In re Methyl Tertiary Butyl Ether Litigation

• Decision Date: 19 October 2004
• Docket Number: MDL 1358(SAS).,No. 1:00-1898.,1:00-1898.
• Citation: 361 F.Supp.2d 137
• Parties: In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION
• Court: U.S. District Court — Southern District of New York

361 F.Supp.2d 137

In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION

No. 1:00-1898.

MDL 1358(SAS).

United States District Court, S.D. New York.

October 19, 2004

Kelly Ayotte, Maureen D. Smith, Office of the Attorney General, Environmental Protection Bureau, Concord, NH, for State of New Hampshire.

Jan Scully, Russ Detrick, Sacramento County Office of the District Attorney, Consumer & Environmental Protection Division, Sacramento, CA, for The People of the State of California.

Robert Gordon, C. Sanders McNew, Stanley N. Alpert, Weitz & Luxenberg, P.C., New York, NY, for Plaintiffs.

Peter John Sacripanti, James A. Pardo, Stephen J. Riccardulli, McDermott Will & Emery, New York, NY, for Defendants.

OPINION AND ORDER

SCHEINDLIN, District Judge.

I. INTRODUCTION

This multi-district litigation consists of dozens of cases, in which plaintiffs seek relief for contamination or threatened contamination of groundwater from defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE").¹ Plaintiffs include states, cities, municipalities, private water providers, and other entities. Although the cases were filed in various state courts, defendants removed the actions to federal court, asserting four grounds of subject matter jurisdiction: (1) federal agent jurisdiction; (2) substantial federal question; (3) complete preemption; and (4) bankruptcy jurisdiction.²

Certain plaintiffs moved to remand. I denied the motions, holding that this Court has federal agent jurisdiction over some, and bankruptcy jurisdiction over all, of the MTBE cases pending before it.³ I found that defendants had sufficiently averred facts supporting removal; specifically, they alleged that they added MTBE to gasoline at the direction of the EPA, a federal agency, to comply with the requirements of the Reformulated Gasoline ("RFG") Program and the Oxygenated Fuels Program.⁴ This allegation sufficed to establish jurisdiction based on defendants having acted as federal agents. I further found defendants' allegations sufficient to establish federal agent jurisdiction with respect to certain non-covered areas because the federal government expected to turn some non-covered locations into RFG areas as a practical matter when it promulgated the RFG Program.⁵ Finally, I held that the Court has bankruptcy jurisdiction because plaintiffs have alleged some actions by defendants that predate Texaco's (one of the defendants) plan of reorganization and questions concerning when claims arose and whether they were discharged involve the enforcement and construction of Texaco's discharge injunction.⁶

Notwithstanding the Court's federal question jurisdiction, plaintiffs State of New Hampshire ("New Hampshire") and The People of the State of California ("California") (collectively "State Plaintiffs") move to remand based on state sovereign immunity. I now consider whether principles of sovereign immunity are violated when a state plaintiff voluntarily prosecutes a claim and its case is removed from state to federal court without its consent.

II. LEGAL STANDARD

Section 1447(c) of Title 28 provides that a case removed from state court shall be remanded "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." When a party files a motion to remand challenging the removal of an action from state court, "the burden falls squarely upon the removing party to establish its right to a federal forum by `competent proof.'"<sup>7</sup> "Out of respect for the independence of state courts, and in order to control the federal docket, `federal courts construe the removal statute narrowly, resolving any doubts against removability.'"⁸ If the removing party cannot establish its right to removal by "competent proof," the removal was improper, and the district court must remand the case to the court in which it was filed.⁹

III. DISCUSSION

State Plaintiffs argue that the Eleventh Amendment of the United States Constitution protects states from being involuntarily subjected to federal jurisdiction.¹⁰ They argue that respecting their right to pursue these actions in state court is consistent with the "preeminent purpose" of state sovereign immunity, i.e., the dignitary interest of States, and the Supreme Court's expansive interpretation of the Eleventh Amendment.¹¹ New Hampshire asserts that the federal officer removal statute cannot trump sovereign immunity.¹² California contends that in Hans v. Louisiana,¹³ the Supreme Court established a presumption against proceedings or suits that were "anomalous or unheard of" at the time the Constitution was adopted; since removing States to federal court without their consent was anomalous and unheard of, defendants cannot establish their right to a federal forum, and the case must be remanded.¹⁴ In addition, State Plaintiffs assert that cases upholding removal over the objections of sovereigns improperly rely on two inapposite Supreme Court opinions; improperly limit their analyses to the literal text of the Eleventh Amendment; and fail to discuss and apply the Hans presumption.¹⁵

Defendants counter that sovereign immunity does not bar removal where the removal is based on section 1442 of Title 28 because Congress created the federal officer removal statute in order to protect the supremacy of federal law and the sovereignty of the federal government against intrusion by the States. They argue that the Eleventh Amendment and sovereign immunity doctrines do not bar removal, but only prohibit lawsuits against the States, i.e., the immunity only applies when a State is the defendant. Moreover, they contend that the Hans presumption does not bar removal because nothing in Hans or any other case insulates non-consenting States from court process. Finally, defendants assert that California cannot raise the defense of sovereign immunity because the lawsuit is brought by the Sacramento District Attorney, who does not represent the State of California.¹⁶

A. Sovereign Immunity

The Eleventh Amendment provides: "The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State."¹⁷ Discussions of state sovereign immunity often begin and end here because the text of the Amendment seems clear. On its face, the Eleventh Amendment only prohibits suits against non-consenting States in federal court; it does not bar removal of cases in which the State is the plaintiff.

However, the Supreme Court has explained:

The phrase ["Eleventh Amendment immunity"] is a convenient shorthand but something of a misnomer, for the sovereign immunity of the States neither derives from, nor is limited by, the terms of the Eleventh Amendment. Rather, as the Constitution's structure, its history, and the authoritative interpretations by this Court make clear, the State's immunity from suit is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution, and which they retain today....¹⁸

Therefore, State Plaintiffs' argument that sovereign immunity bars their involuntary removal cannot be dismissed out of hand.

1. Common Law Origin

The principle of sovereign immunity developed in England based on the feudal system.¹⁹ A lord could not be sued by a vassal in his own court, but each lord could be sued in the court of a higher lord.²⁰ Since the king reigned at the top of the system, he was not subject to suit in any court" `[f]or all jurisdiction implie[d] superiority of power....' "²¹ "Only the sovereign's own consent could qualify the absolute character of that immunity."²²

Sovereign immunity was also premised on the notion that the king could do no wrong.²³ In adhering to this fiction, courts distinguished between the king and his agents in order to provide relief for the sovereign's transgressions.²⁴ The courts permitted suits against the king's officers on the theory that the king would never have authorized unlawful conduct, and therefore his agent's unlawful acts should not be treated as the acts of the sovereign.²⁵ As Justice Stevens explains:

The rationale for this principle was compelling. Courts did not wish to confront the king's immunity from suit directly; nevertheless they found the threat to liberty posed by permitting the sovereign's abuses to go unremedied to be intolerable. Since in reality the king could act only through his officers, the rule which permitted suits against those officers formally preserved the sovereign's immunity while operating as one of the means by which courts curbed the abuses of the monarch.²⁶

Thus, sovereign immunity historically meant a prohibition against suit in one's own court. Though the immunity was seemingly absolute, some judicial proceedings did not offend the crown.²⁷

2. Federalism and the Constitutional Structure

The framers of the Constitution rejected "`the concept of a central government that would act upon and through the States' in favor of `a system in which the State and Federal Governments would exercise concurrent authority over the people....'"²⁸ The Constitution therefore altered some common law principles to balance the supremacy of federal law with the independent sovereignty of States.²⁹

At the time this nation was founded, the States were sovereign, and "[t]he suability of a state, without its consent, was a thing unknown to the law."³⁰ Under the common law, however, a sovereign was not immune from suit in another sovereign's court, and to the extent he was not suable, his immunity "must [have been] found either in an agreement, express or implied, between the two sovereigns, or in the voluntary decision of the second to respect the dignity of the first as a matter of comity."³¹ Although States would retain immunity in their own courts under the federal system, they feared that federal...