United States District Court, E.D. Virginia, Richmond Division
E. Payne Senior United States District Judge.
matter is before the Court on the Newcomers' MOTION TO
REMAND (ECF No. 10) . For the following reasons, the motion
Justin and Monica Newcomer filed this action in state court
in relation to a loan they secured from Wells Fargo for a
house. ECF No. 1, Exhibit No. 3 at 2. In their complaint, the
Newcomers specify a certain federal regulation-38 C.F.R.
36.4346-that they allege Wells Fargo violated. Id.
at 3. They claim that Wells Fargo committed: (1) actual
fraud, arguing that a Wells Fargo representative
intentionally lied to them by telling them to fall behind on
their loans to lower their loan payments, which resulted in
negative credit reports; (2) constructive fraud, because of
the facts stated in Count One; (3) breach of Virginia
regulations, because of the violation of 38 C.F.R. 36.4346;
(4) foreclosure in breach of Virginia regulations, because of
other Virginia regulations that resulted in negative reports
to credit reporting agencies and other damages; (5)
foreclosure in breach of the Virginia regulatory requirement
of compliance with accepted lending practices, because Wells
Fargo would not consider any alternatives to foreclosure; and
(6) breach of fiduciary duty by PFC by being a fiduciary to
both Wells Fargo and the Newcomers. See generally
id. None of these claims say that Wells Fargo or any
other defendant violated the Fair Credit Reporting Act
("FCRA"). Fair Credit Reporting Act, § 602 et
seq., 15 U.S.C.A. § 1681 et seq. Instead, all are state
Fargo filed a notice of removal on March 26. ECF No. 1.
Court strictly construes removal jurisdiction. Mulcahey
v. Columbia Organic Chemicals Co., 29 F.3d 148, 151 (4th
Cir. 1994). If federal jurisdiction is doubtful, remand is
required. Id. "The burden of establishing
federal jurisdiction is placed upon the party seeking
notice of removal, Wells Fargo says that the FCRA
"preempts state law claims relating to credit
reporting." ECF No. 1 at 3, ¶14. Thus, in its view,
the Court has subject matter jurisdiction, because
"[t]he Newcomers' claims for damages based on credit
reporting by Wells Fargo in Counts One, Two and Three are
claims for alleged violations of the FCRA . . . and
consequently 'arises [sic] under' the laws of the
United States." Id. at 3, ¶¶15-16.
contrary, the Court does not have subject matter jurisdiction
to hear this case because the Newcomers' well-pleaded
complaint does not plead a federal action here, and because
Wells Fargo's basis for removal-claiming that the
Newcomers' claims are preempted under federal law-does
not establish subject matter jurisdiction in federal court.
Consequently, this case will be remanded.
A Federal Preemption Defense Under the FCRA Does Not
Establish Federal Subject Matter Jurisdiction
federal law preempts a state law, preemption is a federal
defense to a suit. Metropolitan Life Ins. Co. v.
Taylor, 481 U.S.58, 63 (1987) . Whether that is so is
measured by looking at the face of the complaint. If the
preemption defense does not appear on the face of the
complaint, removal is not permitted even if the defendant
offers a federal defense. Id. An exception to this
general rule is the doctrine of complete preemption, meaning
that "Congress  so completely pre-empt[s] a particular
area that any civil complaint raising this select group of
claims is necessarily federal in character."
Id. at 63-64. This class of cases has been described
as "extraordinary," and the Fourth Circuit has said
that "the application of complete preemption
'converts an ordinary state common law complaint into one
stating a federal claim for purposes of the well-pleaded
complaint rule.'" Owen v. Carpenters' Dist.
Council, 161 F.3d 767, 772 (4th Cir. 1998) (quoting
Taylor, 481 U.S. at 65).
"a defendant may not remove a civil action on the basis
of a defense of federal preemption, even if the defense is
anticipated in the complaint, and even if pre-emption is the
only issue in the case." Id. Whether the
complete preemption exception is applicable focuses on
congressional intent. Rosciszewski v. Arete Assocs.,
Inc., 1 F.3d 225, 231 (4th Cir. 1993).
district courts in this circuit have examined whether the
FCRA completely preempts all claims related to credit
reporting. They have unanimously held that it does not.
See Rule v. Ford Receivables, Inc., 36 F.Supp.2d 335
(S.D. W.V. 1999); Swecker v. Trans Union Corp., 31
F.Supp.2d 536 (E.D. Va. 1998); Sloan v. Green Tree
Servicing LLC, No. 2:05-CV-00558, 2005 WL 2428161 (S.D.
W.V. 2005). The Court finds that these opinions are
well-reasoned. Basically, their reasoning is that: (1) the
Supreme Court has said that complete preemption is an
exception to the well-pleaded complaint rule, not the rule;
and (2) complete preemption applies only when Congress
clearly manifests an intent to replace all state
causes of action and provide exclusive jurisdiction to the
federal courts; and (3) the FCRA "explicitly declines to
replace all state causes of action or to provide exclusive
jurisdiction in the federal courts"; thus, (4) the FCRA
does not completely preempt all state claims, even if the
specific claims brought by ...