Kiick v. Metropolitan Edison Co., 85-5351

Decision Date19 February 1986
Docket Number85-5352,No. 85-5351,No. 85-5352,Nos. 85-5351,85-5351,s. 85-5351
CourtU.S. Court of Appeals — Third Circuit
Parties16 Envtl. L. Rep. 20,544 KIICK, Perri C. and Kiick, Edward, Appellees, v. METROPOLITAN EDISON CO., and General Public Utilities Corp., and Babcock and Wilcox Company, Appellants,and SMITH, Terry and Smith, Michelle Smajda, Appellees, v. GENERAL PUBLIC UTILITIES CORP., Metropolitan Edison Co., Jersey Central Power & Light Co., Pennsylvania Electric Co., Babcock & Wilcox Company, J. Ray McDermott & Co., and Catalytic, Inc., Appellants,

John G. Harkins, Jr. (argued), A.H. Wilcox, Pepper, Hamilton & Scheetz, Philadelphia, Pa. (Paul J. Mishkin Berkeley, Cal., of counsel), for appellants.

Joseph D. Shein (argued), Daniel G. Childs, Shein, Paul, Reich & Myers, P.C., Philadelphia, Pa., for appellees in No. 85-5351.

F. Lee Bailey, Aaron J. Broder, New York City (Mitchell D. Kessler (argued), of counsel), for appellees in No. 85-5352.

Arnold Levin, Howard J. Sedran, David J. Perlman, Levin & Fishbein, Philadelphia, Pa., Lee C. Swartz, Hepford, Swartz, Menaker & Morgan, Harrisburg, Pa., for amici curiae, James D. Carrigan, et al.

Before SEITZ, GIBBONS, Circuit Judges, and GERRY, * District Judge.

OPINION OF THE COURT

SEITZ, Circuit Judge.

Defendants appeal from an interlocutory order of the district court denying defendants' motion for partial summary judgment. The district court denied the motion based on its conclusion that the Price-Anderson Act does not preclude the recovery of punitive damages under state law. The district court later amended its order, certifying a controlling question of law to this court under 28 U.S.C. Sec. 1292(b). We granted permission to appeal.

I.

These are "public liability" actions as that phrase is used in the Price-Anderson Act, Pub.L. No. 85-256, 71 Stat. 576 (1957) (codified as amended in scattered sections of 42 U.S.C.). They arise out of the nuclear accident at Three Mile Island ("TMI") in 1979. Plaintiffs are individuals who resided in the vicinity of the TMI facility at the time of the accident. They claim to have suffered emotional distress and chromosomal injury; in addition, one plaintiff alleges that the accident caused her to suffer a stillbirth. Each plaintiff seeks both compensatory and punitive damages.

Defendants are the companies that at the time of the accident were the owners and operators of the TMI facility, together with those companies that supplied design, engineering, or maintenance services, or that were vendors of systems or equipment incorporated in the facility. Each defendant is a "person indemnified" as defined in the Price-Anderson Act, 42 U.S.C. Sec. 2014(t), through the "financial protection" system required by the Act, 42 U.S.C. Sec. 2210(k).

In an early pretrial order, the district court bifurcated all issues of fault from the issues of causation and compensable injury, with the latter claims to be tried first. With respect to claims for compensatory damages, defendants agreed that plaintiffs need not allege or prove the existence of liability-creating conduct; rather, for such purposes it would be assumed that liability had been established.

Before these actions came to trial, however, plaintiffs requested a conference to determine the effect of the Supreme Court's decision in Silkwood v. Kerr-McGee Corp., 464 U.S. 238, 104 S.Ct. 615, 78 L.Ed.2d 443 (1984), on the continued bifurcation of issues. This conference resulted in defendants' motion for partial summary judgment on the question whether state-law punitive damages awards are available in actions subject to the limitations of the Price-Anderson Act. The district court ultimately denied defendants' motion, holding that the Price-Anderson Act did not preclude such awards, provided that they were not assessed against the United States. The district court subsequently amended its order, certifying the punitive damages question to this Court. We granted defendants' petition for an interlocutory appeal. 1

In retaining subject matter jurisdiction over these actions after our opinion in Stibitz v. General Pub. Utils. Corp., 746 F.2d 993 (3d Cir.1984), cert. denied, --- U.S. ----, 105 S.Ct. 1187, 84 L.Ed.2d 334 (1985), the district court relied, once again, on its prior opinion, In re Three Mile Island Litigation, 87 F.R.D. 433 (M.D.Pa.1980). See Host Enters. v. General Pub. Utils. Corp., Civ. Action No. 81-0405, slip op. at 3 (M.D.Pa. Feb. 12, 1985). In so doing, the district court held that, for those actions filed prior to the Nuclear Regulatory Commission's ("N.R.C.") determination that the TMI accident did not constitute an "extraordinary nuclear occurrence," the non-frivolous allegation of such an occurrence was a proper basis for "arising under" jurisdiction, a question we expressly left open in Stibitz. See 746 F.2d at 996 n. 3 ("Since the complaint in this litigation was filed well after the N.R.C.'s determination was made, we have no occasion to consider whether a non-frivolous allegation of an extraordinary nuclear occurrence is a proper basis for 'arising under' jurisdiction.").

This court raised sua sponte the issue of whether the district court's continued exercise of subject matter jurisdiction in these cases was proper. It is to this issue that we now turn.

II.

As in Stibitz, none of the parties 2 questions the existence of federal subject matter jurisdiction. Quite to the contrary, they assert that the district court's continued exercise of such jurisdiction was "obviously correct." They argue that such jurisdiction can be predicated on either the "arising under" language of 28 U.S.C. Sec. 1337(a), or the direct grant of jurisdiction contained in the Price-Anderson Act itself, see 42 U.S.C. Sec. 2210(n)(2). We will address each of these asserted bases of federal subject matter jurisdiction in turn.

A. "Arising Under" Jurisdiction: 28 U.S.C. Sec. 1337(a)

Petitioners assert that our decision in Stibitz does not preclude subject matter jurisdiction based on the "arising under" language of 28 U.S.C. Sec. 1337(a). Relying upon language in Duke Power Co. v. Carolina Envtl. Study Group, 438 U.S. 59, 98 S.Ct. 2620, 57 L.Ed.2d 595 (1978), they argue that when Congress enacted the Price-Anderson Act, it intended to create an alternative federal compensation scheme that completely replaced traditional common-law and state tort law remedies. Given this characterization of the Act, they then assert that at the time these actions were commenced,

it was not frivolous to suppose that a claim for compensation from the financial protection afforded by the Act would be a claim arising under federal law. This would be true even if the content of many (perhaps most) of the rules of decision applicable to the claims might be derived from state law, as Congress apparently intended, and incorporated into the mechanism as federal rules of decision.

Thus, under Bell v. Hood, 327 U.S. 678, 682-83, 66 S.Ct. 773, 776-77, 90 L.Ed. 939 (1946), they conclude that a dismissal for want of jurisdiction is inappropriate.

Put simply, petitioners disagree with the fundamental premise of our decision in Stibitz: that is, our characterization of the claims advanced therein as "state-created causes of action." See 746 F.2d at 995-96. However, after carefully reviewing the language employed by the Supreme Court in Duke Power, we conclude that petitioners' claim that the Price-Anderson Act "replaced" or somehow "federalized" state tort law is so completely devoid of merit as to not involve a federal controversy within the jurisdiction of a federal court. Hagans v. Lavine, 415 U.S. 528, 536-37, 94 S.Ct. 1372, 1378-79, 39 L.Ed.2d 577 (1974); Stibitz, 746 F.2d at 997. Any doubt concerning the validity of this conclusion is dispelled by reading Duke Power in conjunction with the legislative history of the Act.

In Duke Power, the Chief Justice admittedly stated that "the Price-Anderson Act does, in our view, provide a reasonably just substitute for the common-law or state tort law remedies it replaces." 438 U.S. at 88, 98 S.Ct. at 2638; see also, e.g., id. at 93, 98 S.Ct. at 2640 ("This panoply of remedies and guarantees is at the least a reasonably just substitute for the common-law rights replaced by the Price-Anderson Act."). However, this discussion took place in the context of the claim that the Act's provision limiting total liability to $560 million violated due process, because the Act "fail[ed] to provide those injured by a nuclear accident with a satisfactory quid pro quo for the common-law rights of recovery which the Act abrogates." Id. at 87-88, 98 S.Ct. at 2637-2638 (emphasis in original). The Court did not directly address the question whether the Act had completely replaced state law or somehow federalized it; rather, it limited its inquiry to whether the Act's limitation of liability violated due process. In those limited circumstances only, then, the Court concluded that the concomitant benefits of the Act provided a "reasonably just substitute" or quid pro quo for any state-law rights or remedies abrogated by the Act. See, e.g., id. at 90-91 & n. 36, 98 S.Ct. at 2639-2640 & n. 36 (observing that Congressional assurance of a $560 million fund for recovery, coupled with statutory commitment to take whatever action is deemed necessary to protect the public from the consequences of a nuclear accident, "to be a fair and reasonable substitute for the uncertain recovery of damages of this magnitude from a utility or component manufacturer, whose resources might well be exhausted at an early stage").

Moreover, the Court's language in Duke Power must be read in conjunction with the Price-Anderson Act's legislative history--a history replete with indications that Congress never intended to displace state tort law with respect to the issues of liability and recoverable damages for nuclear accidents. Cf. Commonwealth v. General Pub....

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