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Ventura v. Central Bank

United States District Court, E.D. Kentucky, Central Division, Lexington

January 5, 2015

CENTRAL BANK, Defendant.


KAREN K. CALDWELL, District Judge.

This matter is before the Court on the plaintiffs' motion to remand this action to state court. (DE 5). For reasons stated below, the Court will grant the plaintiffs' motion and remand the matter to the Powell Circuit Court.


Plaintiffs Miguel and Susan Ventura own and operate Miguel's Pizza and Rock Climbing Shop in Slade, Kentucky. In 2010, the Internal Revenue Service ("IRS") initiated an investigation into the Venturas' banking activity based upon information provided by Central Bank. During the course of the investigation, the IRS seized more than $300, 000.00 from the Venturas and on January 17, 2013, the Venturas were indicted on charges that they structured currency transactions in violation of 31 U.S.C. § 5324(a)(3). After hearing the evidence at trial, however, a jury acquitted the Venturas on all charges.

After they were acquitted on criminal charges, the Venturas filed suit against Central Bank in state court, specifically the Powell Circuit Court. In their complaint, the Venturas assert the following claims: (1) Central Bank wrongfully invaded their privacy and violated their rights to be free from unwarranted publicity; (2) Central Bank breached its fiduciary duty to the Venturas by disclosing confidential information and disclosing the "best" time to seize their accounts; and (3) Central Bank participated in an unfounded, malicious criminal prosecution. (DE 1-1 Compl.) The Venturas seek compensatory and punitive damages because of Central Bank's alleged wrongful disclosure of their banking activity.

Central Bank removed this action from the Powell Circuit Court on grounds that the Venturas' complaint raises issues of substantive federal law. Although Central Bank does not dispute that the Ventura's claims are founded in state law, it asserts that the matter is removable because the bank's disclosures to the IRS were made pursuant to federal law, specifically the Bank Secrecy Act ("BSA"), 31 U.S.C. § 5311, et seq. (DE 1).


A defendant may remove a case from state court to federal court if the plaintiff could have originally commenced the action in federal court. 28 U.S.C. § 1441(a). For instance, a plaintiff may bring an action in federal court if the matter "aris[es] under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The statutory grant of federal-question jurisdiction does not apply to all instances where a federal question may be an "ingredient" of the action but is limited to whether a claim "arises under" federal law under the well-pleaded complaint rule. Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 807-08 (1986). Accordingly, removal based upon federal-question jurisdiction has two requirements: (1) a well-pleaded complaint and (2) a proper federal question. See Gunn v. Minton, 133 S.Ct. 1059, 1064-65 (2013) (establishing the bounds of federal questions that may be removable from state court); Vaden v. Discover Bank, 556 U.S. 49, 60 (2009) (affirming the well-pleaded complaint rule as a distinct element necessary for removal to federal court); Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312-13 (2005) (acknowledging the need for both a proper federal question and a well-pleaded complaint); see also Cal. Shock Trauma Air Rescue v. State Comp. Ins. Fund, 636 F.3d 538, 542 (9th Cir. 2011) [hereinafter CALSTAR ] (" Grable stands for the proposition that a state-law claim will present a justiciable federal question only if it satisfies both the well-pleaded complaint rule and passes the "implicate[s] significant federal issues" test.") (alteration and emphasis in original). The defendant bears the burden of establishing both requirements. See Warthman v. Genoa Twp. Bd. of Trs., 549 F.3d 1055, 1063 (6th Cir. 2008).

A. The well-pleaded complaint rule.

"Under the longstanding well-pleaded complaint rule... a suit arises under federal law only when the plaintiff's statement of his own cause of action shows that it is based upon federal law." Vaden, 556 U.S. at 60 (alterations and internal quotation marks omitted) (citing Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908)). The plaintiff's complaint dictates whether federal jurisdiction exists, and the federal issue must be an essential element of the plaintiff's cause of action. Franchise Tax Bd. of State of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10-11 (1983).

[T]he presence of a federal question... in a defensive argument does not overcome the paramount policies embodied in the well-pleaded complaint rule - that the plaintiff is the master of the complaint, that a federal question must appear on the face of the complaint, and that the plaintiff may, by eschewing claims based on federal law, choose to have the cause of action heard in state court.

Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99 (1987). Despite the primacy of the well-pleaded complaint rule, there are a number of exceptions to the rule. For instance, a plaintiff cannot avoid federal court "by omitting to plead necessary federal questions in a complaint." Franchise Tax Bd., 463 U.S. at 22 (the "artful pleading doctrine"). And, as a defense against the well-pleaded complaint rule, "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64 (1987) ("complete preemption").

B. Actions "arising under" federal law.

An action can "arise under" federal law, thus providing a proper federal question for removal jurisdiction, if either federal law creates the cause of action or a state claim falls within "a special and small category' of cases in which arising under jurisdiction still lies." Gunn, 133 S.Ct. at 1064-65 (quoting Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006)). This "special and small category" of cases includes state law claims upon which a federal issue is: "(1) necessarily raised, (2) actually disputed, (3) substantial, ...

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