Federal Preemption Does Not Always Constitute Grounds For Removal: Court Rejects Removal Based On FCRA And FDCPA Preemption Claims

Troutman Pepper

Troutman Pepper

On January 20, 2021, the Southern District of New York granted Emmanuel Torres’ (“Torres”) motion to remand to state court, holding that Wakefield & Associates’ (“Wakefield”) and Rural Metro Ambulance Corporation’s (“Rural Metro”) argument for removal did not constitute “complete preemption.”

In Torres v. Wakefield & Assocs., Torres filed a complaint in the New York Supreme Court against Wakefield and Rural Metro stating solely state law causes of action. In response, Rural Metro, with the consent of Wakefield, filed a notice of removal asserting that the case properly was removable based on federal question jurisdiction. Specifically, Rural Metro claimed that many of the state law claims made by Torres were preempted by the Fair Credit Reporting Act (“FCRA”) and the Fair Debt Collection Practices Act (“FDCPA”), and therefore, Torres could only succeed by bringing federal claims.

The Court rejected Rural Metro’s argument, stating that whether the claims as pleaded in Torres’ complaint could succeed is not the operative question for the purposes of removal. Additionally, the Court reasoned that preemption is typically a defense to be asserted in state court and not a ground for removal, except in cases where “complete preemption” applies. Under the “complete preemption” doctrine, certain federal statutes are construed to have such extraordinary preemptive force that state-law claims coming within the scope of the federal statute are transformed for jurisdictional purposes, into federal claims.

Here, the FCRA may have preempted some of Torres’ state-law claims; however, the Court concluded the FCRA does not completely preempt all of Torres’ state law claims, a prerequisite for removal on this basis. Accordingly, because Torres’ complaint did not allege a violation of federal law, and Wakefield and Rural Metro could not rely on the “complete preemption” doctrine, the Court granted Torres’ motion to remand the matter back to state court.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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