Mississippi ex rel. Hood v. Entergy Mississippi, Inc.

• Decision Date: 04 April 2019
• Docket Number: CAUSE NO. 3:08-CV-780-CWR-LRA
• Parties: State of MISSISSIPPI EX REL. Jim HOOD, Attorney General, Plaintiff v. ENTERGY MISSISSIPPI, INC., et al., Defendants
• Court: U.S. District Court — Southern District of Mississippi

381 F.Supp.3d 723

State of MISSISSIPPI EX REL. Jim HOOD, Attorney General, Plaintiff

v.ENTERGY MISSISSIPPI, INC., et al., Defendants

CAUSE NO. 3:08-CV-780-CWR-LRA

United States District Court, S.D. Mississippi, Northern Division.

Signed April 4, 2019

Harold Edward Pizzetta, Jim Hood, Bridgette Williams Wiggins, Office of the Attorney General, Jackson, MS, Andre' G. Bourgeois, Pro Hac Vice, Jon Kenton Parsons, Pro Hac Vice, Luke F. Piontek, Pro Hac Vice, Shelley Ann McGlathery, Pro Hac Vice, Roedel, Parsons, Koch, Blache, Balhoff & McCollister, ALC, Baton Rouge, LA, David A. McDonald, David A. McDonald, Attorney at Law, Vincent F. Kilborn, III, Kilborn, Roebuck & McDonald, Mobile, AL, for Plaintiff.

James L. Robertson, Charles E. Ross, Michael B. Wallace, Rebecca W. Hawkins, Wise, Carter, Child & Caraway, PA, Roy D. Campbell, III, Alicia N. Netterville, J. William Manuel, Bradley Arant Boult Cummings, LLP, Christopher R. Shaw, Tianna Hill Raby, Entergy Mississippi, Inc., Jackson, MS, Jay Breedveld, Pro Hac Vice, Mark Strain, Pro Hac Vice, Duggins Wren Mann & Romero, Austin, TX, L. Richard Westerburg, Jr., Pro Hac Vice, Entergy Services, LLC, The Woodlands, TX, John A. Braymer, Pro Hac Vice, Entergy Services, Inc., New Orleans, LA, John D. Martin, Pro Hac Vice, Nelson, Mullins, Riley & Scarborough, LLP, Columbia, SC, Sanford I. Weisburst, Pro Hac Vice, Kathleen M. Sullivan, Pro Hac Vice, Quinn Emanuel Urquhart & Sullivan, LLP, New York, NY, for Defendants.

ORDER OF REMAND

Carlton W. Reeves, UNITED STATES DISTRICT JUDGE Federal courts "have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party." Arbaugh v. Y & H Corp. , 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) (citation omitted). This obligation helps the judiciary adhere to the principles of federalism enshrined in the Constitution. It exists no matter what the parties may prefer or how much time they have spent preparing their case for adjudication in federal court.¹ If "a federal court determines that it is without subject matter jurisdiction, the court is powerless to continue." Amason & Assocs., Inc., v. Columbus Land Dev., LLC , No. 7:12-CV-2459-VEH, 2013 WL 12250379, at *3 (N.D. Ala. Feb. 28, 2013) (citing Wernick v. Mathews , 524 F.2d 543, 545 (5th Cir. 1975) ).

In this case, jurisdiction depends on the existence of a federal question in the complaint. Judge Southwick succinctly explained this strand of the law in Quinn v. Guerrero , when he recited that

The plaintiff's federal question must appear on the face of his well-pleaded complaint. The plaintiff need not specifically cite a federal provision such as Section 1983, but he must allege facts sufficient to establish a colorable issue of federal law. The plaintiff is the master of the claim, so he may confine his arguments to those arising under state law even if federal claims are available. If he so chooses, there is no basis for federal jurisdiction. Further, anticipation of a federal defense is insufficient to establish federal-question jurisdiction.

863 F.3d 353, 358-59 (5th Cir. 2017) (quotation marks, citations, and brackets omitted). This law is well-established. See Arkansas v. Kansas & Texas Coal Co. , 183 U.S. 185, 188, 22 S.Ct. 47, 46 L.Ed. 144 (1901) ("[I]t has been settled that a case cannot be removed from a state court into the circuit court of the United States on the sole ground that it is one arising under the Constitution, laws, or treaties of the United States, unless that appears by plaintiff's statement of his own claim.").

This case is presently in its first week of trial. On day two, during examination of the plaintiff's first witness, counsel for Entergy urged the Court to apply Entergy Corporation v. Jenkins to our dispute. See 469 S.W.3d 330 (Tex. App. 2015). The Court took a close look at the decision.

Jenkins is indeed similar to our case.² There, as here, the plaintiff(s) "filed suit against Entergy alleging that it had devised and operated an improper energy-purchasing scheme under which it had selected internally generated, higher-priced electrical power while rejecting less expensive, available third-party power, resulting in theft from ... retail power customers in violation of" state law.³ Id. at 335. There, as here, "Entergy removed the suit to federal court alleging federal question jurisdiction." Id. So far, so good.

In Jenkins , however, "[t]he federal court remanded the case to state court, concluding that the suit did not invoke federal law." Id. The question then becomes, if Jenkins is so similar to this case and was resolved in state court, why is this case being heard in federal court? The trial was paused so the parties could provide supplemental briefing and argue this issue.

In an earlier Order, the District Judge presiding over this case determined that jurisdiction was proper under the Class Action Fairness Act. See Docket No. 37. When an intervening U.S. Supreme Court decision revealed that conclusion to be incorrect and rendered CAFA unavailing as a source of jurisdiction, see Mississippi ex rel. Hood v. AU Optronics Corp. , 571 U.S. 161, 134 S.Ct. 736, 187 L.Ed.2d 654 (2014), the District Judge pivoted and determined that jurisdiction was proper because there was a federal question buried in the complaint. He reasoned as follows:

Mississippi's complaint challenges EMI's [Entergy Mississippi's] failure to use its discretion to purchase the allegedly cheaper energy from third-party suppliers. Specifically, Mississippi accuses EMI and the other EOCs of failing to "make a purchase of electricity from a non-affiliate for its/their ‘own account.’ Entergy Agreement, Sec. 402. Despite this ability to do so, EMI deliberately decided not to pursue less expensive non-affiliate supplies of electricity, and, instead, merely accepted transfers ... of the expensive ESX electricity." Mississippi's Complaint at 38.

Mississippi's challenge, then, requires an analysis of the Entergy Agreement. The Entergy Agreement is a FERC tariff, which applies with the force of federal law. SeeCarter v. Am. Tel. & Tel. Co. , 365 F.2d 486, 496 (5th Cir. 1966). In essence, Mississippi is suing EMI for its failure to vindicate its federal power to initiate the process of buying energy from a third-party supplier. Mississippi's cause of action, therefore, derives from federal law; this court simply cannot adjudicate Mississippi's claim without determining the precise nature of the discretion vested in EMI by federal law. Whether EMI had the discretion to purchase energy from third-party suppliers—and failed to do so—within the meaning of the federal tariff is an essential element of Mississippi's claim.

Docket No. 68 at 11-12.⁴

In the Jenkins federal court action, however, Judge Kent arrived at the opposite conclusion. He found no federal question jurisdiction on the face of the complaint.

None of the Texas common-law or statutory causes of action cited by Plaintiffs in their Petition require the violation of a federal tariff. Conduct that violates the tariff may also violate the [Texas statute] or other common-law duties, but a violation of the tariff is not an essential element to any of Plaintiffs' claims.... Defendants have tried to escape this result through very skillful briefing of the issues in this Motion, but the fact remains that the federal tariff at issue is not an essential element to any of Plaintiffs' claims.

Jenkins v. Entergy Corp. , No. G-03-746, Docket No. 29 at 5, 2004 WL 7339883 (S.D. Tex. Jan. 29, 2004). Without subject matter jurisdiction, Judge Kent remanded the dispute to state court, where Entergy later prevailed.

Entergy argues that Judge Kent's decision is not persuasive because it predates Grable & Sons Metal Products v. Darue Engineering and Manufacturing , a Supreme Court decision on federal question jurisdiction. 545 U.S. 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005). So let us turn to Grable .

The Fifth Circuit has articulated the Grable standard in this way:

"The question is, does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Grable , 545 U.S. at 314, 125 S. Ct. 2363. In other words, federal question jurisdiction exists where (1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities.

Singh v. Duane Morris LLP , 538 F.3d 334, 338 (5th Cir. 2008) (brackets omitted). Only "a special and small category of cases" has ever satisfied this test. Gunn v. Minton , 568 U.S. 251, 258, 133 S.Ct. 1059, 185 L.Ed.2d 72 (2013) (quotation marks and citation omitted). "In cases lacking a federal cause of action, the Supreme Court has clearly upheld jurisdiction under § 1331 in only four instances." PlainsCapital Bank v. Rogers , 715 F. App'x 325, 328 (5th Cir. 2017) (quotation marks and citation omitted).

Entergy has not shown that today's case can "be squeezed into the slim category Grable exemplifies." Empire Healthchoice Assur., Inc. v. McVeigh , 547 U.S. 677, 701, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). Although this case involves a federal issue—the Entergy Agreement—there is no dispute about the Agreement to resolve. The parties agree that Entergy Mississippi had the authority to, and in fact did, make own-account purchases under the Entergy Agreement. See, e.g. , Trial Tr. Vol. 2 at 26. The plaintiff's claims do not require showing a breach of that Agreement or otherwise "turn on substantial questions of federal law." Grable , 545 U.S. at 312, 125 S.Ct. 2363 ; accord Cent. Iowa Power Co-op. v. Midwest Indep. Transmission Sys. Operator, Inc. , 561 F.3d 904, 913 (8th Cir. 2009) ("If CIPCO...