Fracasse v. People's United Bank
747 F.3d 141
2d Cir.2014Background
- Tracy Fracasse and K. Lee Brown, former mortgage underwriters at People’s United Bank, sued in Connecticut Superior Court alleging unpaid overtime and related state-law claims (unjust enrichment, negligent infliction of emotional distress, wrongful termination in violation of public policy, breach of covenant of good faith and fair dealing).
- Plaintiffs concurrently filed a separate federal action asserting direct FLSA and Connecticut Minimum Wage Act claims based on the same conduct.
- People’s removed the state-court action to federal court asserting federal-question jurisdiction under 28 U.S.C. § 1331, invoking the artful-pleading doctrine because the state complaint referenced the FLSA as a public-policy basis for some common-law claims.
- The district court dismissed the state-law complaint on the merits, holding FLSA preempted the claims; the district court did not address subject-matter jurisdiction.
- The Second Circuit sua sponte examined subject-matter jurisdiction, requested supplemental briefing, and concluded federal jurisdiction was lacking because any federal issue raised by the state claims was not "substantial" under Gunn v. Minton.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction exists over state-law claims that reference the FLSA | Fracasse/Brown: claims are state-law causes of action; references to the FLSA are public-policy context and do not create federal jurisdiction | People’s: state claims necessarily raise federal questions because they rely on or invoke the FLSA; removal is proper under the artful-pleading doctrine | No federal-question jurisdiction: the federal issue is not "substantial" under Gunn and thus claims do not "arise under" federal law |
| Whether the district court properly reached the merits before resolving jurisdiction | Fracasse/Brown: federal court lacked § 1331 jurisdiction and should not have adjudicated merits | People’s: removal justified; merits dismissal proper | Court: jurisdictional inquiry required; district court lacked subject-matter jurisdiction and its judgment must be vacated and remanded to state court |
Key Cases Cited
- New York v. Shinnecock Indian Nation, 686 F.3d 133 (2d Cir.) (courts must independently assess subject-matter jurisdiction)
- Durant v. Dupont, 565 F.3d 56 (2d Cir.) (courts must dismiss sua sponte if subject-matter jurisdiction is lacking)
- Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (Sup. Ct.) (Congress can provide statutory removal for certain federal-interest state claims)
- Sullivan v. Am. Airlines, Inc., 424 F.3d 267 (2d Cir.) (complete preemption doctrine examples)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (Sup. Ct.) (when state claims may nonetheless raise federal issues)
- Gunn v. Minton, 133 S. Ct. 1059 (Sup. Ct.) (four-part test for when a state-law claim "necessarily raises" a federal issue; federal issue must be "substantial" to permit federal jurisdiction)
- Grable & Sons Metal Prods. v. Darue Eng’g & Mfg., 545 U.S. 308 (Sup. Ct.) (federal-question jurisdiction requires a substantial federal issue)
- MDS (Canada) Inc. v. Rad Source Techs., Inc., 720 F.3d 833 (11th Cir.) (factors relevant to substantiality analysis)