In Dixon v. Coburg Dairy, Inc., the Fourth Circuit in an opinion by Judge Gregory joined by Senior Judge Michael of the W.D. Va. sitting by designation held that the trial court erred in failing to remand a case, notwithstanding the allegations of a constitutional violation, where the defendant was not a state actor and therefore the federal question was too insubstantial to support removal. The third judge on the panel, Judge Goodwin, joined in this holding.
The majority also held that a state-law public policy wrongful discharge claim, where the public policy was federal law, could support federal jurisdiction. Plaintiff claimed that he was fired in violation of his constitutional right to have a rebel flag sticker on his toolbox. The majority went on to a lengthy analysis of whether this was protected speech. In dissent, District Judge Goodwin points out that this federal right is only to protection from state actors, so there cannot be federal jurisdiction over a public policy wrongful discharge claim based on an alleged First Amendment violation by a private employer.
Well, all I can is, if what Judge Gregory says about the South Carolina law of wrongful discharge is true, then it is a good thing as sort of a consolation prize that such claims when based on federal rights are removable, but I think that what he is saying is fundamentally wrong. A state can create a cause of action that copies the substance of federal law in every detail, but that will never "federalize" the claim in the sense that I understood would be necessary to support removal. There are many, many examples of state laws that are essentially "me, too" tag-alongs to federal law, but that does not make them removable; to the contrary, that's why plaintiffs' lawyers love these state human rights laws in places like Kentucky, West Virginia, and Tennessee, where the law copies Title VII, etc. - because the claims are not removable (when there is no diversity).
Now, there are creatures out there, like ERISA-pension plans, and collective bargaining agreements, that have special status under federal law, and so cases where their federally-protected status comes into play are removable, whether the state law cribs federal law or not. And, sometimes, those creatures just get treated like other creatures, when the federally-protected aspect is not affected by the state law claim (thus, cases like Franchise Tax Board). Claims to enforce state law rights against these special creatures are going to be removable where they infringe on the federally-protected status, notwithstanding the normal obstacles such as the well-pleaded complaint rule.
Here, though, the claim is a creation of state law, and to say that the statute involves "a substantial question of federal law" is just not true, or if is true, the federal right applies only to state actors. In Kentucky, KRS 344.040 "mirrors Title VII of the Civil Rights Act of 1964" and therefore all the courts applying it, both state and federal, literally "use the federal standards for evaluating race discrimination claims." Smith v. Leggett Wire Co., 220 F.3d 752, 758 (6th Cir. 2000). Judge Goodwin (being from West Virginia) cites a similar West Virginia law in his dissent. By Judge Gregory's logic, all those claims are removable, but they're not. It might be good for employers if they were. Moreover, if there is some state law construct that applies the Bill of Rights to persons other than state actors, that's not federal law, whatever it is.
The South Carolina cases cited by the court are not all they're cracked up to be - the plaintiffs lost in Culler v. Blue Ridge Electric Co-op and Williams v. Strickland for lack of proof, and so the courts in those cases never really unraveled the state vs. federal aspect of rights protected by the South Carolina statute.
Finally, application of the First Amendment to private employers is a bad idea. As the majority notes, private employers can't afford to allow employees "free speech" that amounts to unlawful racial (or sexual) harassment of co-workers. As the dissent notes in a footnote, application of the First Amendment to private employers is likely at least in some circumstances to violate the First Amendment rights of the employers, in a way that could be actionable in federal court, I suspect.
The consolation prize for employers is that the majority held the case is removable to federal court, which is probably the wrong conclusion, but at least puts the case where the application of federal law is likely for reasons of familiarity if nothing else to be more accurate. Some state court judges I know would often rather not wrestle unnecessarily with whole bodies of law that are outside of their normal sphere, which is complicated enough. In Virginia, famously, the courts have refused to import the concepts of proving Title VII claims into wrongful discharge claims - one lawyer who tried it had his arguments rejected and sanctions imposed by the trial court. (The sanctions were lifted on appeal, but the outcome on the merits stayed the same.)