Gentek Bldg Products v. Steel Peel Litigation

• Decision Date: 20 June 2007
• Docket Number: No. 06-3964.,06-3964.
• Citation: 491 F.3d 320
• Parties: GENTEK BUILDING PRODUCTS, INC., Plaintiff-Appellant, STEEL PEEL LITIGATION TRUST, formerly known as Sherwin-Williams Claims Trust, Plaintiff, v. The Sherwin-Williams Company, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

491 F.3d 320

GENTEK BUILDING PRODUCTS, INC., Plaintiff-Appellant STEEL PEEL LITIGATION TRUST, formerly known as Sherwin-Williams Claims Trust, Plaintiff, v. The Sherwin-Williams Company, Defendant-Appellee.

No. 06-3964.

United States Court of Appeals, Sixth Circuit.

Argued: April 25, 2007.

Decided and Filed: June 20, 2007.

ARGUED:

Tracy S. Johnson, Calfee, Halter & Griswold, Cleveland, Ohio, for Appellant. Robert H. Eddy, III, Gallagher, Sharp, Fulton & Norman, Cleveland, Ohio, for Appellee.

ON BRIEF:

Tracy S. Johnson, John J. Eklund, Calfee, Halter & Griswold, Cleveland, Ohio, for Appellant. Robert H. Eddy, III, Timothy John Fitzgerald, Richard C.O. Rezie, Gallagher, Sharp, Fulton & Norman, Cleveland, Ohio, for Appellee.

Before: GUY, COLE, and McKEAGUE, Circuit Judges.

OPINION

R. GUY COLE, JR., Circuit Judge.

Plaintiff-Appellant Gentek Building Products Inc. appeals a district court's grant of summary judgment in favor of Defendant-Appellee Sherwin-Williams Company. Gentek originally sued Sherwin-Williams in state court, alleging that Sherwin-Williams provided Gentek with a defective coating material for steel and aluminum siding that Gentek manufactures. Sherwin-Williams removed the suit to federal court, contending that Gentek's claims fell within the ambit of the Magnuson-Moss Act, 15 U.S.C. § 2301(1), which provides remedies for certain warranty claims involving what it defines as "consumer products." As the case proceeded to summary judgment, Sherwin-Williams stated that the coatings at issue were not "consumer products," and the district court ultimately granted Sherwin-Williams summary judgment on Gentek's claims. Additionally, the court granted Sherwin-Williams summary judgment on its counterclaim for amounts owed for the coatings it provided. Gentek contends that the district court lacked subject-matter jurisdiction because the only basis for jurisdiction was Sherwin-Williams's allegedly false statement in its notice of removal that the suit involved a "consumer product." Alternatively, Gentek contends that the district court erred in calculating prejudgment interest awarded to Sherman-Williams on its counterclaim. We AFFIRM the district court's judgment.

I. BACKGROUND

Gentek is a commercial manufacturer of steel and aluminum siding. Sherwin-Williams is a commercial manufacturer of paints and coating products. For some years, Gentek and its predecessors purchased certain coatings from Sherwin-Williams and applied them to steel and aluminum in the fabrication of its siding. Some of these coatings allegedly failed (by cracking, chipping, or peeling), subjecting Gentek to customer complaints and warranty claims. Gentek filed suit against Sherwin-Williams in Ohio state court, raising various claims, including breach of warranty, related to the allegedly failed coatings.

Sherwin-Williams removed the suit to federal court, contending that the Magnuson-Moss Warranty—Federal Trade Commission Improvement Act, 15 U.S.C. §§ 2301-12, provided federal jurisdiction. The Magnuson-Moss Act provides a federal remedy for certain warranty breaches related to what it defines as "consumer products." 15 U.S.C. § 2301(1). In its notice of removal, Sherwin-Williams stated that the coating at issue is a "consumer product" and that the Magnuson-Moss Act applied. Gentek did not challenge the removal. Gentek then amended its complaint to state expressly, in addition to the state-law claims, a claim under the Magnuson-Moss Act. Sherwin-Williams then counterclaimed for Gentek's alleged failure to pay for the disputed coatings.

The case proceeded to the summary-judgment stage. Sherwin-Williams first moved for partial summary judgment on Gentek's state-law claims and on Sherwin-Williams's counterclaim. The district court granted these motions, awarding $158,589.33 in prejudgment interest to Sherwin-Williams on its counterclaim for the $867,509.95 that Gentek failed to pay for the coating.

Sherwin-Williams then moved for summary judgment on the Magnuson-Moss-Act claim. Sherwin-Williams argued, among other things, that the district court's earlier rejection of Gentek's state warranty claims required rejection of Gentek's Magnuson-Moss-Act claims. Alternatively, Sherwin-Williams contended that Gentek failed to meet Magnuson-Moss requirements. For example, Sherwin-Williams stated (contrary to its earlier statement in its notice of removal) that the coating "is not a `consumer product' as defined by Magnuson-Moss." (Joint Appendix ("JA") 146.) In response, Gentek argued that, because removal to federal court was based on Sherwin-Williams's earlier statement that the coating was a "consumer product," this new statement showed that removal was improper and that the district court lacked subject-matter jurisdiction (i.e., there was no Magnuson-Moss claim).

The district court granted Sherwin-Williams summary judgment, noting that its earlier ruling rejecting Gentek's state-law warranty claims also defeated Gentek's Magnuson-Moss claim. Further, the court rejected Gentek's argument regarding jurisdiction, explaining that subject-matter jurisdiction existed under Magnuson-Moss based on Gentek's amended complaint. The court explained that, although "Sherwin-Williams determined, after discovery, that the Act does not apply to this action," that determination "does not serve to divest [the court] of jurisdiction." (JA 178.)

Gentek appealed. Sherwin-Williams contended that Gentek is not the real party in interest and that this Court therefore lacks jurisdiction over the appeal. In December 2006, this Court rejected that argument, concluding that Gentek has standing. Gentek Bldg. Prods. Inc. v. Sherwin-Williams Co., No. 06-3964, slip op. at 2 (6th Cir. Dec. 7, 2006) (order).

II. DISCUSSION

A. Subject-Matter Jurisdiction

Gentek contends that the district court lacked subject-matter jurisdiction. This Court reviews de novo a district court's exercise of subject-matter jurisdiction. Green v. Ameritech Corp., 200 F.3d 967, 972 (6th Cir.2000). To assess Gentek's contention, we begin with first principles of removal jurisdiction.

Defendants sued in state court generally may remove the suit to federal district court if the district court has original jurisdiction over the suit. 28 U.S.C. § 1441(a) ("Except as expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending."). Thus, state-court lawsuits involving federal questions are removable: "Any civil action of which the district courts have original jurisdiction found on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties." 28 U.S.C. § 1441(b).

To determine whether a claim arises under federal law, a court, under the well-pleaded-complaint rule, generally looks only to the plaintiff's complaint. Palkow v. CSX Transp., Inc., 431 F.3d 543, 552 (6th Cir.2005) (citing Gully v. First Nat'l Bank, 299 U.S. 109, 57 S.Ct. 96, 81 L.Ed. 70 (1936) and Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908)). If the complaint relies only on state law, the district court generally lacks subject-matter jurisdiction, and the action is not removable. Id. This makes the plaintiff the master of the complaint; the plaintiff may simply avoid federal jurisdiction by relying exclusively on state law. Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987).

The Supreme Court has developed a limited exception to the well-pleaded-complaint rule: the complete-preemption doctrine. Palkow, 431 F.3d at 552. If Congress intends that a federal statute should completely preempt an area of state law, any complaint alleging claims under that area of state law is presumed to allege a claim arising under federal law. Id. (citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63-64, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987)). The complaint may thus be removed to federal court and will be treated as alleging a federal cause of action, notwithstanding that, on its face, the plaintiff's complaint alleges only a state-law cause of action. Id.

But the complete-preemption doctrine is a limited exception to the well-pleaded-complaint rule. Id. at 553. The Supreme Court has "demonstrated a reluctance to extend application of the doctrine, largely limiting its finding of complete preemption to a handful of federal statutes," the most widely recognized of these being the Labor Management Relations Act, 29 U.S.C. § 185(a) (LMRA) and the Employee Retirement Income Security Act, 29 U.S.C. § 1144(a) (ERISA). Id. (citations omitted). As will be discussed below, the Magnuson-Moss Act does not completely preempt state law.

If a plaintiff believes that removal is improper because the complaint does not arise under federal law, the plaintiff may challenge removal, including by moving to remand the matter to state court. Yet the plaintiff may waive the right to bring this challenge if the jurisdictional defect is ultimately cured. A series of frequently cited decisions illustrate the contours of the law in this area.

In Brough v. United Steelworkers of America, 437 F.2d 748, 749 (1 st Cir.1971), the plaintiff employee brought state-law negligence claims in state court against the defendant, who removed the action to federal court, claiming that the duty it owed to the plaintiff was derived from federal law. The court denied the plaintiff's motion to remand to state court. Id. The plaintiff amended his complaint to add a federal claim, and the court later granted the defendant's motion for summary judgment. Id. at 749, 750. The First Circuit held that, although federal jurisdiction did not...