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Tuesday, October 08, 2013

Baseball and removal

Baseball player and PED pariah Alex Rodriguez sued Major League Baseball in state court in New York last week, asserting claims for tortious interference with existing contract (his contract with the New York Yankees) and tortious interference with prospective business relationship (because sponsors have dropped or refused to hire him). Today, MLB removed the action to the Southern District of New York.

But the basis for removal was not, as one might expect in a tort suit, diversity. That removal would have been impossible. MLB is an unincorporated association of its 32 teams, which are themselves unincorporated associations and partnerships; each team is a citizen of every state in which a member or partner is a citizen, meaning MLB is a citizen of every such state. MLB thus is a citizen of New York (among other places), as is Rodriguez, meaning complete diversity is lacking. Moreover, because MLB is a citizen of New York, it cannot remove a diversity action under the Forum Defendant Rule.

Instead, removal was based on federal question jurisdiction under the doctrine of complete preemption. MLB argues that Rodriguez's claim, which functionally challenges his suspensiona and the process by which that suspension was imposed, is preempted by § 301 of the Labor Management Relations Act and MLB's agreements with the MLBPA. The LMRA is one of a few federal statutes (ERISA and the National Bank Act are the others) that have "uniquely powerful preemptive force;" the statute provides the only available cause of action in this realm, such that any state law claim is converted into a federal claim arising under the federal statute. Thus, although Rodriguez pled state-law claims, such state claims do not exist. His claims therefore arise under federal law (the LMRA) and are removable as such.

Complete preemption is controversial and in many ways makes no sense. Preemption ordinarily is a defense; the preemptive force of federal law defeats the state law claim and warrants its dismissal. But that argument is made in state court. By allowing removal to federal court, the doctrine carves an unexplained exception to the Well-Pleaded Complaint Rule, under which removal can only be based on the claims appearing in the complaint, not on defenses. The response, I suppose, is that this is a unqiue form of preemption, which converts the nature of the cause of action; removal is not based on a defense, but on the actual claim, recast in light of federal law's preemptive force.  But the Court has never explained or justified what Justice Scalia has derided as this "federalize-and-remove dance."

It is particularly obvious in this case that the LMRA provides a defense rather than a change to the claim. With the case now in federal court, MLB almost certainly will argue that the civil action should be dismissed because the claims are governed by MLB's Basic Agreement (its CBA) and related agreements respecting drug use and testing, which empower the commissioner with respect to PED use and commit challenges to that power to binding arbitration. In other words, the LMRA and the Basic Agreement are doing double work--providing the jurisdictional hook to put the case in federal court, then providing the merits hook to defeat the claim. This offends my basic belief that rules should be either merits or jurisdictional but never both. In any event, the extra step seems wasteful and unncecessary. It would have been simpler and more efficient for MLB to simply move to dismiss in state court in favor of arbitration.

Posted by Howard Wasserman on October 8, 2013 at 09:31 AM in Civil Procedure, Howard Wasserman, Sports | Permalink

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I don't think you can question MLB's strategic call. Very few corporate defendants would choose to pursue a preemption defense in state court when they have a colorable basis to remove.

I do think you can question the logic of the complete preemption doctrine in this context. As I understand the doctrine, it is designed to streamline proceedings where the plaintiff has pleaded state-law claims which are preempted by essentially identical federal claims. It makes sense to treat these claims as federal claims from the beginning, rather than requiring them to be dismissed, repleaded, and then removed. But it doesn't make sense in cases where, as is the case here, there is no federal claim that can be heard in federal court. In such cases, the claims are being removed to federal court in order to be dismissed. Which raises the question why they cannot simply be dismissed by the state court.

The answer, I would guess, is the same reason why defendants prefer to remove in these cases: federal judges, like corporate defendants, tend to be distrustful of state courts' ability to decide complicated federal questions such as preemption.

Posted by: AF | Oct 8, 2013 6:17:44 PM

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