Fracasse v. People's United Bank, No. 13-266 (2d Cir. 2014)Annotate this Case
Plaintiffs, formerly employed as mortgage underwriters by the Bank, filed suit in state court asserting state law claims for unjust enrichment, negligent infliction of emotional distress, wrongful termination in violation of public policy, and breach of the covenant of good faith and fair dealing. The Bank removed to federal court and the district court dismissed under Rule 12(b)(6), holding that the Fair Labor Standards Act (FLSA), 29 U.S.C. 201 et seq., preempted plaintiffs' common law claims. In Gunn v. Minton, the Supreme Court explained that federal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal-state balance approved by Congress. In this case, the court concluded that the federal issue arising in these state law claims was not substantial, and the district court, therefore, lacked subject matter jurisdiction. Even if the court were to assume that plaintiffs' state common law claims raised a federal issue as pled, the federal issue was at best insubstantial. Accordingly, the court concluded that the federal courts were without subject matter jurisdiction in this case and vacated and remanded with instructions.