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Laul v. Los Alamos National Security, LLC

United States District Court, D. New Mexico

May 31, 2018

JAGDISH C. LAUL, Plaintiff,



         Plaintiff's Motion to Remand (Doc. 15) was referred to the undersigned “to perform any legal analysis required to recommend to the District Court an ultimate disposition” of the Motion. Doc. 27 (Order of Reference). Having considered the parties' positions and all pertinent authority, the Court recommends that Plaintiff's Motion to Remand be granted.

         I) BACKGROUND

         Plaintiff initiated this action by filing his “Complaint for Retaliation” in the First Judicial District Court, County of Los Alamos, State of New Mexico, on October 26, 2016. See Doc. 1-2. In said Complaint, Plaintiff alleges that he was employed by Defendant from 1999 through 2013. Id. at 2. In addition to this relationship, Plaintiff leased two buildings to Defendant from 2002 through 2016. Id. at 1-2. The lease was extended twice. Id. at 2. However, Defendant informed Plaintiff that it would not renew the lease after Plaintiff was terminated and filed complaints against Defendant with the New Mexico Human Rights Bureau, ultimately leading to a lawsuit. Id. at 3. Premised upon these facts, Plaintiff asserts claims for retaliation under the New Mexico Human Rights Act and breach of the lease agreement. Id. at 3-4.

         Defendant removed the case to this Court on December 21, 2016. See Doc. 1. As grounds for removal, Defendant asserted that “Plaintiff's action arises, in large part, out of alleged violations of a lease contract between the parties, which provides that the contract shall be construed and interpreted according to the federal common law[.]” Id. at 1. The choice of law provision in this case states:

This Lease will be governed by federal law as provided in this paragraph. Irrespective of the place of award, execution, or performance, this Lease will be construed and interpreted, and its validity determined, according to the federal common law of government contracts as enunciated and applied to prime government contracts by the federal boards of contract appeals and federal courts having appellate jurisdiction over their decisions rendered pursuant to the Contract Disputes Act of 1978. The Federal Arbitration Act, other federal statutes, and federal rules will govern as applicable. To the extent that federal common law of contracts is not dispositive, the laws of the State of New Mexico will apply.

Doc. 15-1 at 4.

         This Court, the Honorable William P. Lynch presiding, issued an Order to Cure Defects on December 21, 2016, finding that “the Notice fails to allege how the civil action arises ‘under the Constitution, laws, or treaties of the United States, ' or to cite any authority suggesting that the parties can stipulate to federal jurisdiction merely by contracting for federal common law to govern disputes.” Doc. 4 at 2. Defendant responded on December 28, 2016, clarifying the basis of removal. See Doc. 6. Defendant's amended notice takes the position that Plaintiff's claims implicate national security concerns, and “that federal question jurisdiction may arise from the terms of a lease agreement wherein the parties have agreed that federal law will govern any disputes concerning the lease.” Id. at 3 (citing Tenneco Oil Co. v. The Sac & Fox Tribe of Indians of Okla., 725 F.2d 572, 575 (10th Cir. 1984)). Defendant further asserted that “[a] number of federal district courts have similarly held that contractual choice of law provisions that provide that federal law will govern disputes arising under such contracts is sufficient to confer federal question jurisdiction.” Id.

         Plaintiff now moves the Court to remand the case to state court. Plaintiff argues that the lease agreement is not a “government contract, ” that national security interests are not implicated here because the lease was for “Office and Storage space, ” and that “a choice of law provision where parties stipulate to federal jurisdiction is not sufficient on its own to permit a (sic) federal question jurisdiction.” See Doc. 15 at 2-3; Doc. 20 at 2. In Response, Defendant reiterates its position that the lease's choice of law provision designates federal common law, conferring federal jurisdiction in this case. Doc. 17 at 3-6.[1]


         “Title 28 U.S.C. § 1331 vests in federal district courts ‘original jurisdiction' over ‘all civil actions arising under the Constitution, laws, or treaties of the United States.” Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 689 (2006). “A case that is filed in state court may be removed from state to federal court at the election of the defendant, but only if it is one ‘of which the district courts of the United States have original jurisdiction, ' which is to say if federal subject-matter jurisdiction would exist over the claim.” Hansen v. Harper Excavating, Inc., 641 F.3d 1216, 1220 (10th Cir. 2011) (quoting 28 U.S.C. § 1441(a)). Defendant, as the removing party, bears the burden of establishing federal jurisdiction. See Gonzales v. Ever-Ready Oil, Inc., 636 F.Supp.2d 1187, 1189 (D.N.M. 2008) (Parker, J.) (citations omitted). “Federal courts are courts of limited jurisdiction; thus, there is a presumption against removal jurisdiction, which the defendant seeking removal must overcome.” Gallup Med Flight, LLC v. Builders Trust of New Mexico, 240 F.Supp.3d 1161, 1210 (D.N.M. 2017) (Browning, J.) (citations omitted).

         “[F]ederal subject matter jurisdiction cannot be created by agreement or consent of the parties.” Becker v. Ute Indian Tribe of the Uintah and Ouray Reservation, 770 F.3d 944, 946 n.1 (10th Cir. 2014) (citing Firstenberg v. City of Santa Fe, N.M., 696 F.3d 1018, 1022 (10th Cir. 2012) (“Federal subject matter jurisdiction is elemental. It cannot be consented to or waived, and its presence must be established in every cause under review in the federal courts.”)). Diversity of citizenship can open the door to a federal forum. See 28 U.S.C. § 1332. However, here, the parties are not diverse. “Therefore, if federal subject matter jurisdiction exists, it must arise under a law of the United States.” Morris v. City of Hobart, 39 F.3d 1105, 1111 (10th Cir. 1994) (citing 28 U.S.C. § 1331). “[I]t takes more than a federal element to open the ‘arising under' door.” Empire, 547 U.S. at 701 (citing Grable & Sons Metal Products, Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 313 (2005)). Federal question jurisdiction exists “when the cause of action is created by federal law or turns on a substantial question of federal law.” Morris v. City of Hobart, 39 F.3d 1105, 1111 (10th Cir. 1994). “Consequently, federal jurisdiction will lie only if resolution of [a] breach of contract claim requires resolution of a substantial question of federal law.” Id.; see also Gilmore v. Weatherford, 694 F.3d 1160, 1170 (10th Cir. 2012) (quoting Empire, 547 U.S. at 690).

         “[B]eyond the requirement of a ‘substantial' question of federal law at the heart of the case, the federal question must be ‘actually disputed, ' and its resolution must be necessary to the resolution of the case.” Gallup Med Flight, 240 F.Supp.3d at 1210 (citing Grable & Sons, 545 U.S. at 314). “Finally, the exercise of federal jurisdiction must also be ‘consistent with congressional judgment about the sound division of labor between state and federal courts governing the application of § 1331.'” Id. (quoting Grable & Sons, 545 U.S. at 313-14).

         III) ...

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