Engle v. West Penn Power Co.

• Decision Date: 25 August 1987
• Docket Number: No. 01722,01722
• Citation: 366 Pa.Super. 104,530 A.2d 913
• Parties: John H. ENGLE, William R. Engle, William C. Engle, t/d/b/a Engle's Holiday Harbor, a Partnership and as Representative of a Class v. WEST PENN POWER COMPANY, a Corporation, Appellant. Pitts. 1986.
• Court: Pennsylvania Superior Court

Page 913

530 A.2d 913

366 Pa.Super. 104

John H. ENGLE, William R. Engle, William C. Engle, t/d/b/a Engle's Holiday Harbor, a Partnership and as Representative of a Class v. WEST PENN POWER COMPANY, a Corporation, Appellant.

No. 01722 Pitts. 1986.

Superior Court of Pennsylvania.

Argued June 4, 1987.

Filed Aug. 25, 1987.

Harold R. Schmidt, Pittsburgh, for appellant.

C. James Zeszutek, Pittsburgh, for appellees.

Before DEL SOLE, POPOVICH and MONTGOMERY, JJ.

POPOVICH, Judge:

This is an appeal from an interlocutory order granted by permission by Superior Court to the appellant/defendant, West Penn Power Company. See Pa.R.App.P. 312; 42 Pa.C.S. § 702(b).

The record discloses that in November of 1985 the plaintiffs John H. Engle, William R. Engle and William C. Engle, t/d/b/a Engle's Holiday Harbor, a partnership, sought certification as representatives of a class in excess of fifty members whose property suffered damages due to the defendant's alleged negligence in the operation of its Lake Lynn hydro-electric dam on the Cheat River in West Virginia.

The plaintiffs averred in their class action complaint that, inter alia, the commonality of questions of law and fact, when coupled with the complexities of the issues and the economies of scale that could be achieved by litigating the claims together, warranted that they be denominated representatives of the class action suit.

The two-count complaint sounded in negligence and alleged the defendant's maintenance of a dangerous instrumentality (the hydro-electric power dam) and the resultant imprudent release of water retained thereby, which, purportedly, was the direct and proximate cause of flooding in the area for which damages in excess of ten thousand dollars were being sought by the plaintiffs on behalf of the class once representative status was bestowed upon them.

Next of record appears preliminary objections, filed by counsel for the defendant, raising a question of jurisdiction. It was recounted therein that the dispute had been removed, by the defendant, to the United States District Court for the Western District of Pennsylvania. In a Memorandum Opinion filed by the Honorable Alan N. Bloch, the case was remanded to Common Pleas Court upon a finding that the claims of negligence and maintenance of a dangerous instrumentality were state law claims. In support thereof, Judge Bloch wrote:

Under the "well-pleaded complaint" rule, a defendant "may not remove a case to federal court unless the plaintiff's complaint establishes that the case 'arises under' federal law. Franchise Tax Board [v. Construction Laborers Vacation Trust], 463 U.S. at 10 [103 S.Ct. 2841, at 2846-47, 77 L.Ed.2d 420 (1983).]"

(Memorandum Opinion at 3)

Because the face of the complaint could not be read as raising a federal question (under 28 U.S.C. § 1331) without reference to the petition seeking removal, the District Court concluded that removal was not called for and remanded. However, in footnote 3, the District Court reserved its ruling on the merits of the defendant's contention that the plaintiffs' claims were within the exclusive jurisdiction of the federal courts, ¹ and, as a result, the defendant was free to raise this question in Common Pleas Court. It did so.

In an opinion and order dated August 4, 1986, Common Pleas Court dismissed the defendant's preliminary objections in regard to subject matter jurisdiction, but it granted the defendant's demurrer to count II of the plaintiffs' complaint, in that insufficient assertions had been made as to the maintenance of a hydro-electric dam being a dangerous instrumentality. Twenty days were afforded to amend the complaint.

On the question of class description, the defendant's objections thereto were dismissed without prejudice. Thereafter, a "Petition To Amend Order To Certify Controlling Question Of Law And To Stay Proceedings Pending Appeal" was filed by counsel for the defendant. The Petition was granted by order dated August 18, 1986, and, with Superior Court subsequently granting permission to appeal, the matter is presently before us for resolution.

The first issue we need to deal with relates to whether the plaintiffs' cause of action, grounded upon principles of negligence and the construction, maintenance or operation of an allegedly dangerous instrumentality by the appellant, is subject to exclusive federal jurisdiction pursuant to Sections 10(c) and 317 of the Federal Power Act (16 U.S.C. §§ 803(c) and 825p), and, therefore, is more appropriately subject to review in federal District Court and not Common Pleas Court.

"[T]he question whether a certain state action is pre-empted by federal law is one of congressional intent. ' "The purpose of Congress is the ultimate touch-stone." ' "

Pilot Life Insurance Co. v. Dedeaux, --- U.S. ----, ----, 107 S.Ct. 1549, 1551, 95 L.Ed.2d 39 (1987) (Citations omitted).

In making our determination of Congress' intent with regard to the Federal Power Act, we look first to the instructive case of Pan American Petroleum Corp. v. Superior Court of Delaware, 366 U.S. 656, 81 S.Ct. 1303, 6 L.Ed.2d 584 (1961).

In Pan American, the petitioners sought to prohibit by writ the Superior Court of Delaware from adjudicating a contractual dispute involving the sale of natural gas by the petitioners to Cities Service.

It was the contention of the petitioners that the Natural Gas Act (15 U.S.C. § 717 et seq.) deprived the state court of jurisdiction over the subject matter in dispute, i.e., a contract.

The contract provided that gas produced by the petitioners from a particular field located in Kansas would be purchased by Cities Service at a fixed price. Thereafter, the Corporation Commission of the State of Kansas fixed a minimum price for the gas removed from the particular field which required Cities Service to pay petitioners a higher rate than set forth in the contract.

Cities Service sued in the Kansas courts to obtain judicial review. Pending resolution of the suit, Cities Service advised the petitioners in a letter that payment of the required fixed (higher) price was being made to avoid any penalties flowing from the Kansas statutes for a violation thereof.

Although the validity of the minimum-rate order by the Kansas Commission was upheld by the State Supreme Court, the United States Supreme Court reversed. As a result, complaints were filed in the Delaware Superior Court by Cities Service seeking recoupment of the overcharges paid to the petitioners under the invalidated Kansas minimum-rate order. The petitioners' request for summary judgment was denied, and what followed was an assault on the jurisdiction of the Superior Court to entertain Cities Service's cause of action in contract. The Delaware Supreme Court sustained the jurisdiction of the Superior Court.

On certiorari to the United States Supreme Court, the actions of the courts below were affirmed despite a provision (§ 22) providing for exclusivity of jurisdiction in the federal courts as to the Natural Gas Act. ² In fact, despite this seeming preemption of the field by the federal courts as to the Natural Gas Act, the United States Supreme Court cogently stated:

... questions of exclusive federal jurisdiction and ouster of jurisdiction of state courts are, under existing jurisdictional legislation, not determined by ultimate substantive issues of federal law. The answers depend on the particular claims a suitor makes in a state court--on how he casts his action. Since "the party who brings a suit is master to decide what law he will rely upon," The Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716, the complaints in the Delaware Superior Court determine the nature of the suits before it. Their operative paragraphs demand recovery on alleged contracts to refund overpayments in the event of a judicial finding that the Kansas minimum-rate order was invalid, or for restitution of the overpayments by which petitioners have allegedly been unjustly enriched under the compulsion of the invalid Kansas order. No right is asserted under the Natural Gas Act.

The suits are thus based upon claims of right arising under state, not federal, law. It is settled doctrine that a case is not cognizable in a federal trial court, in the absence of diversity of citizenship, unless it appears from the face of the complaint that determination of the suit depends upon a question of federal law. See, e.g., Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672, 70 S.Ct. 876, 879, 94 L.Ed. 1194, and cases cited. Apart from diversity jurisdiction, "a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiff's cause of action. * * * and the controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal. * * * " Gully v. First National Bank, 299 U.S. 109, 112-113, 57 S.Ct. 96, 97, 81 L.Ed. 70.

For this requirement it is no substitute that the defendant is almost certain to raise a federal defense. See Skelly Oil Co. v. Phillips Petroleum, supra; Gully v. First National Bank, supra, and authorities cited in those cases. Equally immaterial is it that the plaintiff could have elected to proceed on a federal ground. Henry v. A.B. Dick Co., 224 U.S. 1, 14-17, 32 S.Ct. 364, 366-367, 56 L.Ed. 645. If the plaintiff decides not to invoke a federal right, his claim belongs in a state court.

The rights as asserted by Cities Service are traditional common-law claims. They do not lose their character because it is common knowledge that there exists a scheme of federal regulation of interstate transmission of natural gas. What was said in Gully v. First National Bank, 299 U.S. at page 116, 57 S.Ct. at page 99, is apposite:

"We recur to the test announced in Puerto Rico v. Russell & Co. [288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903], supra: 'The federal nature of the right to be...