855 F.2d 1160 (5th Cir. 1988), 86-2992, Willy v. Coastal Corp.

Docket Nº:86-2992.
Citation:855 F.2d 1160
Party Name:4 Indiv.Empl.Rts.Cas. 819 Donald J. WILLY, Plaintiff-Appellant, and George A. Young, Respondent-Appellant, v. The COASTAL CORP., Coastal States Management Co., Inc., et al., Defendants- Appellees.
Case Date:September 29, 1988
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 1160

855 F.2d 1160 (5th Cir. 1988)

4 Indiv.Empl.Rts.Cas. 819

Donald J. WILLY, Plaintiff-Appellant,


George A. Young, Respondent-Appellant,


The COASTAL CORP., Coastal States Management Co., Inc., et

al., Defendants- Appellees.

No. 86-2992.

United States Court of Appeals, Fifth Circuit

September 29, 1988

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Edward F. Sherman, Austin, Tex., for amicus curiae Texas Trial lawyers assn.

Michael A. Maness, Houston, Tex., for Donald J. Willy.

George A. Young, Houston, Tex., pro se.

David Van Os, James C. Harrington, Austin, Tex., Sharon D. Groth, Houston, Tex., for amicus curiae Texas AFL-CIO.

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Bruce V. Griffiths, Staff Counsel, Houston, Tex., for amicus curiae ACLU-Houston.

James L. Reed, Jr., Robert C. DeMoss, Houston, Tex., for defendants-appellees.

Peter Linzer, University of Houston Law Center, Houston, Tex., for amicus curiae.

Appeals from the United States District Court for the Southern District of Texas.

Before GARWOOD and JONES, Circuit Judges, and HUGHES, [*] District Judge.

GARWOOD, Circuit Judge:

Plaintiff-appellant Donald J. Willy (Willy) brought this action in the Texas courts seeking primarily to allege a wrongful discharge claim under Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733, 735 (Tex.1985), or some extension thereof. He also asserted other related claims (such as defamation and blacklisting) under state law. Defendants-appellees removed the case to federal court on the basis of original federal question jurisdiction under 28 U.S.C. Secs. 1331, 1441, arguing that federal issues pleaded as a part of Willy's state wrongful discharge claim made this a federal case. The district court agreed and subsequently dismissed Willy's wrongful discharge claim for failure to state a claim upon which relief can be granted, Fed.R.Civ.P. 12(b)(6), treated Willy's remaining claims as pendent state claims and dismissed them under United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966), and ordered Willy and his attorney to pay $22,625 in attorneys' fees to defendants as a sanction pursuant to Fed.R.Civ.P. 11. We find that the district court lacked subject matter jurisdiction over the case, and that the amount of the Rule 11 sanctions is not adequately supported by the record and should be reconsidered in light of our opinion herein and the principles announced in Thomas v. Capital Security Services, Inc., 836 F.2d 866 (5th Cir.1988). Accordingly, we reverse and remand.

Facts and Proceedings Below

Willy is a lawyer who was employed as in-house counsel from May 1981 until he was fired in October 1984 by defendant-appellee Coastal States Management Co., a wholly-owned subsidiary of defendant-appellee The Coastal Corporation. These entities (collectively, Coastal), are involved in the oil and gas industry through other subsidiaries of The Coastal Corporation. Willy claims that he was fired because he insisted that Coastal comply with various state and federal environmental and securities laws and because he would not act in violation of those laws.

Within a month of his dismissal, Willy filed an administrative complaint against Coastal with the United States Department of Labor pursuant to 29 C.F.R. pt. 24 (1984). He argued that by firing him Coastal had violated the "whistleblower" provisions of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Sec. 9610; the Clean Air Act, 42 U.S.C. Sec. 7622; the Solid Waste Disposal Act, 42 U.S.C. Sec. 6971; the Water Pollution Control Act, 33 U.S.C. Sec. 1367; the Safe Drinking Water Act, 42 U.S.C. Sec. 300j-9(i); and the Toxic Substances Control Act, 15 U.S.C. Sec. 2622. The Department of Labor investigated and agreed. The Administrative Law Judge (ALJ) to whom Willy's case was assigned, however, found that Willy had engaged in only intracorporate activity, not communications with a governmental agency, and recommended dismissal of Willy's claim under Brown & Root, Inc. v. Donovan, 747 F.2d 1029 (5th Cir.1984) (the "whistleblower" provision of the Energy Reorganization Act, 42 U.S.C. Sec. 5851(a)(3), does not protect an employee from filing an intracorporate quality control report). On June 4, 1987, the Secretary of Labor (Secretary) rejected the ALJ's recommendation and remanded, finding from the record that Willy had been in contact with governmental agencies, presumably federal, before he was fired. The Secretary further "held" that Brown & Root was incorrectly decided and that this Court should be given an opportunity to

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reconsider its decision in light of Kansas Gas & Electric Co. v. Brock, 780 F.2d 1505 (10th Cir.1985), cert. denied, 478 U.S. 1011, 106 S.Ct. 3311, 92 L.Ed.2d 724 (1986), and Mackowiak v. University Nuclear Systems, 735 F.2d 1159 (9th Cir.1984). The present status of Willy's administrative action is not reflected by the record or briefs.

On November 22, 1985, after the ALJ's recommendation of dismissal but before remand by the Secretary, Willy filed this action in Texas state court, naming as defendants Coastal and several individuals associated with Coastal. He asserted claims for wrongful discharge, breach of the codes of ethics of the American and Texas bar associations, invasion of privacy, defamation, blacklisting, and interference with contractual and business relationships. Although Willy's complaint does not mention case law, he obviously attempted to plead his wrongful discharge action under Sabine Pilot, which established a Texas common law wrongful discharge action for at-will employees who have been fired for refusing to perform an illegal act, or some extension thereof. Willy alleged that he sought to cause his employer to comply with, and that he refused to engage in activity that assertedly would violate, state and federal environmental and securities laws, specifically naming the Clean Water Act (33 U.S.C. Secs. 1251, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Secs. 6901, et seq.), the Clean Air Act (42 U.S.C. Secs. 7401, et seq.), the Safe Drinking Water Act (42 U.S.C. Secs. 300f, et seq.), and the Solid Waste Disposal Act (42 U.S.C. Secs. 6901, et seq.). 1

On December 30, 1985, defendants removed the case to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. Sec. 1441 on the basis of original federal question jurisdiction under 28 U.S.C. Sec. 1331. They contended that federal question jurisdiction appears on the face of Willy's complaint because the federal statutes that Willy claimed he was fired for refusing to violate formed a necessary element of his Sabine Pilot-type claim. The district court agreed and denied Willy's initial motion to remand. Willy then moved for partial summary judgment and defendants moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) and for sanctions pursuant to Fed.R.Civ.P. 11. Before the district court ruled on these motions, Willy twice more unsuccessfully moved for remand. On September 17, 1986, the district court denied Willy's motion for partial summary judgment and on November 12, 1986, dismissed Willy's Sabine Pilot-type action pursuant to Rule 12(b)(6), dismissed Willy's remaining pendent state law claims under Gibbs, 647 F.Supp. 116, and imposed Rule 11 sanctions in the amount of $22,625 jointly and severally against Willy and his attorney. 2 This appeal followed.


Because the district court dismissed Willy's complaint for failure to state a claim pursuant to Rule 12(b)(6), see Voter Information Project, Inc. v. City of Baton Rouge, 612 F.2d 208, 210 (5th Cir.1980), and because we look to the well-pleaded complaint to determine subject matter jurisdiction, see, e.g., Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 103 S.Ct. 2841, 2846, 77 L.Ed.2d 420 (1983), we accept as true for the purposes of this appeal Willy's factual allegations that are relevant to subject matter jurisdiction, see Williamson v. Tucker, 645 F.2d 404, 412 (5th Cir.), cert. denied, 454 U.S. 897, 102 S.Ct. 396, 70 L.Ed.2d 212 (1982). We note, however, that Willy's factual allegations are often imprecise. For instance, he discusses an episode where he sought to prevent changes in a report, but does not indicate whether the report was for purely intracorporate purposes. Similarly,

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a contact with a governmental agency is hinted at by a vague discussion of "actions" he took that "were the first legal step" in reporting to the Securities and Exchange Commission Coastal's noncompliance with environmental laws. Because we hold that the district court did not have subject matter jurisdiction over Willy's action under any reasonable construction of his state court pleading, we find it unnecessary to resolve these ambiguities. Thus, for purposes of this appeal, we will assume, arguendo, that Willy alleges that he was fired because he complied with and/or refused to violate federal and state environmental and federal securities laws and that his activities in this connection were not wholly intracorporate. 3

I. Removal Jurisdiction

As a preliminary matter, we emphasize that the burden of establishing federal jurisdiction is placed upon the party seeking removal. See Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 42 S.Ct. 35, 66 L.Ed. 144 (1921). Moreover, removal jurisdiction raises significant federalism concerns, see Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 106 S.Ct. 3229, 3233, 92 L.Ed.2d 650 (1986); Franchise Tax Board, 103 S.Ct. at 2846, and we must therefore strictly construe removal jurisdiction. Shamrock Oil & Gas Corp v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941); Powers v. South Central United Food & Commercial Workers Unions and Employers Health & Welfare Trust, 719...

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