In re Fraser

• Decision Date: 05 November 1999
• Docket Number: No. 598CV45.,598CV45.
• Citation: 75 F.Supp.2d 572
• Parties: In re Senator Troy FRASER, Senator Kenneth Armbrister, Senator Jane Nelson, Representative Tom Craddick, Representative Dianne White Delisi, Representative Kyle Janek and Representative Dan Kubiak, Relators.
• Court: U.S. District Court — Eastern District of Texas

75 F.Supp.2d 572

In re Senator Troy FRASER, Senator Kenneth Armbrister, Senator Jane Nelson, Representative Tom Craddick, Representative Dianne White Delisi, Representative Kyle Janek and Representative Dan Kubiak, Relators.

No. 598CV45.

United States District Court, E.D. Texas, Texarkana Division.

November 5, 1999.

COPYRIGHT MATERIAL OMITTED

John J. McKetta, III, P.M. Schenkkan, Graves Dougherty Hearon & Moody, Austin, TX, for Troy Fraser, Kenneth Armbrister, Jane Nelson, Kyle Janek, Dan Kubiak, Dianne White Delisi, Tom Graddick.

William Andrew Taylor, Attorney General's Office, Austin, TX, for Atty. Gen. of TX.

David Grant Kaiser, Kaiser & Morrison PC, Houston, TX, Michael E. Tigar, Tigar Law Firm, Washington, DC, for Real Parties.

Elizabeth Saunders, Supeme Court of Texas, Austin, TX, pro se.

ORDER

FOLSOM, District Judge.

Now before the Court is Relators'¹ Motion to Remand. Members of the Texas state legislature ("Relators") seek remand of a mandamus proceeding originally filed in the Texas Supreme Court and removed to this Court pursuant to 28 U.S.C. §§ 1441 and 1651. Relators argue removal was improper because this Court lacks subject matter jurisdiction and because removal is precluded by the Eleventh Amendment. Realtors further argue that this case should be remanded because it was removed to the wrong district and, alternatively, even if removal was proper, the Court should abstain. The Court, through this order, hereby addresses Relators' subject matter jurisdiction, improper removal, and Eleventh Amendment claims. This Order does not attempt to address Relators' abstention arguments or the actual merits of the writ filed in the Texas Supreme Court.

After extensive briefing and careful review of the issues presented, the Court finds that the Court has jurisdiction over Relators' claims because it has ancillary jurisdiction to enforce the settlement agreement and because jurisdiction is proper under 28 U.S.C. § 1651, the All Writs Act. The Court also finds that the Eleventh Amendment is not a bar to the Court's jurisdiction. Therefore removal to this Court was proper. Realtors' motion is DENIED.

I History of the Case

The motion now before the Court is but one chapter in the ongoing litigation first filed in this Court on March 28, 1996, styled The State of Texas v. The American Tobacco Co., et al. ("Texas Tobacco Litigation"). Although the Court and the parties are well aware of the complex factual history of this case, it is necessary to revisit that history as it will facilitate an understanding of the Court's holding.

In 1996 the State of Texas entered into an agreement with several private attorneys ("Private Counsel")² to provide legal services the State and to the attorney general. The contract provided that Private Counsel would advance all costs and expenses of the litigation and would work under the direction of the attorney general. In return, under the terms of the contract, Private Counsel were to be compensated in the amount of fifteen percent of the monies recovered as a result of the litigation.

On March 28, 1996 the Attorney General for the State of Texas, in coordination with Private Counsel, filed its original complaint in the Federal District Court for the Eastern District of Texas³. The suit, as subsequently amended, sought recoupment of State funds spent for smoking-attributable medical costs. The State alleged seventeen causes of action against eleven defendants, including claims under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964. By the conclusion of the main case, there were 132 attorneys of record, 1,856 docket entries, and tens of thousands of pages of briefing. There were approximately 23 million documents produced, hundreds of depositions taken, 50,000 exhibits listed, and 1,500 witnesses designated. There were 472 motions filed, and twenty-one hearings over the course of nearly two years. The Court allotted 450 hours or approximately six months for the trial of this case.

In late 1997 — and on the heels of pending National Legislation that would reduce any settlement amounts received — a settlement was reached between the State of Texas and the Tobacco Industry. On January 22, 1998, this Court entered a final judgment in the Texas Tobacco Litigation approving a comprehensive settlement agreement and release. The tobacco industry agreed to pay the State of Texas $15.3 billion dollars over twenty-five years and agreed to nonmonetary restrictions on the advertising and distribution of tobacco products. The Industry further agreed to abandon their allegations that the Attorney General did not have the power to enter into a contract with Private Counsel.⁴

On January 16, 1998, Private Counsel filed a motion for approval of attorney's fees, asking the Court to determine the amount of fees that were reasonable under the circumstances. On January 22, 1998, the Court approved the fee arrangement embodied in the contract subject to the provisions of the compromise settlement agreement and release. The order issued by the Court explicitly provided for the Court's continuing exclusive jurisdiction over the provisions of the order and final judgment.

On January 30, 1998, two years after the original action was filed, Relators filed a mandamus action in the Texas Supreme Court. In their prayer for relief, Relators asked the Supreme Court of Texas to issue a writ of mandamus requiring the Attorney General to file pleadings in the Texas Tobacco litigation: (1) informing the Court that the Attorney General has no statutory or constitutional authority to bind the State to a contingent fee arrangement for legal services on behalf of the State, to bind the State to pay such fees, or to waive the State's right to oppose the fees; (2) to inform the Court that the Attorney General's position on the fee issue does not represent that of his client, the State of Texas; and (3) to request this Court to reconsider its order approving the fee award and to consider any objections filed by Relators or other interested persons. See Emergency Petition for Writ of Mandamus, No. 98-0089, (Tex.Sup.Ct. Jan. 30, 1998).

II. Subject Matter Jurisdiction and Removal

Lower federal courts are courts of limited jurisdiction. See Sheldon v. Sill, 49 U.S. (8 How.) 441, 449, 12 L.Ed. 1147 (1850). Federal courts are empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution and those cases entrusted to them by a jurisdictional grant authorized by Congress. See Charles A. Wright, Arthur R. Miller & Edward H. Cooper, 13 Federal Practice and Procedure § 3522 (2d ed.1983). Congress may give, withhold, or restrict the lower federal courts' jurisdiction at its discretion but may not grant jurisdiction in excess of the limits set by the Constitution. See Kline v. Burke Constr. Co., 260 U.S. 226, 234, 43 S.Ct. 79, 82, 67 L.Ed. 226 (1922).

Title 28 U.S.C. § 1441(a) provides that "[a]ny 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." However, a court's removal jurisdiction is not an exception to a federal court's obligation to exercise restraint when inquiring into its own jurisdiction. See University of S. Ala. v. The American Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999). The removing party bears the burden of establishing the existence of federal jurisdiction. See Allen v. R. & H. Oil &amp Gas Co., 63 F.3d 1326, 1335 (5th Cir.1995), reh'g denied, 70 F.3d 26 (5th. Cir.1995). It is with these principles in mind that we begin to ascertain this Court's jurisdiction.

A. This Court Has Continuing Jurisdiction Over the Settlement Agreement

The first issue the Court must address is whether this Court has jurisdiction over the claim filed in state court. An analysis of the settlement agreement, the final judgment, and the case law establishes that this Court has continuing jurisdiction over the settlement agreement, the final judgment, and subsequently, the state law claim.

When a federal district court reserves its power to enforce a settlement, a breach of the agreement is a violation of the order, conferring on the court ancillary jurisdiction. See Kokkonen v. Guardian Life Insur. Co. of America, 511 U.S. 375, 380, 114 S.Ct. 1673, 1677, 128 L.Ed.2d 391 (1994). In Kokkonen, the Supreme Court recognized that a district court's explicit retention of jurisdiction over a settlement agreement, or its incorporation of that agreement into its final order, satisfies any jurisdictional concerns. See id. A breach of a settlement agreement in violation of a court order provides a court with ancillary jurisdiction. See id. The exercise of ancillary jurisdiction in these situations makes sense. The district court is in the best position to interpret its own orders and related issues. See In re VMS Securities Litigation, 103 F.3d 1317, 1321-22 (7th Cir.1996); Hastert v. Illinois State Bd. of Election Comm'rs, 28 F.3d 1430, 1438 (7th Cir.1993), cert. denied, 513 U.S. 964, 115 S.Ct. 426, 130 L.Ed.2d 340 (1994). The court must also have the power to implement a settlement agreement between litigants in order to fulfill its role as supervisor of the litigation.

In its order approving the settlement agreement, the Court expressly retained jurisdiction over settlement related claims and enjoined the parties from proceeding in any other federal or state court. The Court's order provided:

It is further ordered that this Court shall have exclusive jurisdiction over the provisions of the Comprehensive Settlement Agreement and Release, this Order and the Final Judgment. All persons in privity with the parties, including all persons represented by the parties, who seek to raise any objections or...