Hendricks v. Dynegy Power Marketing, Inc.
| Decision Date | 31 July 2001 |
| Docket Number | No. C-01-178-RHW.,No. 01-CV-387-RHW.,No. 00-CV-2525-RHW.,No. C-01-838-RHW.,No. 00-CV-2524-RHW.,00-CV-2524-RHW.,00-CV-2525-RHW.,01-CV-387-RHW.,C-01-838-RHW.,C-01-178-RHW. |
| Citation | 160 F.Supp.2d 1155 |
| Court | U.S. District Court — Southern District of California |
| Parties | Ruth HENDRICKS, Plaintiff, v. DYNEGY POWER MARKETING, INC., et al., Defendants. Pamela R. Gordon, Plaintiff, v. Reliant Energy, Inc., et al., Defendants. Sweetwater Authority, et al., Plaintiffs, v. Dynegy, Inc., et al., Defendants. Pier 23 Restaurant, et al., Plaintiffs, v. PG & E Energy Trading, et al., Defendants. State of California, Plaintiff, v. Dynegy Power Marketing, Inc., et al., Defendants. |
Before the Court are motions to remand brought by Plaintiffs in each of the above-captioned cases: Ct. Rec. ___ in S.D. Cal. No. 00-CV-2524-RHW; Ct. Rec. ___ in S.D. Cal. No. 00-CV-2525-RHW; Ct. Rec. ___ in S.D. Cal. No. 01-CV-387-RHW; Ct. Rec. ___ in N.D. Cal. No. C-01-838-RHW; and Ct. Rec. ___ in N.D. Cal. No. C-01-178-RHW. Oral argument was heard on these motions on June 27, 2001. Attorney appearances are noted in the official minutes. For the reasons below, the motions are granted and these matters are remanded to the state courts from which they were removed.
Plaintiffs in each case allege that Defendants engaged in anticompetitive conduct while participating in California's energy market, thereby artificially and illegally inflating the wholesale and retail prices of electricity in that state. Plaintiffs originally filed suit in state court, alleging that Defendants' conduct violated California's Cartwright Act and other sections of the California Business and Professions Code prohibiting unfair or unlawful business practices. Various Defendants then removed the actions to federal court in their respective districts, arguing, inter alia, that the artful pleading doctrine requires recasting of Plaintiffs' claims in federal terms under the Federal Power Act. The cases were subsequently transferred to this Court by the Judicial Panel on Multi-district Litigation. Plaintiffs now move to remand.
It is clear that Congress intended, in the Federal Power Act, to vest in the federal government a central and controlling role in the regulation of energy production, marketing, and distribution. However, it is equally clear that the jurisdiction of federal courts is limited, and may not be expanded by judicial decree or in the absence of a federal question or issue. On its face, Plaintiffs' complaint alleges only violations of state law. The Court concludes that Congress did not intend for the federal government to entirely occupy the field with the Federal Power Act, thereby completely preempting Plaintiffs' state law claims and converting them into federal questions. Further, although Plaintiffs' claims might conceivably be cast in federal terms, a plaintiff is the master of his or her own claims; the Court need not recast Plaintiffs' state causes of action into federal causes because Plaintiffs' claims can all be resolved with reference to or resolution of substantial federal questions or issues. Accordingly, the Court concludes that it lacks jurisdiction and remands these matters to the originating state courts.
The Court begins with several propositions regarding removal jurisdiction. Foremost among these is the following:
Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree. It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.
Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (citations omitted). It logically follows that removal jurisdiction is extremely limited. Accordingly, the removal statute, 28 U.S.C. § 1441, is strictly construed against removal, see Clinton v. Acequia, Inc., 94 F.3d 568, 573 (9th Cir.1996), citing Sullivan v. First Affiliated Sec., Inc., 813 F.2d 1368, 1372 (9th Cir.1987), and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992), citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). Furthermore, "a defendant may remove a case only if the claim could have been brought in federal court." Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986).
Ordinarily, "[t]he presence or absence of federal-question jurisdiction is governed by the `well-pleaded complaint rule,' which provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). This rule is based upon three key jurisdictional principles: "that the plaintiff is the master of the complaint, that a federal question must appear on the face of the complaint, and that the plaintiff may, by eschewing claims based on federal law, choose to have the cause heard in state court." Caterpillar, Inc., 482 U.S. at 398-99, 107 S.Ct. 2425. The well-pleaded complaint rule also bars federal courts from asserting jurisdiction based on the existence of a federal defense, even if the defense is anticipated by the complaint, because a defense is not part of a plaintiff's properly-pleaded statement of his or her claim. See Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998); Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).
However, "a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint." Franchise Tax Bd. of California v. Construction Laborers Vacation Trust for S. California, 463 U.S. 1, 22, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). A federal court may exercise removal jurisdiction under the "artful pleading" doctrine, even if a federal question does not appear on the face of a well-pleaded complaint, in three circumstances. First, a state law claim may be removed "in the rare instances where Congress has chosen to regulate the entire field." ARCO Envtl. Remediation, L.L.C. v. Department of Health & Envtl. Quality of Montana, 213 F.3d 1108 1114 (9th Cir.2000). See also Metropolitan Life, 481 U.S. at 63-64, 107 S.Ct. 1542 ( ) Second, a state law claim may be recharacterized as federal and, accordingly, removed where the claim is necessarily federal in character. ARCO Envtl. Remediation, 213 F.3d at 1114. Third, a state law claim also may be recharacterized as federal and removed where the right to relief depends on the resolution of a substantial, disputed federal question. Id. As might be surmised from the narrowness of removal jurisdiction and the longstanding recognition that a plaintiff is the master of his or her complaint,
[t]he "artful pleading" doctrine is a narrow exception to the straightforward rules of removal jurisdiction, which we will apply only if "the particular conduct complained of [is] governed exclusively by federal law." Further, we will invoke the doctrine "only in exceptional circumstances as it raises difficult issues of state and federal relationships and often yields unsatisfactory results."
Sullivan, 813 F.2d at 1372 (citations omitted).
The Court turns to the instant matter with these principles in mind.
When federal law entirely occupies a particular field, that occupation "converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Metropolitan Life Ins. Co., 481 U.S. at 65, 107 S.Ct. 1542. Stated differently, removal jurisdiction exists when a plaintiff's state law claims arise out of events or circumstances within a field entirely occupied by federal law. Such preemption is extremely rare; the Supreme Court has recognized complete preemption only with respect to the Labor Management Relations Act, see Caterpillar, Inc., 482 U.S. at 393-94, 107 S.Ct. 2425, and the Employee Retirement Income Security Act of 1974, see Metropolitan Life, 481 U.S. at 65-66, 107 S.Ct. 1542. Defendants ask this Court to recognize a third area of complete preemption under the Federal Power Act. The Court declines to do so.
The Ninth Circuit distinguishes between complete preemption, in which federal occupation of the field necessarily converts all state law claims into federal claims, and conflict preemption, in which federal preemption may be a defense to plaintiff's state law claims but may not be an independent basis for federal removal. See ARCO Envtl. Remediation, 213 F.3d at 1114. The distinguishing factor between these two preemption doctrines is the existence of federal jurisdiction in the first instance. If Congress preempts state law claims and provides a federal cause of action1, then original federal jurisdiction may properly be said to exist. However, if Congress preempts state law claims but does not provide a federal cause of action, then Plaintiffs' complaint could not have been brought in federal court and removal jurisdiction will not lie. As the Ninth Circuit explained shortly after the Supreme Court's decision in Caterpillar, Inc.:
Even when federal law preempts state law, a state law claim may not be...
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