s role in policing its workers’ compensation scheme and delineating the contours of its
IIED cause of action is significant. See, e.g., Jackson v. Sedgwick Claims Mgmt. Servs., Inc., 731
F.3d 556, 568 (6th Cir. 2013) (noting that workers’ compensation schemes “supplant a body of
law that has always been within the domain of the states’ police powers”). This court has
previously noted that IIED claims implicate complex aspects of Michigan law, IIED claims have
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been ruled on differently by Michigan courts, and the Michigan Supreme Court has been hesitant
to recognize it as a formal cause of action. Moon v. Harrison Piping Supply, 465 F.3d 719, 728
(6th Cir. 2006). Finally, to the extent federal law arises on remand, Michigan courts are competent
to apply it. Mikulski, 501 F.3d at 574 (citation omitted).
For good reason, this court has been hesitant to federalize state workers’ compensation
disputes in the past, and this is another attempt we must avoid. See, e.g., Jackson, 731 F.3d at 568
(“The plaintiffs’ reading of RICO would dramatically alter the proper distribution between state
and national governments of police authority . . . by making federal courts an alternative forum for
workers’ compensation disputes.” (citation omitted)).
IV.
Because the district court lacked jurisdiction, its order is REVERSED. The case is
REMANDED to the district court with instructions to dismiss all claims without prejudice.
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