For data privacy litigations filed in state court, one strategic option that should be considered by defense counsel is whether the case can (and should) be removed to federal court. When a plaintiff asserts a claim under federal law, removal to federal court may be based on federal question jurisdiction. Straightforward, right?
Well, what about when a plaintiff files suit in state court, asserting exclusively state law causes of action, but some of plaintiff’s claims are preempted under federal law? Can a defendant still remove the litigation to federal court on the basis of federal question jurisdiction? In a decision out this week concerning Fair Credit Reporting Act (“FCRA”) preemption, the Southern District of New York answered this question with a resounding NOPE. Torres v. Wakefield & Assocs., 1:20-cv-09343, 2021 U.S. Dist. LEXIS 10345 (S.D.N.Y. Jan. 20, 2021).
In Torres, the plaintiff initially sued in New York state court and the defendant removed the case to the Southern District of New York. Upon removal, the Torres plaintiff sought to have the case kicked back to state court, on the basis that the complaint did not state any claim for relief based on a federal statute. In response, the defendant argued that certain of plaintiff’s claims were preempted under the FCRA and the Fair Debt Collection Practices Act (“FDCPA”).
In a succinctly worded opinion, the court rejected defendant’s invocation of the FCRA and FDCPA as a basis for federal jurisdiction. Citing well-established precedent from the Second Court of Appeals, the court explained that “[o]rdinarily, preemption is a defense to be asserted in state court and not a ground for removal, except in a limited number of cases in which ‘complete preemption’ applies.” The court held that the FCRA and FDCPA are not of the group of “certain federal statutes  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—i.e., completely preempted.’”
Accordingly, because the FCRA and FDCPA did not “completely preempt” all of plaintiff’s state law claims, the litigation was remanded back to state court. Whether the Torres defendant will escape the litigation through assertion of a preemption defense remains to be seen (although this is not a new issue insofar as the FCRA is concerned). Stay tuned.