Farkas v. Bridgestone/Firestone, Inc.

• Decision Date: 22 September 2000
• Docket Number: No. Civ.A.3:00CV-00502H.,Civ.A.3:00CV-00502H.
• Parties: Julianne FARKAS, et al., Plaintiffs, v. BRIDGESTONE/FIRESTONE, INC., Defendant.
• Court: U.S. District Court — Western District of Kentucky

113 F.Supp.2d 1107

Julianne FARKAS, et al., Plaintiffs, v. BRIDGESTONE/FIRESTONE, INC., Defendant.

No. Civ.A.3:00CV-00502H.

United States District Court, W.D. Kentucky at Louisville.

September 22, 2000.

COPYRIGHT MATERIAL OMITTED

Ann B. Oldfather, Lea A. Player, Oldfather & Morris, Louisville, KY, Timothy D. Lange, Benson, Byrne & Risch, LLP, Louisville, KY, David Coorssen, Louisville, KY, Cyrus Mehri, Michael Kanovitz, Gouri N. Bhat, Mehri, Malkin & Ross, PLLC, Washington, DC, Scott Johnson, Jonathan Shub, Sheller, Ludwig & Badey, P.C., Philadelphia, PA, for plaintiffs.

Charles M. Pritchett, Jr., William T. Donnell, William Edward Skees, Brown, Todd & Heyburn, Louisville, KY, Edward J. Sebold, Hugh R. Whiting, Mark Herrmann, Jones, Day, Reavis & Pogue, Cleveland, OH, for defendants.

[New York State Consumer Protection Board], Paul A. Casi, II, Hoffman & Casi, Louisville, KY, Christopher J. Hanifin, New York State Consumer Protection Board, Albany, NY, for amicus.

MEMORANDUM OPINION

HEYBURN, District Judge.

Plaintiffs Julianne Farkas and Nicole Pang filed suit in state court asking for injunctive relief requiring Firestone to reimburse Plaintiffs and all others similarly situated for the cost of replacing defective tires. After Firestone removed this case to federal court, Plaintiffs now seek remand to state court arguing that this Court lacks subject matter jurisdiction. The motion presents complex issues of federal subject matter jurisdiction upon which case law is unsettled. After carefully considering the parties' pleadings and thoroughly discussing the issues in a conference with counsel, the Court concludes that it lacks jurisdiction and remands to the Jefferson County Circuit Court.

I.

The facts pertinent to this issue appear undisputed. On August 9, 2000 Bridgestone/Firestone, Inc. ("Firestone") initiated a recall of approximately 6.5 million tires (the "Subject Tires") which it considered defective or potentially defective. Due to insufficient inventory on hand to replace all the recalled tires, Firestone gave tire owners the option of purchasing replacements from competitors and receiving reimbursement up to one hundred dollars per tire. Firestone announced the actual terms of this recall/reimbursement program on August 16, 2000. Oddly, this initial announcement required consumers to apply for reimbursement by August 17, 2000.

Meanwhile, after the August 16 announcement terminating the reimbursement program on August 17, but before the August 17 announcement continuing the program indefinitely, plaintiffs Julianne Farkas and Nicole Pang filed a class action suit in Jefferson Circuit Court. Late on the evening of August 16, Plaintiffs obtained a Temporary Restraining Order preventing Firestone from discontinuing reimbursing customers who replaced their subject tires with competitor's tires. Sometime on August 17, 2000 Firestone announced that it would continue the reimbursement program indefinitely.¹

The complaint alleged four causes of action: violation of Kentucky's consumer protection laws, breach of contract, recklessness, and negligence. The Plaintiffs sought an injunction preventing Firestone from terminating the reimbursement program and a declaration that Firestone is financially responsible for replacing the Subject Tires. On August 21, 2000 Firestone removed the case to the Western District of Kentucky.

Unlike state courts of general jurisdiction, federal courts have limited jurisdiction and may not hear a case absent constitutional and statutory authority. See Erwin Chemerinsky, FEDERAL JURISDICTION 258 (3d. ed., 1999). "If at any time before final judgement it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c) (2000) (emphasis added). Here Firestone asserts two grounds for jurisdiction: federal question jurisdiction and diversity jurisdiction. The Court will discuss each in turn.

II.

District courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. A case "arises under" the laws of the United States if a federal question is presented on the face of a well pleaded complaint. See Louisville and Nashville Railroad v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). This "well pleaded complaint" rule holds that even though a federal question will arise as a defense to plaintiffs claims, that alone is insufficient for federal question jurisdiction. See Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (quoting Louisville and Nashville Railroad, 211 U.S. at 152, 29 S.Ct. 42). This rule applies to the defense of pre-emption: "since 1887 it has been settled law that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption." Franchise Tax Board, 463 U.S. at 14, 103 S.Ct. 2841.

Even if Defendants rely on pre-emption as a defense to Plaintiffs' state law claims, those claims are not considered to "arise under" federal law for the purposes of asserting federal question jurisdiction. See Louisville and Nashville Railroad, 211 U.S. at 149, 29 S.Ct. 42. However, the Supreme Court has recognized an exception to this rule where "Congress may so completely pre-empt a particular area that any civil complaint raising this select group of claims is necessarily federal in character." Metropolitan Life Insurance v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).

Complete pre-emption in a jurisdictional context is different from, and narrower than, ordinary pre-emption raised as a defense to a state law claim. In Taylor the Supreme Court considered the difference between the two in the context of the Employee Retirement Income Security Act ("ERISA"). The Court explained that the particular ERISA section at issue, section 502(a), was different than the general ERISA pre-emption at issue in Franchise Tax Board. Taylor, 481 U.S. at 64-65, 107 S.Ct. 1542.² Concurring with Franchise Tax Board that "pre-emption, without more, does not convert a state claim into an action arising under federal law," the Supreme Court in Taylor found that Section 502(f) of ERISA so clearly manifested a Congressional intent to pre-empt state law as to recharacterize an action arising under state law into one arising under federal law. See Taylor, 481 U.S. at 64, 107 S.Ct. 1542.

To apply the complete pre-emption doctrine, therefore, the Court must find that Congress intended to completely pre-empt state law causes of action. See id. at 66, 107 S.Ct. 1542 (holding "the touchstone of the federal district court's removal jurisdiction is not the obviousness of the pre-emption defense but the intent of Congress"). To date, the Supreme Court has recognized complete pre-emption in just three areas: labor relations, ERISA, and tribal claims. See 14C Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, FEDERAL PRACTICE AND PROCEDURE § 3772.1 (1998). While a number of district and appellate courts have considered complete pre-emption in various statutory contexts, see id. at n. 26, 107 S.Ct. 1542 (listing decisions considering various statutes), the Court has yet to articulate a clear test. See id. at n. 37, 107 S.Ct. 1542 (describing several different formulations of a "test" for complete pre-emption). The statute at issue here is the Motor Vehicle Safety Act ("MVSA"), 49 U.S.C. § 30101 (2000), which delegates to the National Highway Traffic Safety Agency ("NHTSA") the authority to monitor and correct defects in cars and car equipment.

Without deciding whether NHTSA's recall authority pre-empts Plaintiffs' state law causes of action, it seems clear that Congress did not intend for the MVSA to completely pre-empt state law to the extraordinary degree required by Taylor. See 481 U.S. at 66, 107 S.Ct. 1542 (stating that "an obvious pre-emption defense does not, in most cases, create removal jurisdiction" and finding complete pre-emption where Congress "clearly manifest[s]" an intent to remove causes of action from state court).³ Section 30103(d) of the MVSA states that the remedies provided by NHTSA's recall authority are in addition to "other rights and remedies under other laws of the United States or a State." 49 U.S.C. § 30103(d) (2000).

Defendants see a distinction between "defects" and "safety standards," and argue that the savings clause in 49 U.S.C. § 30103(a)-(e) does not apply to "`defect'-based recalls." The Court does not agree that the statutory language supports this distinction. The savings clause in section 30103(d) explicitly applies to sections 30118-30121. Section 30120(b), which covers tire remedies, applies to "a defective or noncomplying tire" (emphasis added). Therefore, it seems logical that the savings clause applies to both safety standards and tire defects as well. Regardless of how one parses the statute, at most it establishes an affirmative defense against Plaintiffs' claims. It does not establish a "clearly manifest[ed]" Congressional intent to convert all state law causes of action relating to motor vehicle defects removable to federal court in the manner relied upon in Taylor, 107 S.Ct. 1542. See 481 U.S. at 66, 107 S.Ct. 1542. Our circumstance is more similar to the Franchise Tax Board case where pre-emption was a likely defense to a state law cause of action.

Indeed, the Court could analyze any number of factual issues, such as: whether NHTSA has authority over reimbursements or whether Firestone has triggered such authority by initiating a recall program which includes reimbursement; whether a NHTSA recall is underway and, if so, what obligation has Firestone to continue it; and whether Kentucky consumer protection laws could conflict with or hinder the recall. These are questions that a state court must answer when considering the necessity and appropriateness of injunctive relief which...