D & J Invs. of Cenla, L.L.C. v. Baker Hughes A G E Co., L.L.C.
| Docket Number | 21-30523 |
| Decision Date | 17 October 2022 |
| Parties | D & J INVESTMENTS OF CENLA, L.L.C.; Deborah H. Greer; James W. Greer, Jr.; Daniel L. Webb; Jim Adams, et al., Plaintiffs—Appellants, v. BAKER HUGHES A G E COMPANY, L.L.C. ; Baker Hughes Energy Services, L.L.C. ; Dresser, L.L.C.; Dresser R E, L.L.C. ; GE Oil ; Gas, L.L.C.; G H D Services, Incorporated; Stantec Consulting Services, Incorporated; Halliburton Energy Services, Incorporated ; Louisiana Department of Environmental Quality, Defendants—Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Victor L. Marcello, Esq., Diane Adele Owen, Talbot, Carmouche & Marcello, Baton Rouge, LA, for Plaintiffs-Appellants.
Andrew Mark Stakelum, Tracie Jo Renfroe, Esqs., Craig Andrew Stanfield, King & Spalding, L.L.P., Houston, TX, for Defendants-Appellees.
Before DAVIS, ELROD, and HAYNES, Circuit Judges.
Plaintiffs-Appellants, forty-eight owners of property located near the former Dresser Industrial Valve Operations Facility ("Dresser Facility") in Rapides Parish, Louisiana, appeal the district court's order dismissing the Louisiana Department of Environmental Quality ("LDEQ") as improperly joined and denying their motion for remand. They further challenge the injunction issued by the district court against Plaintiff Michael Guillory from pursuing a proceeding in state court. Because we conclude that Defendants-Appellees failed to meet their burden of establishing that LDEQ was improperly joined, we REVERSE and REMAND to the district court with instructions to remand this case to Louisiana state court. We further VACATE the injunction.
The Dresser Facility manufactured industrial valves from 1961 to 2016. In July 2020, Plaintiffs filed suit in state court against LDEQ and Defendants-Appellees, who are the various past and present owners and operators of the facility ("Facility Defendants"). Plaintiffs allege that hazardous waste from the facility has contaminated the soil and groundwater of their nearby properties.
In their petition for damages, Plaintiffs contend that the Facility Defendants failed to properly design, construct, and/or operate the Dresser Facility's waste removal processes to prevent leaching of contaminants into the groundwater and to prevent offsite migration onto and under Plaintiffs' properties. Plaintiffs allege that the Facility Defendants knew or should have known that operations at the Dresser Facility would result in contamination of the soil, surface waters, and groundwater of surrounding properties; that they chose to conceal and cover up the contamination; and that they failed to responsibly and timely remove and/or remediate the toxic pollution such that the contaminants have now migrated, spread, and permanently damaged the drinking water and other aquifers underlying their properties. Plaintiffs assert their damages were caused by the Facility Defendants' "negligence, strict liability, and wanton and reckless misconduct," as well as "unlawful subsurface trespass." Plaintiffs also contend that they are entitled to punitive and/or exemplary damages under former Louisiana Civil Code article 2315.3.1
With respect to LDEQ, Plaintiffs allege that in 2012, LDEQ learned that hazardous waste was emanating from the Dresser Facility. They further assert that by 2014, LDEQ had determined the direction of groundwater flow and knew of the homes and businesses in the path of the contaminant plume, but that LDEQ did not inform Plaintiffs and other members of the public of the contamination until years later in 2020. Plaintiffs maintain that the damages they have sustained were caused by the "negligence and misconduct" of LDEQ in failing to timely and properly (1) report and warn them of the contamination of the groundwater and soils underlying their properties, (2) conduct testing and remediation, and (3) investigate the source of the contamination and the potential pathways of contamination from the facility into the environment.
One of the Facility Defendants, Halliburton Energy Services, Inc. ("Halliburton"), removed the case to federal district court on the basis of diversity jurisdiction. Halliburton asserted that because all Plaintiffs are diverse from all of the properly joined Facility Defendants, complete diversity existed. Halliburton contended that LDEQ, the only defendant whose presence would prevent diversity jurisdiction, was improperly joined. It argued, citing this court's decision in Smallwood v. Illinois Central Railroad Company ,2 that LDEQ was improperly joined "because there [wa]s no reasonable basis to predict that Plaintiffs will be able to recover from LDEQ." Specifically, Halliburton asserted that Plaintiffs' allegations against LDEQ for failing to adequately investigate and remediate the alleged contamination emanating from the Dresser Facility and failing to warn Plaintiffs of the alleged contamination do not "support[ ] a claim against LDEQ under Louisiana law."
Plaintiffs thereafter filed a motion for remand. Plaintiffs argued that LDEQ was not improperly joined because LDEQ owed them a duty under Louisiana law to warn them about the presence of hazardous materials in their drinking water. Additionally, Plaintiffs asserted that LDEQ had assumed control of the soil and groundwater contamination investigation and then concealed the findings from Plaintiffs. Plaintiffs argued that their damages were caused and/or exacerbated by the negligence and misconduct of LDEQ. In response, in addition to arguing that LDEQ owed no duties to Plaintiffs, Halliburton asserted that LDEQ's alleged actions fall within the discretionary-acts exemption set forth in Louisiana Revised Statutes Annotated § 9:2798.1, making LDEQ immune from suit in this case.3
The district court denied Plaintiffs' motion for remand. It determined that under Louisiana law, LDEQ did not have a duty "to inform [Plaintiffs] of reported contamination within a particular timeframe or to otherwise oversee remediation in any particular manner." It further concluded that Louisiana law does not create a cause of action against LDEQ for contamination caused by private industry. Although noting that whether LDEQ owed a duty under the circumstances was "an issue of first impression" in the Western District of Louisiana, the district court observed that Louisiana's two other federal districts had also "conclude[ed] that the [L]DEQ is not liable in tort for failing to properly handle contamination."4 Consequently, the district court determined that Halliburton met its burden of establishing that LDEQ was improperly joined and that its presence could be disregarded.5 The district court therefore denied Plaintiffs' motion for remand and also dismissed LDEQ with prejudice. Because complete diversity existed among the remaining parties, the district court determined it had subject matter jurisdiction over this case.
Plaintiffs filed a motion for reconsideration, arguing that the district court's improper-joinder analysis was erroneous. They submitted additional authority for their argument that LDEQ owed a duty to warn—specifically, a 2001 Executive Order requiring certain state agencies, including LDEQ, of notifying "people who may be exposed to environmental contamination." Plaintiffs also contended that the district court's dismissal of LDEQ for improper joinder should have been without prejudice, instead of with prejudice. The district court granted the motion in part, determining that its dismissal of LDEQ should have been without prejudice, but denied the remainder of the motion.
Halliburton thereafter moved the district court pursuant to Federal Rule of Civil Procedure 54(b) to certify, as a partial final judgment, its order dismissing LDEQ without prejudice and denying Plaintiffs' motion for remand. Halliburton also sought to enjoin state court proceedings, contending that one of the plaintiffs, Michael Guillory, had filed a "duplicative state court action." In the state court petition, Guillory requested a declaratory judgment that LDEQ owed a duty to notify him of contamination, citing the 2001 Executive Order and asserting that the Order had been codified in the Louisiana Administrative Code.6 Halliburton argued that Guillory filed his state court action in an attempt to "collateral[ly] attack" the district court's legal conclusions underlying its dismissal of LDEQ. The other Facility Defendants all joined in Halliburton's motion.
The district court noted that the cited sections of the Louisiana Administrative Code in Guillory's state court action "delineate the procedures established by the [L]DEQ for notifying the public of contamination." In a footnote, the district court determined that although the Code set forth time frames for public notification of contamination, the application of the timeframes to specific instances of contamination "is left solely to the discretion of the [L]DEQ." The district court granted the Facility Defendants' motion, entered a final judgment pursuant to Rule 54(b) of its order dismissing LDEQ and denying remand, and issued an injunction against Guillory from pursuing his state court action against LDEQ. Plaintiffs timely appealed.
On appeal, Plaintiffs argue that the district court abused its discretion in certifying as a final judgment under Rule 54(b) its order dismissing LDEQ. They additionally assert that the district court erred in determining that LDEQ was improperly joined and in denying their motion to remand. Finally, they assert that the district court erred in enjoining Plaintiff Guillory from prosecuting his claims against LDEQ in state court.
Under 28 U.S.C. § 1291, this Court has appellate jurisdiction "from all final decisions of the district courts." "Where, as here, an action involves multiple parties, a disposition of the action...
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