Jeffrey Fried v. Donna Parham Sanders
18-2385
6th Cir.Aug 14, 2019Background
- In 2011 Mark Marusza suffered a traumatic brain injury at work and required attendant care; Accident Fund Insurance Company of America insured his employer and paid for some treatments.
- Guardians Jeffrey Fried and Nancy Gucwa (plaintiffs) sued Accident Fund and adjuster Donna Parham Sanders in Michigan state court in 2017 asserting three claims: intentional infliction of emotional distress (IIED) (partly alleging federal-law violations), a statutory untimely-payment claim, and enforcement of a workers’ compensation agency order.
- Accident Fund removed to federal court asserting federal-question jurisdiction based on allegations of mail/wire fraud and RICO.
- Plaintiffs sought to amend to remove federal-law allegations and moved to remand; the district court denied leave to amend, dismissed the IIED claim with prejudice, and remanded the other claims to state court.
- The Sixth Circuit reversed, holding the district court lacked federal-question jurisdiction and instructed the district court to dismiss all claims without prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction (embedded federal issue) exists over IIED claim | IIED claim does not necessarily depend on federal law; plaintiffs can and sought to remove federal allegations | Federal statutory allegations (mail/wire fraud, RICO) are at the core of IIED and create federal jurisdiction under Grable | No jurisdiction: federal law not necessarily raised or substantial; remand required (dismiss without prejudice) |
| Whether the federal issue is "necessarily raised" | Plaintiffs: federal violations are only one of many bases for IIED; not required to prove IIED | Accident Fund: federal violations are pleaded as proof for IIED elements | Federal issue not necessary—IIED can be proved by state-law facts independent of federal violations |
| Whether the federal issue is "substantial" to the federal system | Plaintiffs: no federal system importance; RICO was already litigated separately | Accident Fund: private RICO cause of action and fraud allegations warrant federal interest | Not substantial—no federal agency involvement, issue not controlling broader federal interests, RICO already litigated in related case |
| Whether federal resolution would disrupt federal-state balance | Plaintiffs: Michigan courts can adjudicate any federal law issues; state interest in workers’ comp and IIED is strong | Accident Fund: federal forum appropriate for federal-law aspects | Court: allowing jurisdiction would improperly federalize state workers’ compensation/tort disputes; Michigan courts competent to apply federal law if needed |
Key Cases Cited
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (federal question may arise from state claims when a substantial federal issue is necessarily raised)
- Gunn v. Minton, 568 U.S. 251 (test for embedded federal issue: necessarily raised, actually disputed, substantial, capable of resolution without disrupting federal-state balance)
- Mikulski v. Centerior Energy Corp., 501 F.3d 555 (6th Cir.) (applying Grable/Gunn multi-factor inquiry)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (state-law claims not converted to federal-question jurisdiction when federal-law violation is not an essential element)
- Roberts v. Auto-Owners Ins. Co., 374 N.W.2d 905 (Mich.) (elements of IIED under Michigan law)
- Sedima, S.P.R.L. v. Imrex Co., Inc., 473 U.S. 479 (RICO private cause of action and its elements)
- Jackson v. Sedgwick Claims Mgmt. Servs., Inc., 731 F.3d 556 (6th Cir.) (caution against federalizing workers’ compensation disputes via RICO)
- Gucwa v. Lawley, 731 F. App’x 408 (6th Cir.) (prior federal litigation dismissing related RICO claims)