Del–ray Battery Co. v. Douglas Battery Co.

• Decision Date: 14 March 2011
• Docket Number: No. 10–40515.,10–40515.
• Citation: 635 F.3d 725
• Parties: DEL–RAY BATTERY COMPANY; Golden Eagle Battery, Inc., Plaintiffs–Appellants,v.DOUGLAS BATTERY COMPANY; Interstate Battery Systems of America, Inc., Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

635 F.3d 725

DEL–RAY BATTERY COMPANY; Golden Eagle Battery, Inc., Plaintiffs–Appellants,

v.DOUGLAS BATTERY COMPANY; Interstate Battery Systems of America, Inc., Defendants–Appellees.

No. 10–40515.

United States Court of Appeals, Fifth Circuit.

March 14, 2011.

Diane Kay Shaw, Trial Atty. (argued), Shaw & Associates, P.C., Gun Barrel City, TX, for Plaintiffs–Appellants.S. Shawn Stephens (argued), Baker & Hostetler, L.L.P., Houston, TX, Walter Dudley James, III, Colleyville, TX, for Defendants–Appellees.Appeal from the United States District Court for the Eastern District of Texas.Before KING, DAVIS and SOUTHWICK, Circuit Judges.KING, Circuit Judge:

Appellants, battery recyclers, were sued under the Texas Solid Waste Disposal Act (the “SWDA”) in Texas state court for contribution to environmental clean-up costs incurred by Appellees. Appellants asserted in their defense that the Superfund Recycling Equity Act (the “SREA”)—an amendment to the federal Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) that exempts certain recyclers from liability for clean-up costs under CERCLA, and awards costs and fees to any recyclers improperly sued for contribution under CERCLA—applied to protect them from the state court action brought pursuant to the SWDA. After Appellees non-suited the state court case, Appellants brought this federal court action requesting declaratory relief as to the SREA and seeking, under the SREA, the attorneys' and experts' fees they incurred in defending the state court action. They now appeal the district court's judgment dismissing their complaint. For the reasons stated below, we affirm.

BACKGROUND

Appellants Del–Ray Battery Company and Golden Eagle Battery, Inc. (together, “Plaintiffs”) and Appellees Douglas Battery Company and Interstate Battery Systems of America, Inc. (together, “Defendants”) are battery recyclers that sold intact, spent lead acid batteries to a recycling facility in Tecula, Texas until the Environmental Protection Agency (“EPA”) declared the facility a Superfund site and closed it down. The Texas Commission on Environmental Quality (“TCEQ”), the state's counterpart to the EPA, identified Defendants, among other battery recyclers, as potentially responsible parties and directed them to perform a remedial investigation/feasibility study at the Tecula site. The EPA ultimately paid $4 million in removal and remediation costs to clean up the site, but neither the EPA nor the TCEQ brought suit against any of the battery recyclers to recover the costs of this clean-up.

Defendants later sued Plaintiffs in state court under § 361.344(a) of the Texas Solid Waste Disposal Act, Tex. Health & Safety Code Ann. § 361 (Vernon 2010), seeking contribution for the costs they incurred to clean up the Tecula site.¹ Defendants did not raise any federal claims in that action. Plaintiffs asserted in their defense that the Superfund Recycling Equity Act, 42 U.S.C. § 9627 (2006)—an amendment to the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq. (2006), that exempts certain recyclers from CERCLA clean-up liability, and awards costs and fees to recyclers who are forced to defend against improper contribution actions—also exempted them from liability under the SWDA, and entitled them to recover the costs of defending the state court action.

The state court granted partial summary judgment for Defendants as to each element of cost recovery under § 361.344 of the SWDA, but did not order Plaintiffs to pay Defendants any damages on their claims for contribution. Defendants thereafter successfully moved to non-suit the case for reasons that are not explained in the record.

Plaintiffs then brought this federal court action asserting five separate claims: a claim under the SREA seeking recovery of their attorneys' and experts' fees incurred in defending the state court lawsuit, and four declaratory judgment claims requesting the district court to declare that (1) the SREA applies to Plaintiffs and protects them from all lawsuits for contribution, including the state court action brought by Defendants; (2) Plaintiffs are entitled to their attorneys' and experts' fees under the SREA; (3) the SREA “is unconstitutional if applied in a manner which precludes equal protection, due process [and] open courts to bonafide battery recyclers”; and (4) the state court's interpretation of the SREA was unconstitutional. Defendants moved to dismiss.

The district court dismissed the fourth declaratory judgment claim for lack of subject matter jurisdiction, reasoning that it lacked the power to review a state court decision under the Rooker–Feldman doctrine. The court dismissed the first and second declaratory judgment claims, as well as the claim for fees, for failure to state a claim because it found that the SREA does not exempt Plaintiffs from contribution actions under the SWDA. Finally, the court dismissed the third declaratory judgment claim regarding the constitutionality of the SREA for failure to state a claim because it could not discern a legal basis for that claim. This appeal followed.

STANDARDS OF REVIEW

We review de novo a district court's grant of a motion to dismiss for lack of subject matter jurisdiction, applying the same standards as the district court. Rodriguez v. Christus Spohn Health Sys. Corp., 628 F.3d 731, 734 (5th Cir.2010) (citations omitted). Where, as here, the district court determined its jurisdiction based on the complaint alone, appellate review is “limited to determining whether the district court's application of the law is correct.” Id. (citation and internal quotation marks omitted).

We also review de novo a district court's grant of a motion to dismiss for failure to state a claim under Rule 12(b)(6). In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007). A plaintiff fails to state a claim when the complaint does not contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555, 127 S.Ct. 1955 (citations and internal quotation marks omitted).

ANALYSIS

The heart of this federal action, as the district court identified, is Plaintiffs' claim that the SREA's exemption and cost shifting provisions apply to claims asserted under state law. As discussed below, the merits of this argument can be straightforwardly rejected: the plain language of the SREA makes clear that it applies to CERCLA actions only, and does not apply to state law actions. However, Defendants assert several new challenges to subject matter jurisdiction on appeal, which must be addressed before reaching the merits of the case. See Steel Co. v. Citizens for a Better Env., 523 U.S. 83, 94, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (requiring jurisdiction to be established as a threshold matter before reaching the merits); Edge Petroleum Operating Co. v. GPR Holdings, L.L.C. (In re TXNB Internal Case), 483 F.3d 292, 298 n. 6 (5th Cir.2007) (holding that federal subject matter jurisdiction may be challenged at any time on appeal).

I. Subject Matter JurisdictionA. Mootness

Defendants argue that Plaintiffs' first declaratory judgment claim—that the SREA applies to protect them from all contribution lawsuits, including the state court lawsuit brought by Defendants—is not justiciable insofar as it requests a specific declaration as to the non-suited state court lawsuit. In other words, they argue that mootness divested the district court of jurisdiction over that particular portion of the claim.

The party asserting mootness bears the “heavy burden of persuading the court that the challenged conduct cannot reasonably be expected to start up again.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167, 189, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citation and internal quotation marks omitted) . The non-suit order entered by the state court dismissed all parties' claims without prejudice. Without any information in the record or the briefs as to the reasons for the non-suit, or as to their future intent, Defendants have not carried their burden to show that the alleged harm will not recur, i.e., that they will not re-file their state law action. The claim thus withstands Defendants' challenge for mootness.

B. The Rooker–Feldman Doctrine

Defendants next argue that the Rooker–Feldman doctrine bars Plaintiffs from “relitigating their defenses in federal court.” The Rooker–Feldman doctrine bars “cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 284, 125 S.Ct. 1517, 161 L.Ed.2d 454 (2005). Thus, a losing party may not seek what amounts to appellate review of a final state court judgment in a federal district court. See Lance v. Dennis, 546 U.S. 459, 463, 126 S.Ct. 1198, 163 L.Ed.2d 1059 (2006).

We have previously held that “the Rooker–Feldman bar generally should not extend to state decisions that would not be given preclusive effect under doctrines of res judicata and collateral estoppel.” Ingalls v. Erlewine (In re Erlewine), 349 F.3d 205, 210 (5th Cir.2003); see also Union Planters Bank Nat'l Ass'n v. Salih, 369 F.3d 457, 460–61 (5th Cir.2004). The federal full faith and credit statute requires federal courts to give state court judgments the same preclusive effect that they would enjoy in the courts of the rendering state. See 28 U.S.C. § 1738 (2006); Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 373, 380, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985). We therefore look to...