Petition for Writ of Certiorari — Wheeler v. Thomas F. White & Co.

(\) Supreme Court. U8, .

G01344 FEB 29 2001

In The

Supreme Court of the United States

David Wheeler,

Petitioner,

Vv.

Thomas F. White & Co. Inc. and Robert Angle,

Respondents.

On Petition for Writ of Certiorari

To the United States Court of Appeals

for the Ninth Circuit

Petition for a Writ of Certiorari

David Wheeler

c/o 26500 West Agoura Road #323

Calabasas, California

818-879-0097

\

~are

Question Presented

May the artful pleading doctrine be extended to render

state law and state remedies inoperative through the creation of

federal question jurisdiction based upon a hypothetical federal

nexus?

Table of Contents

pO Perr r re rere Terr en ere i

pe | PPT Eee T ere ee ee ill

Peten for 6 Wik OF COMNONENE 4g. occ hci in cc cvccasaes ]

Opinions Below ............. 60sec e eee eee eeeee ]

EPP PCCP CE eT Pe Cer Tere Tr eye ee l

Statement of the Case............ Sa cna ete ae ]

Reasons for Granting the Petition .................... 3

PEC TET eee PET eee ON 7

Appendix

Memorandum of the Ninth Circuit Court of Appeals

bdad& baal ees & ma aa ea eee App. |

Proceedings of the United States District Court for the

Central District of California .............. App. 4

Table of Authorities

Cases

Bright v. Bechtel Petroleum, Inc., 780 F. 2d 766 (9" Cir. 1986)

yO 3,4

Statutes

California Civil Code § 1798 et seq ...............0... 2

California Civil Code § 1798.35 ...............00005. 2

California Civil Code § 1798.45 ................... 2,3

eae auc ec6ccccecccecccccces 3

Te cs... vince cccccccccccccccccces 3

Law Review

Miller, Artful Pleading: A Doctrine in Search of Definition,

1998, 76 Texas Law Review 1781 .................... 2

Other Authorities

Wright, Miller, & Cooper, Federal Practice and Procedure,

Jurisdiction 3d, §3722 pp 436-469. ................... 5

ill

Petition for a Writ of Certiorari

Petitioner David Wheeler respectfully petitions for a

writ of certiorari to review the judgment of the Ninth Circuit

Court of Appeals, entered in the above-entitled proceeding on

July 11, 2000.

Opinions Below

The opinion of the United States Court of Appeals for

the Ninth Circuit was entered on July 11, 2000 (App., infra,

page 1). The opinion of the U.S. District Court for the Central

District of California was entered on March 23, 1998 (App.,

infra, page 4).

Jurisdiction

The judgment of the Ninth Circuit Court of Appeals was

entered on July 11, 2000. On November 24, 2000, the Ninth

Circuit Court of Appeals denied a petition for panel rehearing

and suggestion of rehearing en banc. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

Statement of the Case

This appeal presents the question of whether the artful

pleading doctrine may give a federal court authority to remove

a case involving issues of state law only, by fabricating federal

question jurisdiction beyond the four corners of the complaint

from a hypothetical federal nexus that is merely incidental to

the complaint. The imprecision of the artful pleading doctrine

l

has allowed the District Court here, under the purported

authority of the artful pleading rule, to effect a striking

expansion of federal question jurisdiction. In the process, state

law and state remedies have been rendered inoperative, and

plaintiff's remedial rights have been destroyed. This avenue

would not have been open had the artful pleading doctrine been

more strictly delineated as a rule of law. (See Miller, Artful

Pleading: A Doctrine in Search of Definition, 1998, 76 Texas

Law Review 1781.)

Wheeler brought a state law complaint against Thomas

F White & Co., Inc. (“White”) under the California Information

Practices Act (Civil Code § 1798 et seq.) (“CIPA”) for their

refusal to correct an erroneous SSN number attached to David

Wheeler in their records, upon demand. The CIPA provides the

right to amend records at § 1798.35(a), and the right to sue at §

1798.45(b).

1798.35. Each agency shall permit an individual

to request in writing an amendment of a record

and, shall within 30 days of the date of receipt

of such request:

(a) Make each correction in accordance

with the individual's request of any portion of a

record which the individual believes is not

accurate, relevant, timely, or complete and

inform the individual of the corrections made in

accordance with their request...

1798.45. An individual may bring a civil action

against an agency whenever such agency does

any of the following:

(a)...

(b) Fails to maintain any record

concerning any individual with such accuracy,

relevancy, timeliness, and completeness as is

necessary to assure fairness in any determination

relating to the qualifications, character, rights,

opportunities of, or benefits to the individual

that may be made on the basis of such record, if,

aS a proximate result of such failure, a

determination is made which is adverse to the

individual.

White's persistent refusal to correct was a violation of

state law. Wheeler sued White in California Superior Court

seeking state-law remedies pursuant to § 1798.45 of the CIPA

to compel White's correction of their records, and for recovery

of damages.

White filed a notice of removal to federal court under 28

USC §§ 1331 and 1441, claiming that Wheeler had artfully

pleaded what was in reality a federal question, by attempting to

conceal a challenge to federal Internal Revenue Code and

Treasury Regulations. White successfully persuaded the Court

to look beyond Wheeler’s state-law complaint so as to conclude

that Wheeler had attempted to mask, through artful pleading, a

federal question.

Reasons for Granting the Petition

White relied on Bright v. Bechtel Petroleum, Inc., 780

F. 2d 766 (9" Cir. 1986) as the artful pleading authority

applicable to Wheeler’s complaint. However, the

3

circumstances in the instant case are so distinct to those in

Bright, which exemplifies a proper application of the artful

pleading doctrine, that Bright cannot provide authority to justify

the District Court’s remarkable departure from the well-pleaded

complaint rule. The Bright Court was required to look beyond

plaintiff's state-law complaint in order to make sense of what

the plaintiff was actually talking about, and found he had

artfully pleaded an essentially federal-law claim as a state-law

claim, and thus federal jurisdiction was proper.

Here, the District Court did not look beyond Wheeler’s

complaint to glean essential additional information necessary to

clarify what the complaint left uncertain or obscure, since

Wheeler’s state-law issues were well-pleaded. There was no

mistaking what Wheeler was trying to do: correct records under

state law. White had refused to correct them, yet had no lawful

basis to refuse. Faced with Wheeler’s suit, and unable to win

on the facts, White fabricated nonessential federal questions

that related to the complaint only hypothetically, and sought

removal under the pretext that Wheeler had avoided these

federal questions through artful pleading. The District Court

sustained White’s fabrications, determining that Wheeler had

not pleaded the irrelevant, nonessential, and altogether beside-

the-point issues of federal law relating just to the information he

sought to correct under state law.

With this decision the District Court achieved an

unprecedented expansion of the artful pleading doctrine,

reaching far beyond the complaint to create federal questions

that any prudent inquiry would at best find completely

nonessential, or completely non-existent, at worst. In allowing

removal, the District Court abused its discretion by evaluating

Wheeler’s complaint according to an unprecedented new artful

4

pleading theory, and the consequence of the Court’s abuse of

discretion was outright abolishment of plaintiffs rights to

correct personal information in third-party records under

California law.

In its traditional position as a corollary to the well-

pleaded complaint rule, the artful pleading doctrine is invoked

to identify an essential federal question that the plaintiff should

have pleaded had he pleaded it well. (Wright, Miller, &

Cooper, Federal Practice and Procedure, Jurisdiction 34,

§3722, pp 436-469.) This was not the way the doctrine was

applied against Wheeler, because his complaint articulated no

cause that could originate, and hence should have been pleaded,

under federal law. The District Court here immeasurably

extended the doctrine to conclude that Wheeler has a removable

case because he should have pleaded the beside-the-point,

nonessential federal questions that relate not to his causes, but

to a remote, incidental federal nexus associated with the

personal information he sought to correct under California law.

There is no precedent for this extraordinarily expansive

interpretation of the artful pleading doctrine allowing a Court to

depose plaintiff as master of his case, simply because the merest

whiff of federal taint can be remotely associated with an item of

personal information that is the subject of a state-law

controversy.

As a consequence of the District Court’s overreaching,

plaintiff's state-law remedial rights were completely destroyed.

Wheeler was denied due process, the CIPA has been rendered

a nullity, and White’s records stand uncorrected—and

uncorrectable. Wheeler’s access to California law requiring the

correction of inaccurate records of personal information has

been foreclosed.

The District Court has clearly erred. The fallacy of the

District Court’s expansion of the scope of the artful pleading

doctrine to include the most remote federal nexus as cause for

removal can be readily illustrated. For example, a man burns

down a house, using gasoline as an accelerant. A federal nexus

exists in that the gasoline was in interstate commerce, and

federal excise taxes were paid on it. Or, for example, a man

drives a car after drinking a little too much Tennessee whiskey

and gets stopped by the traffic police, who find the open bottle

in the car. A federal nexus exists in that whiskey bottle has a

federal tax stamp on it. According to the artful pleading theory

employed by the District Court against Wheeler, these remote,

nonessential, and merely incidental federal nexuses provide

enough of a federal question to remove the arson case and the

DUI case to federal court. If this case is allowed to stand, then

the courts must gird for a rush of absurdity.

Prior to this case, artful pleading was a judicial tool

intended to determine whether there can be found to exist

federal jurisdiction in a plaintiff's causes in a state-law

complaint. As employed here by the District Court, federal

question removal under artful pleading now extends to

defendant’s insinuations against the complaint on issues that are

completely nonessential to plaintiff's causes. If the artful

pleading doctrine may now allow federal courts to remove due

to a remote federal taint of a thing, or a hypothetical federal

relatedness to the use of a thing, which appears in a complaint

only in regards to its disposition pursuant to state-law, then

there has been achieved an enormous, unprecedented expansion

of federal jurisdiction. This expansion of the artful pleading

doctrine puts state jurisdiction on dangerous ground, since with

this new paradigm there are theoretically few limits to federal

question jurisdiction.

Conclusion

In this case the District Court has effected an enormous

and erroneous expansion of federal jurisdiction with a wrongful

application of the artful pleading doctrine. A vague definition

of artful pleading allowed the District Court to remake

plaintiff's purely state-law case into a federal case based upon

defendant’s hypothetically fabricated, nonessential federal

nexus. As a consequence, the Court has completely foreclosed

plaintiff s state-law rights and remedies. If this case is allowed

to stand, we will have witnessed an unprecedented expansion

of federal jurisdiction and concomitant extinction of state law

under authority of the artful pleading doctrine. This decision

must be corrected, to protect state-law causes from a federal

court power grab, and so that the artful pleading doctrine may

benefit from much-needed definition.

Respectfully submitted,

David Wheeler

c/o 26500 West Agoura Road #323

Calabasas, California

818-879-0097

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

FILED Jul. 11, 2000

DAVID WHEELER, Plaintiff-Appellant,

.

THOMAS F. WHITE & CO.; ROBERT ANGLE,

Defendants-Appellees.

No. 98-55821

D.C. No. CV-97-09564-WDK

MEMORANDUM!

Appeal from the United States District Court

for the Central District of California

William D. Keller, District Judge, Presiding

Submitted June 26, 20007

Before: FERGUSON, RYMER, and HAWKINS, Circuit Judges

David Wheeler appeals pro se from the district court’s

' This disposition is not appropriate for publication and may not be

cited to or by the courts of this circuit except as may be provided by 9” Cir.

R. 36-3.

The panel unanimously finds this case suitable for decision without

oral argument. See Fed. R. App. P. 34(a)(2)

App. |

order denying his motion to remand to state court and

dismissing his action challenging provisions of the Internal

Revenue Code and Treasury Regulations. We have jurisdiction

pursuant to 28 U.S.C. § 1291. We review de novo the district

court’s dismissal pursuant to Fed. R. Civ. P. 12(b)(6), see

Halkin v. Verifone, Inc. (In re Verifone Sec. Litig.), 11 F. 3d

865, 868 (9" Cir. 1993), and de novo the district court’s refusal

to remand an action to state court, see Bell v. City of Kellogg,

922 F. 2d 1418, 1424 (9" Cir. 1991). We affirm.

The district court did not err in denying Wheeler's

motion to remand to state court because Wheeler’s complaint,

in fact, raised questions of federal law. See Bright v. Bechtel

Petroleum, Inc., 780 F. 2d 766, 769 (9" Cir. 1986).

Wheeler’s contention that the district court improperly

looked beyond the four corners of his complaint lacks merit.

See id. at 769 (determining that it is proper to submit

background information to demonstrate that the complaint, in

fact, raises a federal question).

The district court properly dismissed Wheeler’s action

for failure to state a claim under Fed. R. Civ. P. 12(b)(6). See

Cal. Civ. Code §§ 45-46 (libel and slander); Cal. Civ. Code §

1798 et seq.; Cramer v. Consol. Freightways, Inc., 209 F.3d

1122, 1133 (9" Cir. 2000) (intentional infliction of emotional

distress); Grimmett v. Brown, 75 F.3d 506, 510 (9% Cir. 1996)

(RICO); Price v. State of Hawaii, 939 F.2d 702, 707-08 (9" Cir.

1991) (conclusory allegations insufficient to show state action).

We lack jurisdiction to review the district court’s order

granting monetary sanctions against Wheeler because no notice

of appeal was filed from the sanctions order and this appeal was

taken before that order was entered. See Culinary & Serv.

App. 2

Employees Union v. Hawaii Benefit Admin., Inc., 688 F.2d

1228, 1232 (9" Cir. 1982).

We deny the appellees’ motion for double costs without

prejudice to refiling in accordance with Fed. R. App. P. 39 and

9" Cir. R. 39-1. The appellees are reminded that Fed. R. App.

P. 38 allows for double costs only, not double costs and double

attorney’s fees.

AFFIRMED.

App. 3

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

No. CV 97-9464-WDK

HON. WILLIAM D. KELLER, JUDGE

David Wheeler

V.

Thomas F. White & Co., Inc., et al.

Attorneys Present for Plaintiffs: None Present

Attorneys Present for Defendants: None Present

Entered March 23, 1998

Proceedings:

Before the Court are: (1) Plaintiff David Wheeler’s

Motion to Strike Notice of Removal and Motion to Remand;

and (2) Defendant’s Motion to Dismiss Pursuant to

Fed.R.Civ.Proc. Rule 12(b)(6) & (7).

BACKGROUND

Plaintiff David Wheeler, who appears in pro per, is a-

App. 4

broker employed by Defendant Thomas F. White & Co., Inc.

(“TFW”), a licensed securities brokerage firm. Defendant

Robert Angle is President of TFW and is alleged to be the

person responsible for TFW’s policies, rules, and conduct.

Complaint, § 3. _

Since 1994, Plaintiff has claimed that a Social Security

Number has been attached to him in error. Plaintiff claims that

he rescinded his Social Security Number in 1994, when he

became aware that he was not eligible for Social Security

benefits due to his religious beliefs. Complaint, § 6. However,

Plaintiff provides no evidence that the federal government

recognizes his recission. Since 1994, Plaintiff has attempted on

numerous occasions to correct all of Defendants’ records to

accurately reflect that he does not have a Social Security

Number. Complaint, {J 8-22. Defendants have refused to do

so and have continued to report Plaintiff's income to the

Internal Revenue Service (“IRS”) under Plaintiffs Social

Security Number, using Form 1099.

On December 1, 1997, Plaintiff filed the present action

in California Superior Court, alleging several causes of action

based upon Defendant’s failure to correct the personal

information he claims is erroneous. The Complaint asserts

causes of action for slander and libel, violation of liberty of

conscience, economic coercion, mental suffering, and lost

earnings. Complaint, {J 27-43. Additionally, the Complaint

tangentially asserts RICO violations (Complaint, §§ 31, 36) and

violations of the California Information Practices Act (“CIPA”),

Cal.Civ.Code § 1978 et seq. (Complaint, #9 7, 24-26). The

Complaint seeks injunctive relief ordering Defendants: (1) to

correct all records containing personal information; (2) not to

disclose any false personal information about Plaintiff, and (3)

App. 5

to give proper notice to anyone to whom Defendants previously

disclosed false information that such information is false and

should be corrected. Complaint, at 8: 14-23. The Complaint

also seeks costs of suit and general, exemplary, and punitive

damages. Complaint, at 8:24 - 9:10.

On December 30, 1997, Defendants removed this action

to this Court, alleging federal question jurisdiction under 28

U.S.C. § 1331. Plaintiff now moves to strike the notice of

removal and to remand this action, arguing that the complaint

is based solely on California law. Defendants oppose this

motion and move for dismissal of the complaint, arguing that

Plaintiff has failed to state a claim and has failed to join

indispensable parties. Plaintiff has not field an opposition to

Defendants’ Motion to Dismiss.

DISCUSSION

I. Plaintiff's Motion to Strike Notice of Removal and

Motion to Remand

Plaintiff argues that the notice of motion should be

stricken and this action should be remanded because no federal

jurisdiction exists over the action. Plaintiff argues that there is

no federal question within the four corners of the complaint,

because all causes of action are based solely on state law.

Plaintiff argues that the “well-pleaded complaint rule” makes

him the master of the claims and allows him to avoid federal

jurisdiction by exclusive reliance on state law. Caterpillar Inc.

v. Williams, 482 U.S. 386, 392 (1987); Westinghouse Elec.

Corp. v. Newman & Holtzinger, 992 F. 2d 932, 934 (9" Cir.

1993).

Defendants counter that Plaintiff s “artful pleading” of

only state law causes of action cannot conceal “what this case

App. 6

is really about”: a challenge to the Internal Revenue Code

Provisions and Treasury Regulations that require Defendants to

report Plaintiff's income under his Social Security Number on

Form 1099. Opposition, at 3: 13-16.’ Defendants cite Bright v.

Bechtel Petroleum, Inc., 780 F. 2d 766 (9" Cir. 1986), as a case

in which the Ninth Circuit held that cases such as these, which

purport to rely exclusively on state law, still provide federal

jurisdiction.

While Plaintiff is correct that the “well-pleaded

complaint rule” states that federal jurisdiction exists only when

a federal question is presented on the face of the plaintiff's

properly pleaded complaint (Caterpillar, 482 U.S. at 392), the

“artful pleading” doctrine is an exception to that rule. Bright,

780 F. 2d at 769. “A plaintiff will not be allowed to conceal the

true nature of a complaint through ‘artful pleading.’” Bright,

780 F. 2d at 769; Schroeder v. Trans World Airlines, Inc., 702

F. 2d 189, 190 (9th Cir. 1983). In Bright, the plaintiff brought

an action for “breach of contract and a gross violation of

Christian principles,” alleging that his employer breached his

employment contract by issuing checks to him for amounts less

than the amount agreed upon. Bright, 780 F. 2d at 768-69. The

court found that the plaintiff, despite artfully pleading his action

as a breach of contract action, in fact was challenging federal

income tax withholding laws and regulations. Id. Therefore,

the court affirmed the district court’s assumption of removal

jurisdiction over the action. Id. at 770.

Defendants have demonstrated similar “artful pleading”

in this case. Plaintiff brings causes of action for slander and

libel, violation of liberty of conscience, economic coercion,

mental suffering, and lost earnings. However, all of these

causes of action are predicated on Defendants’ reporting of

App. 7

Plaintiff's income using his Social Security Number. As

Defendants point out, they are required by federal law to do so.

See 26 U.S.C. § 6041 Aja), (f); 26 U.S.C. § 6109(d); Treasury

Reg. § 1.6041-6; Treasury Reg. § 301.6109-1(aX1 (ii A) &

(B). Therefore, what Plaintiff is actually challenging are the

provisions of the Internal Revenue Code and Treasury

Regulations, despite his carefully worded complaint which

attempts to avoid doing so. Accordingly, this court has

jurisdiction over Plaintiff's action, and Defendants’ removal

and notice of removal were proper. Plaintiff's Motion to Strike

Notice of Removal and Motion to Remand are denied.

Il. Defendants’ Motion to Dismiss for Failure to State a

Claim’

CONCLUSION

Based upon the foregoing, Plaintiff's Motion to Strike

Notice of Removal and Motion to Remand are both DENIED.

Defendants’ Motion to Dismiss is GRANTED. Because

granting Plaintiff leave to amend would be futile, the Complaint

is dismissed with prejudice and without leave to amend.

IT IS SO ORDERED

Since the judgment sought to be reviewed here in the Supreme

Court relates only to the issues of removal and remand, discussion relating

to the motion to dismiss is omitted.

App. 8