California Employer/Insurer’s Right to Subrogation Does Not Bar Removal of Case to Federal District Court
That a California employer and/or its workers’ compensation insurer might have a subrogation interest in the proceeds of any recovery in a third-party negligence action originally filed in a state trial court against the designer and manufacturer of a garbage truck did not mean the plaintiff’s claims arose under California’s workers’ compensation laws, held a U.S. District Court recently in Gutierrez v. McNeilus Truck & Mfg., 2019 U.S. Dist. LEXIS 181984 (N.D. Cal., Oct. 21, 2019). Accordingly, where the defendant removed the case to federal court on diversity grounds, the federal court denied plaintiff’s subsequent motion to remand since 28 U.S.C.S. § 1445(c), which generally provides that a civil action arising under the workers’ compensation laws of a state may not be removed, was not applicable to the plaintiff’s claims against the defendant.
Background
On September 29, 2017, plaintiff sustained serious injuries when he fell from the roof of a garbage truck designed and manufactured by defendant. Plaintiff, an employee of Green Team, had been attempting to secure a chain to the top of a large “debris box,” which had fallen onto the truck bed. Plaintiff contended, inter alia, that the defective design and manufacturing of the truck was the proximate cause of his injuries. Pursuant to 28 U.S.C.S. § 1441(b), defendant removed the action to a federal district court in California. Plaintiff then filed a motion to remand.
Section 1445(c)
The District Court initially noted that whether an action is one that arises under the workers’ compensation laws of a state and, therefore, is a “nonremovable action,” is governed by federal law. The Court noted that neither Congress nor the Ninth Circuit had defined “arising under” in the context of § 1445(c). It added, however, that all courts that had addressed the issue agreed that “arising under” in § 1445 had the same meaning as it did in 28 U.S.C.S. § 1331.
The Court continued that in the context of § 1331, “arising under” meant that “it was apparent from the face of the complaint either that either:
- A federal law created the plaintiff’s cause of action; or
- If a state law created the cause of action, a federal law that created a cause of action was a necessary element of the plaintiff’s claim [citing Virgin v. County of San Luis Obispo, 201 F.3d 1141, 1142-43 (9th Cir. 2000)].
Importing that definition to § 1445(c), the Court added that a civil action “arises under” a state’s workers’ compensation law when the workers’ compensation law created the plaintiff’s cause of action or was a necessary element of the claim [citing Ramirez v. Saia Inc., No. 14-04590 ODW, 2014 U.S. Dist. LEXIS 111569 (C.D. Cal. Aug. 12, 2014)].
Labor Code § 3852
The Court noted that plaintiff contended the claims arose under California workers’ compensation law not because the claims for negligence, products liability, and loss of consortium arose under such law, but because Cal. Lab. Law § 3852 provided plaintiff’s employer, Green Team, a right of subrogation.
The Court said there was no question that an insurer’s suit under § 3852 to recover workers’ compensation benefits arose under California’s workers’ compensation law and was, therefore, nonremovable. The Court accepted, however, defendant’s argument that neither plaintiff’s employer nor the workers’ compensation insurer had asserted a subrogation claim. The Court concluded that here neither Green Team nor its insurer were parties to the action; § 3852 accordingly did not bar removal.
Could Have Been Different if Employer/Insurer Had Intervened Before Removal
Practitioners, particularly those in California, should note that the result might well have been different had the employer and/or its carrier intervened before the cause was removed to federal court. For example, in Camacho v. JLG Indus., 2017 U.S. Dist. LEXIS 144421 (C.D. Cal. Sept. 6, 2017), later remanded on other grounds in Camacho v. JLG Indus., 2017 U.S. Dist. LEXIS 189286 (C.D. Cal., Nov. 15, 2017), an injured worker and spouse filed suit in California Superior Court against the manufacturer of scissor lift equipment, seeking recovery in tort for injuries sustained by the worker, including traumatic brain injury and loss of consortium suffered by spouse. Following removal of the cause by defendant, the , federal district court denied plaintiffs’ motion to remand.
The Court acknowledged that under 28 U.S.C.S. § 1445(c), Congress expressly prohibited removal of civil action in any State court arising under workers’ compensation laws of a State, and that an intervening employer or insurance company had a right to recover in the same suit as plaintiff under Cal. Labor Code § 3852, but the Court found plaintiffs’ claim against defendant did not arise under California’s workers’ compensation laws and, at the time of removal, the workers’ compensation insurer had not yet intervened in connection with its subrogation claim. Defendant’s removal of action was, therefore, proper and not barred by federal procedure.