In re Conoco Edc Litigation
| Decision Date | 16 November 2000 |
| Docket Number | No. 00-001.,00-001. |
| Citation | 123 F.Supp.2d 340 |
| Parties | In re CONOCO EDC LITIGATION |
| Court | U.S. District Court — Western District of Louisiana |
Joseph Jerome McKernan, Baton Rouge, LA, for Plaintiffs.
John A. Jeansonne, Jr., Jeansonne & Remondet, Lafayette, LA, for Defendants, Conoco EDC Litigation, movants.
THIS DOCUMENT RELATES TO ALL CASES
Presently before the court is the Magistrate Judge's Report and Recommendation [doc 115] on the Plaintiffs' motions to remand [docs 3, 5-54, 56-57, 61, 63, 66-78, 90] the above-captioned consolidated cases (the "Conoco EDC cases") to Louisiana state court. Defendants Conoco, Inc. et al ("Conoco") oppose these motions in joint memoranda [doc 93, 95, 105, 106] on grounds that the United Nations' Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter "the Convention," and, as ratified and its aims promulgated under the Convention Act of 1970, hereinafter, "the Convention Act"),1 controls removal in cases where there are related foreign arbitration agreements. Conoco premises its contention on the third-party claims made by Defendant Condea Vista against Conoco's insurers, some of which are foreign entities. Plaintiffs have replied to the Defendants' memoranda in a single document [doc 109], and all parties have been given ample opportunity to file additional and answering memoranda, and have done so.
Because we find that the insurance policies written by Conoco's insurers are not the foreign arbitral agreements contemplated to be adjudicated in federal courts by the removal requirements of 9 U.S.C. § 205, as those third-party contracts containing arbitration clauses are only a tangential focus of the Conoco EDC cases and are not the subject of or related to the Plaintiffs' claims, we conclude that this court does not have subject matter jurisdiction over the consolidated cases. Therefore, we find that the Plaintiffs' motions to remand the Conoco EDC cases to state court should be granted.
This lawsuit stems from the joined claims of hundreds of unskilled laborers and others who contend that they were overexposed to ethylene dichloride (EDC) as a result of attempts to clean up and remediate the spill of EDC from a leaking underground pipeline which carried the chemical inland from barges at Defendant Conoco's docks in Westlake, Louisiana, to Conoco's Condea Vista facility.
Most of the lawsuits which presently constitute the Conoco EDC cases were filed in the Fourteenth Judicial District Court for the State of Louisiana in 1999. The Plaintiffs named Conoco, Inc. in the state civil actions, as well as other Defendants in many of the cases, including Condea Vista. Conoco then impleaded Condea Vista, thereby making it a party to all the lawsuits. Condea Vista filed a cross-claim against Conoco, together with a third party demand against four of Conoco's insurers.
Three of Conoco's four insurers were foreign entities, and on the day they were named third-party Defendants, two of the foreign entities — Danube Insurance, Ltd. and XL Insurance Company (the "Foreign Insurers") — removed the consolidated cases to federal court. Their notice of removal claimed that as the liability insurance policies issued to Conoco require arbitration in London for all coverage disputes, the state court actions to which they have been made parties were properly removable to federal court under § 205 of the Convention Act.
Plaintiffs object to removal on grounds that § 205 does not apply to their state law claims, as they are not parties to the arbitration agreements contained in the insurance policies between Conoco and its Foreign Insurers, and pray for remand of these cases to state court, or, in the alternative, for the state court claims to be severed and remanded to state court, in case this court finds removal was proper.
The analysis of this provision of the Convention Act, which affords removal where an action relates to an arbitration agreement, is clearly stated in the Magistrate Judge's Report and Recommendation, and we need reiterate only the bare bones of that determination:
To effect removal under § 205 of the Convention Act, it must be established that the Conoco EDC cases "relate to" an arbitration agreement. The Foreign Insurers removing this consolidated action claim that the phrase "relates to" must be interpreted broadly to allow removal where the legal action has the potential to affect arbitration agreements or awards, such as the arbitration agreements contained in their insurance policies with Conoco. The Foreign Insurers argue that "relates to" is intended to be "highly general," and means "to stand in some relation, to have bearing or concern, to pertain, refer, to bring into association with or connection with ...."2 While this definition may suffice as the standard for determining a relationship between a claimant and a defendant, where the subject matter of the claim can fairly be said to relate to both the claimant and the defendant, absent privity between the claimant and a third party defendant, this definition of relate refers to a connection3 that is far too tenuous, remote, and peripheral to create a right of removal in the third party defendant. See, e.g., Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 100 at n. 21, 103 S.Ct. 2890, 77 L.Ed.2d 490 (1983). In the instant case, the nexus between the arbitration clauses in the insurance agreements between Conoco and its Foreign Insurers and the state cause of action brought by the Plaintiffs in the Conoco EDC cases is insufficient to trigger § 205 removal.
The Defendants argue further that they should be allowed to remove to federal court in order to effect the purposes of the Convention Act, which "insure[s] that there would be a uniform federal common law regarding international arbitral obligations." Acosta v. Master Maintenance & Construction, Inc., 52 F.Supp.2d 699, 703-704 (1999) (citing McDermott International v. Lloyds Underwriters of London, citation omitted). Acosta contends that:
Acosta also quotes the McDermott decision, noting that the Convention Act has been construed as a liberal removal provision. (Acosta, at 703-704.) However, in its extended analysis of the Convention and the Convention Act, the McDermott court notes that:
McDermott International v. Lloyds Underwriters of London, 944 F.2d 1199 (5th Cir. 1991), rehearing and rehearing en banc denied, 947 F.2d 1489 (5th Cir.1991).
While the courts in Acosta and McDermott recognize that the Convention Act is intended to create predictability for foreign entities in their business dealings with American companies, the decisions also refer to America's purpose for signing on to the Convention through the Act: Congress enacted the Convention Act in order to bring American courts in line with those of other Convention signatories, in order to secure for Americans the right to pursue arbitral awards due them from foreign entities and in foreign domains, as mutuality is required to secure rights under the Convention. Neither the Convention nor the Convention Act suggests that we guaranty a federal forum to any and all foreign entities, nor that we create predictability for foreign entities at a disproportionate expense to Americans. The Convention Act does not encourage absolute and systematic defeat of state court jurisdiction by the incidental impleading of foreign parties, nor does it prevent the adjudication in state courts of claims tangentially touching on foreign parties, by allowing removal to federal court for every third-party agreement containing an arbitration clause. If we were to read such overbreadth into the ...
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Reid v. Doe Run Res. Corp.
...ruling will not have preclusive effect and is only a tangential focus of this case. Their only support is In re Conoco EDC Litigation, 123 F.Supp.2d 340, 341–42 (W.D.La.2000), a district court case decided before Beiser and Infuturia (and is probably superceded by Beiser). At any rate, no c......