948 F.3d 931
8th Cir.2020Background
- Holbein was hired as general manager of TAW Enterprises’ Bellevue, NE dealership; in 2016 he discovered the Finance Director had lost customer financial data and allegedly re-obtained it without disclosing the breach.
- Holbein warned TAW about reporting obligations under the Gramm-Leach-Bliley Act and repeatedly raised compliance concerns.
- In October 2016 TAW demoted Holbein and cut his pay ~65%; Holbein alleged the demotion was retaliatory for his insistence on GLBA compliance.
- Holbein sued in Nebraska state court alleging (1) retaliatory discharge in violation of public policy (based on the Act) and (2) breach of contract; only TAW was served.
- TAW removed to federal court on federal-question grounds; the district court dismissed Holbein’s amended complaint with prejudice, holding his claim did not implicate a Nebraska public-policy exception to at-will employment grounded in the Act.
- On appeal the Eighth Circuit considered whether it had subject-matter jurisdiction and concluded federal jurisdiction was lacking; it vacated the dismissal and instructed remand to state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has federal- or diversity-based subject-matter jurisdiction | Holbein initially suggested diversity, later disavowed federal jurisdiction; argued claim is state law | TAW argued federal-question jurisdiction (and sought to preserve diversity argument on appeal) | Diversity jurisdiction unavailable (forum-defendant rule); federal-question jurisdiction absent — no federal SMJ |
| Whether the forum-defendant removal bar is jurisdictional or waivable | Holbein implied waiver could allow diversity jurisdiction on appeal | TAW urged Grubbs-style waiver; court invoked Horton as controlling | Horton controls in this circuit: forum-defendant rule is jurisdictional, so diversity removal is barred |
| Whether Holbein’s retaliation claim “arises under” federal law because it invokes the Gramm-Leach-Bliley Act (Grable/Merrell Dow analysis) | Holbein labeled the claim under the Act but said it was a state-law public-policy tort that relied on the Act | TAW urged that the federal issue is substantial and anchors federal-question jurisdiction | The claim is a state-law retaliatory-discharge tort that merely incorporates a federal standard; Merrell Dow/Grable analysis shows no substantial federal issue; §1331 jurisdiction lacking |
| Proper remedy if federal jurisdiction lacking | Holbein sought remand to state court | TAW had litigated in federal court but could not cure jurisdictional defect | Court vacated the district-court judgment and remanded with instructions to remand the case to state court |
Key Cases Cited
- Grubbs v. General Elec. Credit Corp., 405 U.S. 699 (U.S. 1972) (addressing when improper removal may be treated as waived when parties proceed without timely objection)
- Horton v. Conklin, 431 F.3d 602 (8th Cir. 2005) (holding the forum-defendant rule is a jurisdictional defect in the Eighth Circuit)
- Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804 (U.S. 1986) (holding incorporation of a federal standard into a state law claim is insufficient for §1331 when Congress provided no private federal remedy)
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (U.S. 2005) (articulating the narrow test for when state-law claims present a substantial federal issue)
- Dunmire v. Morgan Stanley DW, Inc., 475 F.3d 956 (8th Cir. 2007) (noting there is no private right of action under the Gramm-Leach-Bliley Act)
- Great Lakes Gas Transmission Ltd. P’ship v. Essar Steel Minn. LLC, 843 F.3d 325 (8th Cir. 2016) (discussing duty to address subject-matter jurisdiction and remand when federal jurisdiction is lacking)
- Lively v. Wild Oats Mkts., Inc., 456 F.3d 933 (9th Cir. 2006) (contrasting view that forum-defendant rule is nonjurisdictional and thus waivable)