In re Methyl Tertiary Butyl Ether ("Mtbe")
| Decision Date | 07 November 2007 |
| Docket Number | No. M21-88.,MDL No. 1358 (SAS).,Master File No. 1:00-1898.,M21-88. |
| Citation | 522 F.Supp.2d 557 |
| Parties | In re METHYL TERTIARY BUTYL ETHER ("MTBE")PRODUCTS LIABILITY LITIGATION. This document relates to: Orange County Water District v. Unocal, et al., 04 Civ. 4968(SAS). |
| Court | U.S. District Court — Southern District of New York |
Robin Greenwald, Esq., Robert Gordon, Esq., Weitz & Luxenberg, P.C., New York, NY, for Plaintiffs.
Peter John Sacripanti, Esq., James A. Pardo, Esq., McDermott Will & Emery UP, New York, NY, for Defendants.
Michael Axline, Esq., Evan Eickmeyer, Esq., Miller, Axline & Sawyer, Sacramento, CA, for Plaintiff Orange County Water District.
This multidistrict litigation ("MDL") involves over one hundred actions brought by various public and private entities that provide people with water at various places in the United States. In each action plaintiffs have brought claims against oil companies for their use and handling of methyl tertiary butyl ether ("MTBE"), a chemical compound added to gasoline that has contaminated or threatens to contaminate their water. The actions were transferred to this Court by the Judicial Panel on Multidistrict Litigation pursuant to section 1407 of title 28 of the United States Code.
The coordination of actions with a common nucleus of operative facts has obvious benefits. Among other things, it prevents various courts from expending resources making decisions that are, at the very least, duplicative and may cause fundamental conflicts with each other. Moreover, the court gains expertise about various matters related to the litigation as well as institutional knowledge as the case proceeds.
Of course, "the sheer volume of the proceeding may also overwhelm a court's ability to provide any plaintiff with relief in a timely and efficient manner."1 For this reason, on October 19, 2004, I designated a handful of these cases as "focus actions" for early discovery and trial within the MDL. These focus actions include the actions brought by Orange County Water District ("OCWD"), the City of New York, the County of Suffolk and Suffolk, County Water Authority, and United Water of New York.
OCWD now moves to remand to state court, relying on a recent Second Circuit decision to argue that its action was improperly removed.2 However, OCWD's motion does not raise any challenge to this Court's subject matter jurisdiction nor does anything in the Second Circuit's opinion call into question this court's bankruptcy jurisdiction.
For the reasons that follow, OCWD's motion for remand is barred by section 1447(c) of title 28 of the United States Code.
In the Spring of 2003, OCWD filed a complaint in the Superior Court of California, Orange County, against various oil companies as a result of the contamination, or threatened contamination, of their groundwater with MTBE. On December 5, 2003, defendants filed a notice of removal to the United States District Court for the Central District of California. On January 6, 2004, plaintiffs filed a motion to remand the action and, on the same day, defendants filed a motion to stay the proceedings pending the transfer of the action to this Court.
On January 23, 2004, District Judge James Selna granted the motion to stay for two reasons. First, a stay pending the transfer of action would avoid the risk of conflicting rulings.3 Second, the court found that "judicial economies will result from having one court rather than several decide the complex jurisdictional issues underlying Plaintiffs' motion to remand."4
The final transfer order was issued on June 16, 2004. Thirty days later, on July 15, 2004, OCWD joined with other plaintiffs from California in moving to remand. In this motion, plaintiffs argued that 28 U.S.C. § 1442 ("section 1442"), the federal officer removal statute, was not a proper basis for removing their actions to federal court or, if this Court held otherwise, it should certify the ruling for review by the Second Circuit under 28 U.S.C. § 1292(b).5 In a series of opinions, I denied the motion to remand finding that the court had original subject matter jurisdiction over the actions and the defendants had properly removed them.
Almost three years later, on May 24, 2007, the Second Circuit issued its decision in People of the State of California v. Atlantic Richfield Company, et al. and The State of New Hampshire v. Amerada Hess Corporation, et al.6 In its opinion, the Second Circuit held, inter alia, that two actions filed by the State of California and New Hampshire had not been properly removed under either the federal officer removal statute or the bankruptcy removal statute.7 The Second Circuit therefore vacated this Court's order and remanded with directions to return the cases to the courts from which they were removed.
On August 1, 2007, OCWD filed its second motion for remand arguing that its action had been improperly removed for the same reasons asserted by the states of California and New Hampshire.8 Thus, while OCWD restated its earlier challenge to the federal officer removal, it also raised, for the first time, a challenge to the bankruptcy removal. OCWD now claims that because it is a government entity exercising its police powers, defendants improperly removed the action.9
While the Bankruptcy Code is found in title 11 of the United States Code,10 Congress's grants of federal jurisdiction are found in title 28. In particular, 28 U.S.C. § 1334 ("section 1334") provides district courts with "original and exclusive jurisdiction of all cases under title 11" and "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11."11 Thus, under section 1334, district courts have subject matter jurisdiction when the proceedings are (1) "under" title 11, (2) "arising under" a title 11 case, (3) "arising in" a title 11 case, and (4) "related to" a title 11 case.12
The last category involves the broadest grant of jurisdiction as a civil proceeding is "related to" bankruptcy if "the outcome of that proceeding could conceivably have any effect on the estate being administered in bankruptcy."13 This last category of cases is also typically called a "non-core" bankruptcy case, in contrast to a "core" case that "invokes a substantive right provided by title 11 or if it is a proceeding that, by its nature, could arise only in the context of a bankruptcy case."14
Section 1334 also allows federal courts to abstain from exercising jurisdiction. Section 1334(c)(1) sets forth the criteria for deciding when to exercise discretionary abstention. In particular, a court may abstain from exercising jurisdiction "in the interest of justice, or in the interest of comity with State courts or respect for State law."15 In contrast, section 1334(e)(2) sets forth the criteria for mandatory abstention in non-core cases:
Upon timely motion of a party in a proceeding based upon a State law claim or State law cause of action, related to a case under title 11 but not arising under title 11 or arising in a case under title 11, with respect to which an action could not have been commenced in a court of the United States absent jurisdiction under this section, the district court shall abstain from hearing such proceeding if an action is commenced, and can be timely adjudicated, in a State forum of appropriate jurisdiction.16
While section 1334 grants jurisdiction to federal courts over cases involving a bankruptcy, it does not provide a procedural mechanism for removing cases from state to federal courts. Rather, Congress has provided the authority for removals through the enactment of specific statutes, most of which are located in sections 1441 through 1453 of title 28 of the United States Code.17 Section 1441(a) serves as the general federal removal statute, while other sections provide for the removal of actions involving federal officers18 or members of the armed forces,19 civil rights cases,20 foreclosure actions against the United States,21 class actions,22 and cases involving a bankruptcy.23
Section 1452 permits removal of a bankruptcy case to a federal district court "if such district court has jurisdiction of such claim or cause of action under section 1334 of this title."24 However, a party may not use section 1452 to remove "a civil action by a governmental unit to enforce such governmental unit's police or regulatory power....25 A party may use section 1441 or section 1452, or both, to remove a case with federal questions and involving a bankruptcy.26
Section 1452 also allows a district court to remand a case that has been removed to it on bankruptcy jurisdiction on "any equitable ground."27 The decision on whether to remand a case remains in the sole discretion of the district court as "[a]n order entered under [section 1452(b)] remanding a claim or cause of action, or a decision to not remand, is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title or by the Supreme Court of the United States under section 1254 of this title."28
Finally, in section 1447(c) Congress drew a distinction between removals that are defective because of lack of subject matter jurisdiction and removals that are defective for any other reason.29 That section places a thirty day deadline on motions to remand a case "on the basis of any defect other than subject matter jurisdiction," while a motion to remand for lack of subject matter jurisdiction can be made at any time.30 Section 1447 applies to a motion to remand regardless of whether the action was removed under section 1441 () or section 1452 ().31
OCWD argues that its action should be remanded because it was improperly...
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