Pamela Caver v. Central Alabama Electric Cooperative
2017 U.S. App. LEXIS 549
| 11th Cir. | 2017Background
- CAEC is a nonprofit rural electric cooperative that receives substantial federal loans from the USDA Rural Utilities Service (RUS) and is subject to detailed RUS loan agreements and regulations.
- Alabama law (Ala. Code § 37-6-20) requires cooperatives to distribute "excess revenues" to members "as, and in the manner, provided in the bylaws" either as patronage refunds or rate reductions.
- CAEC’s bylaws credit each member’s capital account for patronage capital (treating credits as if paid in cash) and CAEC retires those capital credits later; CAEC historically retained large accrued patronage capital rather than paying annual cash refunds.
- Plaintiff Pamela Caver sued in state court claiming CAEC violated § 37-6-20 and the bylaws by not making annual cash patronage refunds; CAEC removed under the federal officer removal statute, 28 U.S.C. § 1442(a)(1).
- The district court denied remand and dismissed Caver’s complaint, holding (1) removal was proper because CAEC acted under federal authority and raised a colorable federal preemption defense, and (2) § 37-6-20 does not require annual cash payouts and CAEC’s capital-account credits satisfy the statute and bylaws.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal under 28 U.S.C. § 1442(a)(1) was proper | Caver argued CAEC is not a person "acting under" a federal officer and removal was improper | CAEC argued it acted under RUS (performing a federal program), the challenged conduct was connected to federal loan terms, and it had a colorable federal preemption defense | Removal proper: CAEC "acting under" RUS, causal nexus present, and colorable federal defense (preemption) satisfied § 1442(a)(1) |
| Whether Alabama § 37-6-20 requires annual cash patronage refunds | Caver argued the statute mandates annual cash payments (refunds) rather than credits | CAEC argued the statute defers to bylaws for the "manner" of distribution and its bylaws authorize capital-account credits treated as equivalent to cash | Held: § 37-6-20 does not require cash payouts; bylaws’ method of crediting capital accounts complies with statute and supports dismissal |
| Whether CAEC breached its bylaws by not making cash payments | Caver contended bylaws/statute require cash refunds and CAEC breached the contract | CAEC argued bylaws themselves prescribe crediting capital accounts and treat credits as equivalent to cash (and board controls retirement) | Held: No viable breach claim—bylaws authorize the credited capital-account method |
| Whether RUS regulations/loan provisions preempt state law or affect relief | Caver sought state-law relief requiring cash distributions | CAEC argued federal loan terms and RUS rules limit distributions (e.g., equity minimums) and may preempt conflicting state requirements | Court treated preemption defense as colorable for removal but did not decide preemption on the merits because dismissal rested on statutory/bylaw interpretation |
Key Cases Cited
- Salt River Project Agric. Improvement & Power Dist. v. Federal Power Comm'n, 391 F.2d 470 (D.C. Cir. 1968) (discusses REA/RUS role in financing and supervising rural cooperatives)
- Ark. Elec. Coop. Corp. v. Ark. Pub. Serv. Comm'n, 461 U.S. 375 (U.S. 1983) (REA/RUS regulations may preempt conflicting state regulation in some circumstances)
- Watson v. Philip Morris Cos., 551 U.S. 142 (U.S. 2007) (limits on § 1442: private compliance with regulation alone does not show "acting under")
- Ruppel v. CBS Corp., 701 F.3d 1176 (7th Cir. 2012) (private contractors can satisfy "acting under" when performing government work)
- Bennett v. MIS Corp., 607 F.3d 1076 (6th Cir. 2010) ("acting under" satisfied where company performed tasks the government would otherwise perform)
- Isaacson v. Dow Chem. Co., 517 F.3d 129 (2d Cir. 2008) (low causal-connection requirement for § 1442 removal)
- Willingham v. Morgan, 395 U.S. 402 (U.S. 1969) (federal officer removal protects federal officials' ability to assert federal defenses)
- Jefferson Cty. v. Acker, 527 U.S. 423 (U.S. 1999) (federal-question element met when defense depends on federal law)
- Magnin v. Teledyne Continental Motors, 91 F.3d 1424 (11th Cir. 1996) (articulates causal-connection and colorable federal defense requirements for removal)
- Florida v. Cohen, 887 F.2d 1451 (11th Cir. 1989) (same framework on removal prerequisites)
- State v. Pea River Elec. Coop., 434 So. 2d 785 (Ala. Civ. App. 1983) (Alabama appellate reasoning approving use of capital-account credits to reflect cooperative obligations)
- State Dep't of Revenue v. Mon-Cre Tel. Coop., 702 So. 2d 179 (Ala. Civ. App. 1997) (Alabama appellate decision finding statute allows returns in form of patronage credits)