Carroll v. Lowes Home Centers, Inc., 2014 WL 1928669 (S.D. Fla. May 6, 2014).

A district court in Florida found that it lacked subject matter jurisdiction over the action after the plaintiff amended his complaint to remove those claims preempted by ERISA, and particularly after the court denied the motion for class certification.  The district court explained that the defendant had removed the case based on preemption, but not on diversity.  Although the parties stipulated that the action satisfied CAFA requirements, the district court ordered the parties to show cause as to why the case must not be remanded.

The plaintiff, an installer for the defendant, filed a putative class action in state court alleging that he was classified by the defendant as an independent contractor, when in fact he was an employee under Florida law.  The plaintiff alleged a violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) and fraud.  The defendant removed the action to federal court.

The plaintiff filed a motion for class certification seeking to certify a class of all persons who installed products for the defendant or performed installation services in the State of Florida and who were misclassified by Lowe’s as independent contractors.

Here, the plaintiff had filed the suit in the state court alleging two state law causes of action, i.e., violation of the FDUTPA and fraud.  However, when the defendant removed the action to federal court, it asserted federal question jurisdiction, arguing that the plaintiff’s state law claims were completely preempted under ERISA because the plaintiff sought to be classified as an “employee” for ERISA purposes.  The defendant had not asserted diversity jurisdiction.  Therefore, the District Court ordered supplemental briefing on jurisdiction, and both parties agreed that the District Court had jurisdiction pursuant to the CAFA.

The parties agreed that there was a basis for diversity jurisdiction under CAFA because (1) the putative class included at least 100 members; (2) the matter in controversy exceeded $5 million; and (3) the plaintiff was a citizen of a different state (Florida) than the defendant who was a citizen of North Carolina.

Regarding the motion for class certification, the District Court found that common issues of law and fact did not predominate over questions affecting individual class members.  Whereas the plaintiff relied on the standard form contracts that the defendant had signed with the installers to establish commonality and predominance, the District Court found that on their face, the contracts stated that the installers were independent contractors.  The agreements also vested the right to control the method and manner of the work in the installer, not the defendant, and, in this regard, supported independent contractor status.  Based on this, the District Court concluded that the individual issues predominated over common issues.

The District Court noted that federal courts had limited jurisdiction and were obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking.  Here, the defendant removed this action from state court pursuant to federal question jurisdiction, arguing that the plaintiff’s claim for insurance and retirement benefits was preempted under ERISA.  However, the plaintiff had removed his claim for ERISA benefits and, therefore, federal question jurisdiction was lacking.

The District Court remarked that it had diversity jurisdiction under CAFA to consider the plaintiff’s motion for class certification because the filings alleged a putative class of over 100 members, damages in excess of $5,000,000 on behalf of the class, and minimal diversity.  It remarked that in this order, it had denied certification of the class and also concluded that the plaintiff could not pursue a claim for actual damages under FDUTPA because he was not a consumer.  In addition, the plaintiff had voluntarily removed his fraud claim.  Thus, the District Court remarked that the only claim remaining was the plaintiff’s individual claim for declaratory and injunctive relief under FDUTPA, a state law cause of action.

Because subject matter jurisdiction was lacking, the District Court ordered the parties to show cause why this action should not be remanded to state court for lack of federal subject matter jurisdiction.