Begging the Federal Question: Removal Jurisdiction in Wrongful Discharge Cases

• Publication year: 1996

UNIVERSITY OF PUGET SOUND LAW REVIEWVolume 20, No. 1FALL 1996

Begging The Federal Question: Removal Jurisdiction In Wrongful Discharge Cases

Michael D. Moberly(fn*)

I. Introduction

The presumption that an employment relationship for an indefinite period is terminable at the will of either party is uniquely a product of the American common law.(fn1) This "employment at will" rule was intended to assure managerial autonomy and discretion in the work place by permitting employers to discharge their employees at any time and for any reason.(fn2) The rule was so well received in the laissez-faire climate of the late nineteenth century(fn3) that it was codified in several states,(fn4) and, for a time, almost attained constitutional standing.(fn5)

The basic assumption underlying the employment at will rule is that employers should have complete contractual freedom(fn6) in order to facilitate industrial growth in accordance with free market principals.(fn7) Proponents of the rule argue that it enhances the contractual freedom of employees.(fn8) Others contend that the disparity in bargaining power between employers and employees makes true freedom of contract illusory in the employment context.(fn9) It is largely the latter view that has prevailed.(fn10) Thus, although the employment at will rule thrived for many years, and is still followed in some form by most jurisdictions,(fn11) it has gradually fallen into disfavor as the courts have increasingly recognized exceptions to its operation.(fn12)

The most widely accepted judicial limitation upon the employment at will rule is the public policy exception.(fn13) This exception protects employees from being discharged because they performed an act that public policy encourages or refused to perform an act that public policy condemns.(fn14) Most wrongful discharge claims(fn15) premised upon the public policy exception are based upon statutory expressions of public policy.(fn16) Although the wrongful discharge claim is a common law cause of action arising under state law,(fn17) if the employee asserts that his discharge violates the public policy expressed in a federal statute,(fn18) the employer may be entitled to remove the case to federal court on the basis of federal question jurisdiction. This possibility is significant because plaintiffs typically bring wrongful discharge cases in state court,(fn19) while employers often prefer to have them litigated in federal court where the substantive law is generally more favorable to their position.(fn20)

This Article focuses on whether the alleged violation of federal law as an element of a state law claim gives rise to a federal question within the meaning of 28 U.S.C. § 1331, thereby creating federal question jurisdiction.(fn21) The resolution of that issue has been described as the single most difficult problem in determining whether federal question jurisdiction exists.(fn22)

This Article analyzes the federal question jurisdiction issue in the context of state law claims for wrongful discharge in violation of public policy articulated in federal law.(fn23) Part II of this Article contains a general discussion of the public policy exception to the employment at will rule. Part III discusses removal and federal question jurisdiction.(fn24) Part IV analyzes cases relevant to the issue of federal question removal jurisdiction in the wrongful discharge context, including the United States Supreme Court's decisions in Merrell Dow Pharmaceuticals v. Thompson (fn25) and Christianson v. Colt Industries Operating Corp.(fn26) This Article concludes that a wrongful discharge claim based solely upon public policy expressed in a federal statute for which there is a private federal statutory remedy should be removable, particularly where the federal courts have exclusive jurisdiction over the direct statutory cause of action. However, the removal of wrongful discharge claims based on other federal sources of public policy, such as federal statutes for which there is no private statutory remedy, is precluded by Merrell Dow and Christianson.(fn27)

II. The Public Policy Exception

The public policy exception has been described as a judicially-recognized "outer limit" to the employment at will rule and is designed to vindicate the rights of employees discharged for reasons that violate public policy.(fn28) Although virtually all states recognize the exception in some form,(fn29) they disagree on the extent to which it limits an employer's right to discharge its employees.(fn30)

The public policy exception began as a narrow rule permitting employees to sue their employers when they were discharged in violation of express statutory prohibitions.(fn31) It was expanded to prohibit discharges which violated more general constitutional or statutory expressions of public policy.(fn32) More recently, many courts have recognized a cause of action for wrongful discharge even in the absence of constitutional or statutory expressions of public policy.(fn33)

For example, several states now recognize wrongful discharge claims based on public policies expressed in decisional law.(fn34) In some jurisdictions, a professional code of ethics or unwritten "customs and conventions of the people"(fn35) have been found to be sufficient expressions of public policy to support wrongful discharge claims.(fn36) Additionally, in order to encourage employees to expose their employers' illegal or unsafe practices,(fn37) many states also protect "whistleblowers" from discharge(fn38) without requiring a directly applicable constitutional, statutory or decisional expression of public policy. Even a public policy expressed in the law of another state may support a wrongful discharge claim under some circumstances,(fn39) although discerning the public policy of another state may occasionally be difficult for courts.(fn40)

Despite these expansive interpretations of the public policy exception, a few courts still confine the exception to public policies expressed in state law.(fn41) However, the better view is that at least some federal expressions of public policy will also support such a claim.(fn42) To the extent that most courts continue to recognize wrongful discharge claims based on federal public policies, the right of employers sued in state court to remove such claims will be debated.(fn43)

III. REMOVAL AND FEDERAL QUESTION JURISDICTION

Generally, Congress grants state court defendants the right to remove to federal court provided that the case could have been brought in federal court initially.(fn44) Thus, determining whether employers can remove common law wrongful discharge claims premised upon federal public policies depends upon whether such claims fall within the federal courts' original federal question jurisdiction.(fn45)

With certain narrow exceptions,(fn46) an employer against whom a federal claim has been asserted in state court has the right to remove the claim to federal court.(fn47) When the right is exercised, removal ordinarily is not limited to the federal claim, but also includes any pendent state law claims(fn48) asserted against the employer,(fn49) as well as any state law claims asserted against "pendent party" defendants.(fn50)

The statutory authorization of federal question jurisdiction appears in 28 U.S.C. § 1331,(fn51) which states that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."(fn52) Although the Supreme Court has consistently declined to provide a single, precise definition of the "arising under" requirement in § 1331,(fn53) two tests have emerged which determine whether a cause of action arises under federal law. The vast majority of cases that come under this grant of jurisdiction fall within Justice Holmes's test in American Well Works Co. v. Layne and Bowler Co.,(fn54) which provides that a suit arises under the law that "creates" the cause of action.(fn55) Federal law therefore "creates" the cause of action where it establishes and defines the rights and obligations of the parties.(fn56)

Because not all cases properly in federal court are "created" by federal law within the meaning of American Well Works,(fn57) federal question jurisdiction also may be exercised over a claim that is created by state law where resolution of a substantial federal issue is necessary to the disposition of the claim.(fn58) Thus, even if federal law does not create a plaintiffs wrongful discharge claim, federal jurisdiction nevertheless may exist if "some substantial, disputed question of federal law is a necessary element" of the claim.(fn59) It is on this basis that federal question jurisdiction is properly asserted over wrongful discharge claims in violation of a public policy expressed in federal law.

IV. Federal Question Removal Jurisdiction in Wrongful Discharge Cases

A. The Requirement That There Be a Private Statutory Right of Action

The existence of federal question jurisdiction, in wrongful discharge cases depends in large measure upon whether the federal statute expressing the public policy upon which the wrongful discharge claim is based establishes a direct private statutory right of action. The importance of that issue stems from the United States Supreme Court's decision in Merrell Dow Pharmaceuticals v. Thompson.(fn60) Although not itself a...