Crazy Eddie, Inc. v. Cotter
| Decision Date | 23 July 1987 |
| Docket Number | 86 Civ. 9485 (RJW).,No. 86 Civ. 9179 (RJW),86 Civ. 9179 (RJW) |
| Citation | 666 F. Supp. 503 |
| Parties | CRAZY EDDIE, INC.; Gabrielle Audio Distributors, Inc.; Simone Audio Distributors, Inc.; David's Audio Distributors, Inc.; West Side Audio Distributors, Inc.; Noelle Audio, Inc.; Mitchell Audio, Inc.; DNS Audio, Inc.; Simcole Audio, Inc.; Nanuet Audio Distributors, Inc.; Renee Audio Distributors, Inc.; Massapequa Audio Distributors, Inc.; Danielle Audio, Inc.; Ace-Hi Record Corporation; SND Audio, Inc.; Third Avenue Home Entertainment Boutique, Inc.; Suffolk Audio Inc.; Debbie Audio, Inc.; Tera Audio Distributors, Inc.; Broadway Audio Distributors, Inc.; Moore Industries Corporation; Allen Audio, Inc.; Queens Boulevard Audio, Inc.; and Ultralinear Sound Corporation, Plaintiffs, v. William COTTER, in his official capacity as Commissioner of the New York State Energy Office; Robert Abrams, in his official capacity as Attorney General of the State of New York; General Electric Corporation; Fedders Corporation; and Abraham Portnoy, Inc., also d/b/a A.P. Distributors, Inc., Defendants. The PEOPLE OF the STATE OF NEW YORK by Robert ABRAMS, Attorney General of the State of New York, Petitioner, v. CRAZY EDDIE, INC., and its subsidiaries: Noelle Audio, Inc.; DNS Audio, Inc.; Nanuet Audio Distributors, Inc.; Ace-Hi Record Corporation; Third Avenue Home Entertainment Boutique, Inc.; Debbie Audio, Inc.; Broadway Audio Inc.; Allen Audio, Inc.; West Side Audio Distributors, Inc.; Mitchell Audio, Inc.; Simcole Audio, Inc.; Renee Audio Distributors, Inc.; Danielle Audio, Inc.; SND Audio, Inc.; Suffolk Audio Distributors, Inc.; Tera Audio Distributors, Inc.; Moore Industries Corporation; Queens Boulevard Audio, Inc.; and Ultralinear Sound Corporation, Respondents. |
| Court | U.S. District Court — Southern District of New York |
Teitelbaum & Hiller, P.C., New York City, for plaintiffs/respondents; Robert H. Hermann, Thomas P. Battistoni, M. Rose Gasner, of counsel.
Robert Abrams, Atty. Gen., New York City, for defendants/petitioner; Mary M. Gundrum, Asst. Atty. Gen. of counsel.
On November 28, 1986, the Attorney General of the State of New York commenced an action in the New York State Supreme Court, New York County, against Crazy Eddie, Inc. and seventeen individual Crazy Eddie retail stores which sell goods, including room air conditioners, under the Crazy Eddie name (hereinafter collectively "Crazy Eddie") to enjoin them from selling at retail new room air conditioners which fail to comply with New York Energy Law section 16-118(4)(a) and to collect statutory penalties.1 On December 1, 1986, Crazy Eddie filed a complaint in this Court seeking declaratory and injunctive relief against the Attorney General. 86 Civ. 9179. On December 10, 1986, the remaining state court defendants filed a petition to remove the action to federal court. 86 Civ. 9485. The Attorney General has moved to remand the action in 86 Civ. 9485 to state court and to dismiss the complaint in 86 Civ. 9179. Crazy Eddie has cross-moved for summary judgment in both actions.
As part of a comprehensive national energy policy, Congress in 1975 enacted the Energy Policy and Conservation Act ("EPCA" or the "Act").2 42 U.S.C. § 6201 et seq. For the period relevant to this action, section 325(a) directed the Secretary of Energy (the "Secretary") to prescribe energy efficiency standards for thirteen covered products, including room air conditioners. Under the Act, "energy efficiency standards for each type (or class) of covered products ... were to be designed to achieve the maximum improvement in energy efficiency which the Secretary determines is technologically feasible and economically justified." 42 U.S.C. § 6295(c). The Act further provided that the Secretary was not to prescribe standards, the "no-standard" standard, for particular products if to do so would not have resulted in a significant conservation of energy or if the proposed standard would not be technologically feasible. 42 U.S.C. § 6295(b).
Under the original Act, the normative standards established by the Secretary were to preempt state energy efficiency standards or other state requirements concerning the energy use of a covered product. Id. § 6297(b)(2). A determination by the Secretary that no standard was justified for a particular covered product would have carried the same preemptive effect as a promulgated standard. Id. § 6295(b).
Under the Act, any state which had regulated the energy use or energy efficiency of a covered product for which a federal standard applied could have petitioned the Secretary requesting a rule that the state regulation had not been superseded.3 42 U.S.C. § 6297(b)(2), (3). After considering the petition and the comments of interested persons, the Secretary was to promulgate a rule only if he found that a significant state or local interest justified the state regulation, the state regulation was more stringent than the applicable federal standard, and the state regulation would not unduly burden interstate commerce. Id. Once the state had requested a rule, the local rule was not to be superseded until and unless the Secretary denied the requested rule.4 See Fed.Reg. 57,214 (1982).
By 1982, New York had passed various statutes concerning energy efficiency requirements for certain appliances. See N.Y. Energy Law § 16-102 et seq. Effective January 1, 1982, the Energy Law mandated certain minimum energy efficiency ratios for room air conditioners.5Id. § 16-118.
In August 1983, the Secretary promulgated "no-standard" energy efficiency standards for eight consumer appliances, including room air conditioners. 48 Fed. Reg. 39,408 (1983), codified at 10 C.F.R. § 430.32. The New York State Energy Office promptly filed a notice of petition for exemption from preemption with respect to the room air conditioner standards dated October 21, 1983 and a completed petition dated December 27, 1983 with the Department of Energy ("DOE"). On August 17, 1984, DOE published a notice of its intention to grant the petitions of New York and twenty-five other states. 49 Fed. Reg. 32,944 (1984). The Secretary premised the proposed exemption for New York on findings that the State had presented a significant local interest, the New York efficiency standards exceeded the proposed federal requirements, and the standards would not significantly burden interstate commerce. 49 Fed.Reg. 32,963 (1984).
On July 16, 1985, the Court of Appeals for the District of Columbia Circuit invalidated the Secretary's actions in promulgating the no-standard standards and ordered a comprehensive reappraisal of the appliance program. Natural Resources Defense Council, Inc. v. Herrington, 768 F.2d 1355 (D.C.Cir.1985). DOE terminated proceedings on the petitions for rulings that state standards had not been preempted by the federal standards on March 5, 1986. 51 Fed.Reg. 7,582 (1986). Consequently, the Secretary never published final orders in response to the states' petitions. Thereafter, Congress rendered further agency proceedings moot by passing the NAECA.
Following the decision in Herrington, the Attorney General of the State of New York, acting along with the New York State Energy Office, advised Crazy Eddie and various other retailers that they could not advertise for sale or sell at retail room air conditioners which had energy efficiency ratios below those prescribed by section 16-118(4)(a) of the Energy Law. On November 7, 1986, the Attorney General issued a notice of proposed action against Crazy Eddie for false advertising and violations of the Energy Law. The Attorney General subsequently filed suit to enjoin Crazy Eddie from advertising or offering for sale new room air conditioners which fail to meet the mandated efficiency requirements, to force restitution for all those who purchased non-complying air conditioners, and to recover a fine of $250.00 for each sale of a non-conforming air conditioner.
On December 1, 1986, Crazy Eddie and twenty-four of its retail outlets filed a complaint in the United States District Court for the Southern District of New York seeking a declaration that the ECPA preempted the New York Energy Law and an injunction preventing the Attorney General from seeking to enforce provisions of the Energy Law.6
On December 10, 1986 the remaining defendants in the state court action filed a petition pursuant to 28 U.S.C. § 1441 to remove the case to the United States District Court for the Southern District of New York. 86 Civ. 9485. There is no diversity between the parties. In the petition, the defendants contend that the action by the Attorney General (1) raises a federal question, (2) is, in substantial respects, a federal claim for relief, and (3) arises under the commerce and supremacy clauses of the constitution and the EPCA.
The Attorney General has moved to remand 86 Civ. 9485 to the state court on the grounds that the action raises no federal question and therefore was improperly removed. He also asks the Court to dismiss the complaint in 86 Civ. 9179 on the basis of various theories of abstention. Crazy Eddie has cross-moved for summary judgment in both actions. For the reasons to follow, the Court grants the Attorney General's motions and remands 86 Civ. 9485 to the New York Supreme Court, New York County, and dismisses the complaint in 86 Civ. 9179.
The removing party bears the burden of establishing that the case falls within the court's removal jurisdiction. Cuomo v. Long Island Lighting Company, 589 F.Supp. 1387, 1391 (E.D.N.Y.1984). Because the parties are not diverse, removal is improper unless the suit "arises under the Constitution, laws or treaties of the United States."7 28 U.S.C. §§ 1331, 1441(a).
Removal is normally improper unless a federal claim appears on the face of a well-pleaded complaint, "unaided by anything alleged in anticipation of avoidance of defenses which it is thought the defendant may...
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