American Oil Company v. Egan, 4-71 Civ. 595.
| Decision Date | 06 April 1973 |
| Docket Number | No. 4-71 Civ. 595.,4-71 Civ. 595. |
| Citation | 357 F. Supp. 610 |
| Parties | AMERICAN OIL COMPANY, a corporation, Plaintiff, v. William EGAN and Northwestern Bell Telephone Company, a corporation, Defendants. |
| Court | U.S. District Court — District of Minnesota |
Robins, Davis & Lyons, by Dale I. Larson, Minneapolis, Minn., for plaintiff.
Mullin, Swirnoff & Weinberg, by William E. Mullin, Minneapolis, Minn., for defendant William Egan.
Plaintiff American Oil Co. (American), a Maryland corporation doing business in the state of Minnesota, has petitioned this court to remand this case to the Minnesota Hennepin County District Court from whence it was removed by defendant. The original case arose out of the termination of a distributorship agreement between plaintiff and defendant Egan, a Minnesota resident, whereby Egan sold and distributed the American products. In the latter part of September, 1971, Egan discontinued representing American products and commenced the selling and handling of products of the Mobile Oil Co. Inasmuch as the outstanding telephone directories contained advertisements and listings linking Egan with American products, American had the telephone company place an "intercept" on Egan's line to determine whether incoming callers wanted Egan's line or that of an American dealer. Egan thereupon filed suit in the Minnesota District Court to obtain a temporary injunction enjoining the intercept. This injunction was subsequently granted. American however countered by filing suit, also in Hennepin County District Court, against Egan and Northwestern Bell Telephone Co. to dissolve the previously issued injunction and for other relief. Defendant Egan's counterclaim in the second suit, the pleading which has raised the issue now before this court, alleges inter alia certain violations by American of the Federal Antitrust laws, including sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, and seeks relief pursuant to sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26. Defendant's counterclaim asserts damages totalling $360,000, a sum well in excess of this court's jurisdictional amount. On November 19, 1971, the same day on which the counterclaim was filed, defendant petitioned for removal to this court, asserting that the antitrust allegations contained in his counterclaim are within the exclusive jurisdiction of the federal courts. A new telephone directory was issued in December 1971 so injunctive relief no longer is of import. Plaintiff's response to defendant's counterclaim asserts an action in contract law for breach of the franchise agreement and seeks damages in the amount of $75,000.
Nearly fifteen months transpired before American suddenly questioned this court's jurisdiction in the form of a remand petition filed February 9, 1973. Extension and delay have characterized these fifteen months in both the pleading and discovery stages, though discovery now has been commenced and at least several depositions have been completed. Petitioner American now asserts that removal to federal court was improper for several reasons: First, well established authority holds that removability depends on the allegations of pleading employed and served by the plaintiff and therefore removal cannot be predicated on allegations contained in a counterclaim; second, inasmuch as federal jurisdiction on a remand petition is derivative from the jurisdiction of the state court, there can be no federal jurisdiction in this case because a state court cannot take cognizance of a federal antitrust claim;1 third, in any event in a diversity action, absent a federal question, only a nonresident defendant can remove pursuant to 28 U.S.C. § 1441(b). American also moves for all costs and disbursements incurred by reason of the removal proceedings and seeks dismissal of the federal antitrust claim. Defendant Egan argues against the remand petition by asserting that this court has subject matter jurisdiction over his antitrust counterclaim and that any defects in the removal procedure have been waived by American by its delay and prior participation in pretrial procedures before this court.
Defendant's removal petition clearly did not conform with the applicable principles governing removal. 28 U. S.C. § 1441(a), which serves as the statutory basis for removal, allows that unless otherwise expressly provided by Congress "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or defendants, to the district court of the United States for the district and division embracing the place where such action is pending." Section 1441(b) of the statute limits removal to non-citizen defendants in cases where federal jurisdiction is based on diversity of citizenship rather than a federal question. Interpreting the above quoted language, well established case law requires federal jurisdiction to be disclosed on the face of plaintiff's complaint. See Gully v. First National Bank in Meridian, 299 U.S. 109, 113, 57 S.Ct. 96, 81 L.Ed. 70 (1936); Gatch v. Hennepin Broadcasting Associates, Inc., 349 F.Supp. 1180 (D.Minn.1972), and the cases cited therein. The cases appear to establish the principle that a plaintiff should be allowed to choose the theory of his own lawsuit. Professor Moore points out that "where plaintiff's claim involves both a federal ground and a state ground, the plaintiff is free to ignore the federal question and pitch his claim on the state ground." 1A Moore's Federal Prac. ¶ 0.160, p. 474. The only colorable basis for federal jurisdiction at the time of removal appeared in defendant Egan's counterclaim. Even had plaintiff's initial complaint established diversity jurisdiction, removal would have been improper by a resident defendant such as Egan. Therefore it is clear that removal was improper ab initio.2
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