Irish v. Burlington Northern Santa Fe R. Co.

• Decision Date: 07 July 2009
• Docket Number: No. 08-cv-469-slc.,08-cv-469-slc.
• Citation: 632 F.Supp.2d 871
• Parties: Kenneth IRISH, Denise Marshall, Allen Moore, and Scott Stillwell, Plaintiffs, v. BURLINGTON NORTHERN SANTA FE RAILWAY COMPANY, Burlington Northern Santa Fe Railway Corporation, William Barbee, Francis A. Weber, John Doe # 1, John Doe # 2, ABC Insurance Company, DEF Insurance Company, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

632 F.Supp.2d 871

Kenneth IRISH, Denise Marshall, Allen Moore, and Scott Stillwell, Plaintiffs, v. BURLINGTON NORTHERN SANTA FE RAILWAY COMPANY, Burlington Northern Santa Fe Railway Corporation, William Barbee, Francis A. Weber, John Doe # 1, John Doe # 2, ABC Insurance Company, DEF Insurance Company, Defendants.

No. 08-cv-469-slc.

United States District Court, W.D. Wisconsin.

July 7, 2009.

Matthew C. Allen, Tyler Timothy Kieler, Kopp, McKichan, Geyer, Skemp & Stombaugh, LLP, Platteville, WI, for Plaintiffs.

Timothy R. Thornton, Briggs and Morgan, P.A., Minneapolis, MN, for Defendants.

OPINION and ORDER

BARBARA B. CRABB, District Judge.

This case involves a dispute regarding defendants' possible liability for damages resulting from a flash flood that inundated plaintiffs' homes in the town of Bagley, Wisconsin in 2007. (For the sole purpose of deciding the motion for reconsideration, I am assuming jurisdiction over the case, which has been assigned to Magistrate Judge Crocker.) Since the case was filed more than nine months ago, the parties have been unable to agree whether a state or federal forum has jurisdiction to hear it. The case's complicated history bears elaboration.

Originally, plaintiffs filed this case as a proposed class action in the Circuit Court for Grant County. On August 11, 2008, defendants removed it to this court under 28 U.S.C. § 1447, asserting diversity jurisdiction under § 1332(a) despite the fact that two of the defendants had the same Wisconsin citizenship as plaintiffs. Defendants accused plaintiffs of having joined the in-state defendants for the purposes of defeating diversity. Defendants also asserted that plaintiff's complaint gave rise to diversity jurisdiction under the Class Action Fairness Act, which requires federal courts to exercise jurisdiction over class actions in which minimal diversity exists, the class exceeds 100 members and the amount in controversy exceeds $5 million. 28 U.S.C. § 1332(d). Plaintiffs' moved to remand the case to state court, arguing that joinder was not fraudulent and that their suit was not subject to the Class Action Fairness Act. I agreed with plaintiffs that the joinder of the in-state defendants was not fraudulent, that it destroyed diversity jurisdiction under § 1332(a), but diversity jurisdiction existed under the Act, which requires only minimal and not complete diversity. In response, plaintiffs moved for leave to amend their complaint, disavowing their class action allegations and seeking relief for only the named plaintiffs. Defendants opposed the motion, arguing that it was too late and an attempt at forum manipulation. On May 8, 2009, I granted plaintiff's motion for leave to amend and remanded the case to the Circuit Court for Grant County on the ground that this court no longer had subject matter jurisdiction under the Class Action Fairness Act.

Now before the court is defendants' motion to reconsider the court's May 8 order of remand under Fed.R.Civ.P. 59(e) and 60(b). Although defendants do not ask the court to reconsider the order granting plaintiffs' motion to amend, they contend that it was error to remand "sua sponte" after finding no basis for jurisdiction under the Class Action Fairness Act. Defendants took the position that if jurisdiction under the Act existed at the time of removal, it continued to exist thereafter, even if the case was no longer a class action. In addition, defendants argue for the first time that this court has subject matter jurisdiction under 28 U.S.C. § 1331 because plaintiffs' claims are completely preempted by the Interstate Commerce Commission Termination Act, 49 U.S.C. § 10101. Plaintiffs oppose the motion for reconsideration, arguing that (1) this court lost jurisdiction to hear the case once it was remanded; (2) it was not error to remand the case; and (3) defendants waived their federal preemption argument; and (4) 49 U.S.C. § 10101 does not apply.

On June 8, 2009, defendants filed a notice of appeal of the court's remand decision with the Court of Appeals for the Seventh Circuit. Ordinarily, the filing of an appeal divests the trial court of jurisdiction to rule on defendants' motion for reconsideration. However, the court does not lose jurisdiction when there is a purported appeal from a non-final order. United States v. Bastanipour, 697 F.2d 170, 173 (7th Cir.1982).

Although the Court of Appeals for the Seventh Circuit has not said expressly that courts have jurisdiction to hear motions to reconsider an order of remand, the court of appeals has held that in those situations in which the court of appeals has "jurisdiction to review a remand order, it would be efficient to allow the district court also to retain jurisdiction to reconsider its order." J.O. v. Alton Community Unit School District, 909 F.2d 267, 273 (7th Cir.1990) (reviewing district court's decision to dismiss all federal claims and remand state claims to state court). 28 U.S.C. § 1447(d) provides that "an order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1443 of this title shall be reviewable by appeal or otherwise." 28 U.S.C. § 1447(d). (Emphasis added.) This is generally understood to preclude appellate review of remand orders except in cases involving removal by defendants in civil rights actions. Midlock v. Apple Vacations West, Inc., 406 F.3d 453, 456 (7th Cir.2005) ("section 1447(d) strips the district court of jurisdiction to reconsider an order of remand issued by it"). However, as part of the Class Action Fairness Act, Congress enacted 28 U.S.C. § 1453, which authorizes appellate review of remands of class actions to state court, regardless of the provisions to the contrary in 1447(d). 28 U.S.C. § 1453(c)("Section 1447 shall apply to any removal of a case under this section, except that notwithstanding section 1447(d), a court of appeals may accept an appeal from an order of a district court granting or denying a motion to remand a class action to the State court from which it was removed if application is made to the court of appeals not less than 7 days after entry of the order."). I conclude that jurisdiction exists to hear defendants' motion to reconsider.

OPINION

Defendants have moved for reconsideration under both Rule 59 and Rule 60. Although similar in essence, these motions are directed at different considerations. In this case, Rule 59(e) is the appropriate mechanism for challenging the remand decision because defendant is asserting that May 6 decision was a mistake of law. Rule 60(b) permits a court to relieve a party from a final judgment, order or proceeding in limited circumstances: "mistake, inadvertence, surprise, or excusable neglect," "newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial" or "any other reason that justifies relief." Gleash v. Yuswak, 308 F.3d 758, 761 (7th Cir.2002) ("rule [60(b)] is designed to allow modification in light of factual information that comes to light only after the judgment, and could not have been learned earlier"); see also West v. Schneiter, 485 F.3d 393, 395 (7th Cir.2007) ("Rule 60(b)(6) may not be used to reopen an adverse decision unless extraordinary circumstances justify that step") (citing Gonzalez v. Crosby, 545 U.S. 524 at 536-37, 125 S.Ct. 2641, 162 L.Ed.2d 480 (2005)). Legal error is not a proper ground for relief under Rule 60(b). Rule 59(e) allows review for errors of law. Bordelon v. Chicago School Reform Bd. of Trustees, 233 F.3d 524, 529 (7th Cir.2000).

Defendants' Rule 59 motion is timely. It was filed within ten days of the entry of judgment.

The court has authority to review and revise a previous ruling. In Santamarina v. Sears, Roebuck & Co., 466 F.3d 570, 571-572 (7th Cir.2006), the court of appeals affirmed a district decision to remand a class action to state court, holding that "[t]he authority of a district judge to reconsider a previous ruling in the same litigation ... is governed by the doctrine of the law of the case, which authorizes such reconsideration if there is a compelling reason, such as a change in, or clarification of, law that makes clear that the earlier ruling was erroneous."

Rule 59 motions are a mechanism to bring to the court's attention a manifest error of law or fact; they are not intended to provide an opportunity to reargue the merits of a case, Neal v. Newspaper Holdings, Inc., 349 F.3d 363, 368 (7th Cir.2003), or to submit evidence that could have been presented earlier. Dal Pozzo v. Basic Machinery Co., Inc., 463 F.3d 609, 615 (7th Cir.2006) (citing Frietsch v. Refco, Inc., 56 F.3d 825, 828 (7th Cir.1995)).

Defendants' motion to reconsider is directed primarily at my decision to remand the suit on the basis of a post-removal amendment of the complaint. However, defendants have asserted a separate basis for federal jurisdiction, namely the Interstate Commerce Commission Termination Act, 49 U.S.C. § 10101. They do not and cannot argue that it was error to remand without considering this new ground for jurisdiction because they never raised the Act as a basis for federal jurisdiction until now. (Defendants say that they raised the issue of preemption in their first answer in which they said that "[t]he complaint is completely preempted and substantively preempted by federal and state law." Dkt. # 3. Defendants are correct, but they never mentioned a federal preemption argument as a basis for removal or for retaining federal jurisdiction when briefing plaintiffs' motion to remand.) Although plaintiffs suggest that defendants' failure to raise this argument anywhere but in their first complaint should constitute waiver, subject matter jurisdiction is not subject to waiver. Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006). If I deny defendants' ...