In re Methyl Tertiary Butyl Ether (Mtbe) Products

• Decision Date: 03 November 2004
• Docket Number: No. M 21-88.,No. MDL 1358(SAS).,No. MASTER FILE 1:00-189.,MASTER FILE 1:00-189.,MDL 1358(SAS).,M 21-88.
• Citation: 364 F.Supp.2d 329
• Parties: In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION This document relates to: Orange County Water District v. Unocal Corp., et al., No. 04 Civ. 4968(SAS) City of Riverside v. Atlantic Richfield Co., et al., No. 04 Civ. 4969(SAS) Quincy Community Services District v. Atlantic Richfield Co., et al., No. 04 Civ. 4970(SAS) City of Roseville v. Atlantic Richfield Co., et al., No. 04 Civ. 4971(SAS) The People of the State of California, et al. v. Atlantic Richfield Co., et al., No. 04 Civ. 4972(SAS) City of Fresno v. Chevron USA, Inc., et al., No. 04 Civ. 4973(SAS) California-American Water Co. v. Atlantic Richfield Co., et al., No. 04 Civ. 4974(SAS) Silver, et al. v. Alon USA Energy, Inc., et al., No. 04 Civ. 4975(SAS)
• Court: U.S. District Court — Southern District of New York

Page 329

364 F.Supp.2d 329

In re: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION

This document relates to: Orange County Water District v. Unocal Corp., et al., No. 04 Civ. 4968(SAS)

City of Riverside v. Atlantic Richfield Co., et al., No. 04 Civ. 4969(SAS)

Quincy Community Services District v. Atlantic Richfield Co., et al., No. 04 Civ. 4970(SAS)

City of Roseville v. Atlantic Richfield Co., et al., No. 04 Civ. 4971(SAS)

The People of the State of California, et al. v. Atlantic Richfield Co., et al., No. 04 Civ. 4972(SAS)

City of Fresno v. Chevron USA, Inc., et al., No. 04 Civ. 4973(SAS)

California-American Water Co. v. Atlantic Richfield Co., et al., No. 04 Civ. 4974(SAS)

Silver, et al. v. Alon USA Energy, Inc., et al., No. 04 Civ. 4975(SAS)

No. MASTER FILE 1:00-189.

No. MDL 1358(SAS).

No. M 21-88.

United States District Court, S.D. New York.

November 3, 2004.

Michael Axline, Miller, Axline & Sawyer, Sacramento, CA, for Plaintiffs Orange County Water District City of Fresno.

Victor Sher, Sher Leff LLP, San Francisco, CA, for Plaintiffs Orange County Water District City of Riverside Quincy Community Services District City of Roseville California-American Water Co. Martin Silver, et al. Sacramento County Water Agency Sacramento Groundwater Authority Citrus Heights Water District Del Paso Manor Water District Fair Oaks Water District Florin Resource Conservation District Rio Linda Elverta Community Water District Sacramento Suburban Water District San Juan Water District City of Sacramento.

Jan Scully, Russ Detrick, Sacramento County Office of the District Attorney, Consumer & Environmental Protection Division, Sacramento, CA, for Plaintiff The People of the State of California.

Robert Gordon, C. Sanders McNew, Stanley N. Alpert, Weitz & Luxenberg, P.C., New York City, for Plaintiffs.

Peter John Sacripanti, James A. Pardo, Stephen J. Riccardulli, McDermott, Will & Emery, New York City, for Defendants.

OPINION AND ORDER

SCHEINDLIN, District Judge.

I. INTRODUCTION

In this consolidated multi-district litigation, plaintiffs allege that defendants have caused the contamination or threatened contamination of groundwater through their use of the gasoline additive methyl tertiary butyl ether ("MTBE"). Although MTBE is supposed to reduce air pollution by making fuel cleaner burning, plaintiffs assert that it pollutes the water supply whenever gasoline is released into the environment.¹

Defendants removed the actions from various state courts, asserting four grounds of subject matter jurisdiction: (1) federal agent jurisdiction; (2) substantial federal question; (3) complete preemption; and (4) bankruptcy jurisdiction. In a series of jurisdictional challenges, I held that this Court has federal agent jurisdiction over some, and bankruptcy jurisdiction over all, of the MTBE cases pending before it.² With respect to the former, I found that preemption constitutes a colorable federal defense, which is a prerequisite for federal agent jurisdiction.³ At the time I considered the issue, the California plaintiffs were not yet before this Court.

After these cases were transferred to me, plaintiffs moved to remand based on the argument that defendants had not properly alleged a colorable "federal" defense.⁴ Specifically, they argue that preemption defenses are not "federal" for purposes of the federal officer removal statute, and that only immunity defenses can be asserted. I now consider whether preemption is a sufficient "federal" defense for removal under section 1442(a) of Title 28, the federal officer removal statute.

II. APPLICABLE LAW

A. Removal and Remand

Section 1447(c) of Title 28 provides: "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." When a party challenges the removal of the action from state court, the burden falls on the removing party "to establish its right to a federal forum by `competent proof.'"<sup>5</sup> "Out of respect for the independence of state courts, and in order to control the federal docket, `federal courts construe the removal statute narrowly, resolving any doubts against removability.'"⁶ If the removing party cannot establish its right to removal by "competent proof," the removal was improper, and the district court must remand the case to the court in which it was filed.⁷

In the absence of diversity jurisdiction, a case is generally not removable if the complaint does not affirmatively allege a federal claim.⁸ District courts have federal question jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States."⁹ A case "arises under" federal law when federal law provides for the cause of action,¹⁰ or where the vindication of a right turns on some construction of federal law.¹¹

"To determine whether a claim arises under federal law, we examine the `well-pleaded' allegations of the complaint and ignore potential defenses."¹² The presence of a federal defense does not raise a federal question, even if the "defense is anticipated in the plaintiff's complaint, and even if ... the federal defense is the only question truly at issue."¹³

Two exceptions to the well-pleaded complaint rule permit removal of state law actions. First, a case arises under federal law, and is thus removable, when a federal statute wholly displaces the state law cause of action through complete preemption.¹⁴ Second, a state law case may be removed where Congress specifically gives federal courts jurisdiction over a particular subject matter.¹⁵

B. Federal Agent Jurisdiction

The federal officer removal statute is a jurisdictional enactment that overcomes the well-pleaded complaint rule.¹⁶ Thus, persons acting under color of any federal officer or agency may remove a case to federal court despite the absence of a federal cause of action.¹⁷ Although section 1442(a) permits removal where a federal claim has not been stated, the action must nevertheless raise an issue of federal law because the statute does not independently support Article III "arising under" jurisdiction. "Rather, it is the raising of a federal question in the officer's removal petition that constitutes the federal law under which the action against the federal officer arises for Art. III purposes."¹⁸

Therefore, to remove a case under section 1442(a), a party must sufficiently allege that (1) it acted under the direction of a federal officer or agency; (2) it has a colorable federal defense; and (3) there is a causal nexus between the federal direction and the conduct at issue.¹⁹ The second requirement is broadly construed; a defense need only be colorable, not clearly sustainable.²⁰ Some courts have also said that the removing party must be a "person" within the meaning of the statute.²¹ However, it is no longer generally disputed that corporations constitute "persons."²²

III. DISCUSSION

In support of their motion, plaintiffs argue that preemption is not a removable federal defense: a federal defense for purposes of section 1442(a) is one that is "based on" a defendant's contention that he was acting under federal direction at the time of the conduct of which the plaintiff complains.²³ Plaintiffs also assert that preemption defenses should be decided in state court pursuant to section 1441,²⁴ absent some other, independent basis for federal jurisdiction. State courts regularly determine federal preemption defenses, which are not normally removable.²⁵

Section 1442(a) provides:

A civil action or criminal prosecution commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending: [] The United States or any agency thereof or any officer (or any person acting under that officer) of the United States or of any agency thereof, sued in an official or individual capacity for any act under color of such office or on account of any right, title or authority claimed under any Act of Congress....²⁶

Although the statute is silent, the Supreme Court has made clear that removal under section 1442(a) must be predicated on the averment of a colorable federal defense. In Mesa v. California,²⁷ two U.S. postal workers were separately charged in state criminal proceedings with traffic violations arising out of unrelated accidents while they were operating their mail trucks. Petitioners removed their cases to federal court based on the fact that they were federal employees, and the charges arose from accidents occurring while they were on duty and acting within the scope of their employment. The district court accepted the petition. However, the court of appeals issued a writ of mandamus, ordering the district court to remand the cases because petitioners had not raised a claim of immunity or other federal defense. In affirming the decision, the Supreme Court examined section 1442(a) and its statutory forebears, and concluded that removing parties had always been required to assert a colorable defense based on federal law.²⁸ Furthermore, the Court explained that section 1442(a) is a jurisdictional statute that defeats the well-pleaded complaint rule but does not independently confer federal question jurisdiction. Rather, it is the averment of a federal defense that supplies the substantive Article III "arising under" jurisdiction.²⁹ Because the purpose of the defense is to supply subject matter jurisdiction, any federal defense will suffice. The Court set out the standard as "colorable federal defense."³⁰ It did not — and has not — limited which federal defenses can be raised.³¹

Instead, the Supreme Court has advised that the policy underlying removal by federal officers "should not be frustrated by a narrow, grudging interpretation of § 1442(a)(1)."³² In Willingham v. Morgan,³³ the Supreme Court held that the "color of office" test for removal under the federal officer removal sta...