Massey Energy v. West Virginia Consumers

• Decision Date: 26 September 2006
• Docket Number: No. 1:06CV986 (JCC).,1:06CV986 (JCC).
• Citation: 351 B.R. 348
• Parties: MASSEY ENERGY CO. and Don Blankenship, Plaintiffs, v. WEST VIRGINIA CONSUMERS FOR JUSTICE and Kenneth Perdue, Defendants.
• Court: U.S. District Court — Eastern District of Virginia

351 B.R. 348

MASSEY ENERGY CO. and Don Blankenship, Plaintiffs, v. WEST VIRGINIA CONSUMERS FOR JUSTICE and Kenneth Perdue, Defendants.

No. 1:06CV986 (JCC).

United States District Court, E.D. Virginia, Alexandria Division.

September 26, 2006.

Benjamin G. Chew, Patton Boggs LLP, Washington, DC, for Plaintiffs.

Rachel Rose Shanahan, Williams & Connolly LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

CACHERIS, District Judge.

This matter is before the Court on Plaintiffs' Motion to Abstain and Remand to Virginia state court and Defendant's Motion to Transfer to the Southern District of West Virginia. For the following reasons, the Court will grant the Plaintiffs' Motion to Abstain and Remand, and accordingly, will deny Defendant's Motion to Transfer.

I. Background

Plaintiff Massey Energy Company ("Massey") is a Delaware corporation and has its principal place of business in Richmond, Virginia. Massey owns and operates mines located primarily in West Virginia, but also in Virginia and Kentucky. Plaintiff Don Blankenship ("Blankenship") is CEO, Chairman, and President of Massey. Defendant West Virginia Consumers for Justice ("WVCJ") is a political advocacy group based in Charleston, West Virginia. Defendant Kenneth Purdue ("Perdue") is the chairman and president of WVCJ.

After Plaintiffs voluntarily nonsuited several claims, three causes of action remain alleged by Plaintiffs against Defendants — two counts of defamation and one count of business conspiracy. These claims arise out of "voter education" political advertisements broadcast statewide in West Virginia during the weeks leading up to the November 2004 West Virginia Supreme Curt of Appeals general election. These advertisements were aired both within Virginia and West Virginia.

Plaintiffs contend that two statements in the WVCJ advertisements regarding Massey's activities in West Virginia are false and defamatory — First, that Massey was convicted of contaminating West Virginia's drinking water, and second, that Massey eliminated the jobs and health insurance benefits of hundreds of West Virginia families. Plaintiffs also allege that Defendants conspired with WVNS/Channel 59 ("WVNS"), a West Virginia television station, to broadcast allegedly defamatory statements regarding Massey's contamination of West Virginia's drinking water. This conspiracy is alleged to be in violation of the Virginia Business Conspiracy Act (Va.Code Ann. § 18.2-499) ("VBCA").

This action was commenced in the Circuit Court of Fairfax County, Virginia ("State Court"), on June 15, 2005. Since then, the State Court has established jurisdiction, adjudicated a multitude of pre-trial motions, resolved numerous discovery disputes, and set a final trial date for a four-week jury trial for April 2007. On August 10, 2006, WVCJ filed a Chapter 11 bankruptcy petition in the United States Bankruptcy Court for the Southern District of West Virginia. On August 28, 2006, Defendants removed this case from the State Court to this Court pursuant to 28 U.S.C. §§ 1334(b) and 1452 on the theory that the claims and causes of action in this case are "related to" the WVCJ bankruptcy proceeding. On August 28, 2006, Defendant Perdue filed a motion to transfer to the United States District Court for the Southern District of West Virginia pursuant to 28 U.S.C. § 1412. In response, Plaintiffs have moved to abstain and remand this motion to state court pursuant to 28 U.S.C. § 1334.

II. Standard of Review

Since this Court's jurisdiction has been established pursuant to 28 U.S.C. § 1334 as "related to the WVCJ bankruptcy proceeding," it is subject to the abstention provisions of the same statute found in § 1334(c). Section 1334(c) governs when circumstances require a court to abstain from hearing the "related to" case (mandatory abstention) and when circumstances permit a court to abstain from a case (permissive abstention).

Under § 1334(c)(2), the requirements for mandatory abstention are: (1) a party to the proceeding files a timely motion to abstain; (2) the proceeding is based upon a state law claim or state law cause of action; (3) the proceeding is a "non-core, but related to" proceeding (not "arising under" Title 11); (4) the proceeding is one which could not have been commenced in a federal court absent jurisdiction under § 1334; (5) an action is commenced and can be timely adjudicated in state court. In re Seven Springs, Inc., 148 B.R. 815 (Bankr.E.D.Va.1992)(citing 28 U.S.C. § 1334).

If the case does not meet the requirements of mandatory abstention, permissive abstention may be appropriate. Pursuant to § 1334(c)(1), a court may abstain from a case "in the interest of justice" or "in the interest of comity with State courts or respect for State law." 28 U.S.C. § 1334(c)(1).

Finally, if a court chooses not to abstain from a case "related to" a Title 11 proceeding under § 1334, a court still may remand the case under § 1452(b). Section 1452(b) provides that a court to which a claim or cause of action [related to bankruptcy] has been removed may remand such claim or cause of action "on any equitable ground."

It is in the context of these bankruptcy jurisdictional provisions that the Court must analyze the instant motions.

III. Analysis

After careful review of the motions and accompanying memoranda, this Court will remand the case to the Circuit Court of Fairfax County, Virginia. Accordingly, Defendant's Motion to Transfer to the Southern District of West Virginia will be denied.

In their Motion to Abstain and Remand, Plaintiffs argue that this Court should abstain under § 1334(c)'s "mandatory abstention" or "permissive abstention" provision. The Court finds that this case satisfies the test under either provision, whether "mandatory" or "permissive," and the application of either subsection requires the same result: abstention by this Court and a remand to the State Court.

A. The Court is required to abstain from hearing this case gender § 1334(e)(2)'s mandatory abstention provision.

Under § 1334(c)(2), the requirements for mandatory abstention are: (1) a party to the proceeding files a timely motion to abstain; (2) the proceeding is based upon a state law claim or state law cause of action; (3) the proceeding is a "non-core, but related to" proceeding (not "arising under" Title 11); (4) the proceeding is one which could not have been commenced in a federal court absent jurisdiction under § 1334; (5) an action is commenced and can be timely adjudicated in state court. In re Seven Springs, Inc., 148 B.R. 815 (Bankr.E.D.Va.1992)(citing 28 U.S.C. § 1334).¹ The instant case meets all five of these requirements, and thus, the Court must abstain and remand to the Circuit Court of Fairfax County. In the following analysis, the Court will address Defendant's arguments that mandatory abstention does not apply.

First, Defendants argue that the mandatory abstention provision is inapplicable to personal_ injury tort claims, and thus, is not appropriate here. Under 28 U.S.C. § 157(b)(4), Congress included a statutory exception to the mandatory abstention provisions of § 1334(c)(2). The statute provides: "non-core proceedings under section 157(b)(2)(B) ... shall not be subject to the mandatory abstention provisions of section 1334(c)(2)." 28 U.S.C. § 157(b)(4). A "personal injury tort" claim is described as a non-core proceeding under § 157(b)(2), and thus, mandatory abstention is not available for personal injury tort claims. See A.H. Robins Co. v. Piccinin, 788 F.2d 994, 1010 n. 14 (4th Cir.1986)("Mandatory abstention under section 1334(c)(2) is not applicable to personal injury claims ...") (quotations omitted). Therefore, this Court must determine the scope of the term "personal injury tort" within § 157; specifically, whether "personal injury tort" includes claims of defamation and business conspiracy. Neither the Fourth Circuit nor this Court has opined on this issue.

After examining the statute's text and other courts' relevant decisions, this Court concludes that the personal injury exception under § 157 is limited to a narrow range of claims that involve an actual physical injury. Had § 157 simply said "tort," then; this Court would likely conclude to the contrary, since defamation is considered a tort in this jurisdiction. However, it is the opinion of this Court that Congress intended to limit the claims fitting the exception by introducing the narrow, modifying language "personal injury." See In re Vinci, 108 B.R. 439 (Bankr.S.D.N.Y.1989)("a tort without trauma or bodily injury is not within the statutory exception for a personal injury claim."); In re Interco, 135 B.R. 359 (Bankr.E.D.Mo.1991)(holding than an emotional distress claim was not within the meaning of "personal injury tort").²

Here, Plaintiffs claim that Defendants engaged in a business conspiracy and defamation harming Plaintiffs business reputation. These allegations clearly involve no physical injury, and consequently, they are not within the meaning of "personal injury tort" in § 157. To hold otherwise would contradict the statute's text, Congressional intent, and the majority of relevant judicial decisions. As a result, the personal injury exception is not satisfied, and the mandatory abstention provision of § 1334(c)(2) is available.

Next, with respect to the five requirements for mandatory abstention, Defendants do not materially dispute requirements (1) through (4). First, Plaintiff filed a timely motion to abstain soon after the removal to this Court and no time limit has expired. Second, this proceeding is based upon state law and state causes of action; namely, Virginia defamation law and the Virginia Business Conspiracy Act. Third, this proceeding does not "arise under" Title 11, but is only "related to" a bankruptcy proceeding. Fourth, with no federal question or diverse parties, the case could not have been commenced in federal court absent jurisdiction under § 1334.

The only requirement that Defen...