Texas Employee’s Suit Against Non-Subscribing Employer Can Be Removed to Federal Court

A federal district court in Texas held that a Texas employee’s civil action against his non-subscribing employer did not arise out of the Texas Workers’ Compensation Act (“TWCA”), in spite of the fact that the TWCA barred certain defenses that the employer-defendant might otherwise enjoy. Accordingly, removal to federal court was not barred by 28 U.S.C.S. § 1445(c) where the employer-defendant had shown diversity jurisdiction [Kaspar v. Ryder Integrated Logistics, Inc., 2020 U.S. Dist. LEXIS 214581 (W.D. Tex. Nov. 17, 2020)].

Background

Plaintiff filed suit against Defendant in a Texas county court, asserting the applicability of the Texas Workers’ Compensation Act (“TWCA”). Defendant, Plaintiff’s non-subscribing employer, removed the matter to federal district court, alleging diversity jurisdiction. Plaintiff filed a Motion to Remand, arguing that the cause of action arose under the workers’ compensation laws of the State of Texas and, accordingly, could not be removed [see 28 U.S.C.S. § 1445(c)]. Defendant responded that the cause of action arose under Texas common law, and was thus properly removed on diversity grounds.

District Court’s Analysis

The federal court noted that 28 U.S.C.S. § 1445 made certain actions nonremovable, and that, as relevant to the case at bar, “a civil action in any State court arising under the workmen’s compensation laws of such State may not be removed to any district court of the United States.” 28 U.S.C. § 1445(c). The court said Plaintiff’s Motion to Remand depended upon the applicability of the TWCA to a negligence claim against a nonsubscribing employer. In essence, said the court, it had to decide whether the source of Plaintiff’s negligence claim was the TWCA or common law. On the issue, the court said the Fifth Circuit’s opinion in American Int’l Specialty Lines Ins. Co. v. Rentech Steel LLC, 620 F.3d 558 (5th Cir. 2010), and the Supreme Court of Texas’ opinion in Kroger v. Keng, 23 S.W. 3d 347 (Tex. 2000), were instructive.

Negligence Action is “Modified” by TWCA

The federal district court observed that in Kroger, the Supreme Court of Texas explained in dicta how the TWCA modified negligence claims against nonsubscriber employers. The Kroger Court explained that the TWCA merely altered the possible defenses and potential liability of a defendant subject to a common law negligence scheme.

In Rentech Steel, the Fifth Circuit, reiterated that the Texas Supreme Court, in Kroger, had indicated in dicta that a negligence claim against a non-subscriber is “modified by the TWCA, but remains a claim at common law” [Rentech Steel, 620 F.3d at 564]. Reasoning by analogy, the Fifth Circuit wrote: “Many common-law claims are ‘governed’ by statutes of limitations, but those statutes neither give rise to the cause of action they govern, nor do they obligate any party to pay a judgment arising from a governed claim” [Id. at 565].

Federal District Court’s Conclusion

The federal district court said it was persuaded by the reasoning in Rentech Steel and Kroger that the TWCA did not create Plaintiff’s cause of action, but merely modified aspects of it. Rather, Plaintiff’s negligence claim against Defendant arose from Texas common law. As such, Plaintiff’s claims for negligence against Defendant do not “arise under” a workmen’s compensation law of the state of Texas, and were thus not subject to remand.