Outokumpu Stainless United States, LLC v. Sas
| Decision Date | 22 November 2016 |
| Docket Number | CA 16-0378-KD-C |
| Parties | OUTOKUMPU STAINLESS USA, LLC, et al. Plaintiffs, v. CONVERTEAM SAS, a foreign corporation now known as GE ENERGY POWER CONVERSION FRANCE SAS, CORP, Defendant. |
| Court | U.S. District Court — Southern District of Alabama |
This matter is before the undersigned on Motions to Remand filed by Plaintiffs Outokumpu Stainless USA, LLC, formerly known as Thyssenkrupp Stainless USA, LLC ("OTK Stainless") and by Sompo Japan Insurance Company of America ("Sompo"), Pohjola Insurance Limited, AIG Europe Limited, Tapiola General Mutual Insurance Company, AXA Corporate Solutions Assurance SA UK Branch, HDI Gerling UK Branch, MSI Corporate Capital Ltd., and Royal & Sun Alliance PLC (collectively, the "Plaintiff Insurers") (Docs. 34 and 35). Also before the undersigned is Defendant GE Energy Power Conversion France SAS, Corp.'s ("GE Energy"), formerly known as Converteam SAS ("Converteam"), Motion to Dismiss as to Plaintiffs Pohjola Insurance Limited, AIG Europe Limited, Tapiola General Mutual Insurance Company, AXA Corporate Solutions Assurance SA UK Branch, HDI Gerling UK Branch, MSI Corporate Capital Ltd., and Royal & Sun Alliance PLC (collectively, the "Foreign Insurers") (Doc. 7).1 In reaching its decision, the Court has considered the Notice of Removal (Doc. 1), and exhibits thereto, including the Complaint, Defendant's Motion to Dismiss (Doc. 7), the Motions to Remand (Docs. 34 and 35), Defendant's Response in Opposition (Doc. 38), Plaintiffs' Replies in Support (Docs. 41 and 42), and all exhibits thereto.
Oral argument on these motions was held before the undersigned on November 3, 2016. Upon consideration, and for the reasons stated herein, the undersigned RECOMMENDS, pursuant to 28 U.S.C. § 636(b) and General Local Rule 72(a)(2)(S), that the Motions to Remand (Docs. 34 & 35) be DENIED and that the Motion to Dismiss (Doc. 7) be DENIED.
Plaintiff OTK Stainless owns a stainless steel manufacturing facility in Calvert, Alabama. Doc. 38-2. On November 25, 2007, OTK Stainless (then, Thyssenkrupp Stainless) entered into Contracts 1001, 1002, and 1003 (the "Contracts") with F.L. Industries Inc. ("FLI"), now known as Fives St Corp. ("Fives"), for the purchase of three Cold Rolling Mills ("CRMs") for the facility. Doc. 1-1 (A). Pursuant to the Contracts, FLI was to engage subcontractors necessary for the completion of the work. See id. (§ 1.1). To that end, the Contracts set out, in Annex A3, a list of "mandatory" vendors from which FLI could select to supply services and equipment under the Contracts, including, inter alia, Converteam, which is now GE Energy. See id. (Annex A3). Subsequently, FLI entered into an Agreement for Consortial Cooperation (the "Consortial Agreement") with GE Energy and a third company, DMS SA ("DSM"), under which GE Energy was to provide electrical equipment for the Cold Rolling Mills.See Doc. 1-1 (D). The Consortial Agreement states that GE Energy was "acting as subcontractor[] of FLI." Id.
Section 23.1 of the Contracts provides, in pertinent part:
All disputes arising between both parties in connection with or in the performances of the Contract shall be settled through friendly consultation between both parties. In case no agreement can be reached through consultation ... any such dispute shall be submitted to arbitration for settlement.
See Doc. 1-1(A) (§ 23.1). This provision further states that arbitration shall take place in Germany, id. (§ 23.2), and that the "substantive law" of Germany "shall apply", id. (§ 23.5).
On June 10, 2016, OTK Stainless commenced this action against GE Energy in the Circuit Court of Mobile County, Alabama, alleging various state law tort and warranty claims arising from the alleged failure of motors GE Energy supplied to the Calvert facility. See Doc. 1-2. On July 18, 2016, GE Energy timely removed this action to this Court on two grounds: (1) federal subject matter jurisdiction pursuant to 9 U.S.C. § 205, which authorizes removal of an action where the subject matter of the suit "relates to" an arbitration agreement "falling under" the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (hereinafter, the "New York Convention" or the "Convention"); and (2) diversity jurisdiction based upon the fraudulent joinder of the Foreign Insurers, see Doc. 1. GE Energy also moved to compel arbitration as to OTK Stainless and Sompo, see Doc. 6, and to dismiss the Foreign Insurers, see Doc 7.
On August 17, 2016, OTK Stainless and the Plaintiff Insurers separately moved to remand, although their arguments are largely the same, see Docs. 34 and 35. With respect to removal under § 205, plaintiffs argue that GE Energy's Notice of Removal is facially deficient because GE Energy is not a party to the Contracts; thus, plaintiffs assert, because there is no agreement to arbitrate between OTK Stainless and GEEnergy, removal under 9 U.S.C. § 205 is improper. See Doc. 35, pp. 5-6; Doc. 34, pp. 3-4. With respect to the alleged fraudulent joinder of the Foreign Insurers, plaintiffs argue that the theory of fraudulent joinder of a plaintiff has not been adopted in the Eleventh Circuit and even if it did apply, GE Energy has not met its "heavy burden" to establish it in this case. Doc. 34, pp. 17-25.
"It is . . . axiomatic that the inferior federal courts are courts of limited jurisdiction." University of South Alabama v. American Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999). They can hear "'only those cases within the judicial power of the United States as defined by Article III of the Constitution,' and which have been entrusted to them by a jurisdictional grant authorized by Congress." Id., quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir. 1994). Further, "[a] defendant's right to remove an action against it from state to federal court 'is purely statutory and therefore its scope and the terms of its availability are entirely dependent on the will of Congress.'" Global Satellite Comm'n Co. v. Starmill U.K. Ltd., 378 F.3d 1269, 1271 (11th Cir. 2004) (citation omitted). "'[B]ecause the Constitution unambiguously confers this jurisdictional power to the sound discretion of Congress, federal courts should proceed with caution in construing constitutional and statutory provisions dealing with [their] jurisdiction.'" Smith v. GTE Corp., 236 F.3d 1292, 1299 (11th Cir. 2001), quoting University of South Alabama, 168 F.3d at 409.
Under 28 U.S.C. § 1441(a), "any 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." The removing defendant bears the burden of demonstrating that federal jurisdiction exists. Triggs v. John CrumpToyota, Inc., 154 F.3d 1284, 1287 n. 4 (11th Cir. 1998); see also McCormick v. Aderholt, 293 F.3d 1254, 1257 (11th Cir. 2002) (). "Just as a plaintiff bringing an original action is bound to assert jurisdictional bases under Rule 8(a), a removing defendant must also allege the factual bases for federal jurisdiction in its notice of removal[.]" Lowery v. Alabama Power Co., 483 F.3d 1184, 1216-1217 (11th Cir. 2007), cert.denied sub nom. Hanna Steel Corp. v. Lowery, 553 U.S. 1080, 128 S.Ct. 2877, 171 L.Ed.2d 812 (2008).
In 1958, the United Nations adopted the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, opened for signature June 10, 1958, 21 U.S.T. 2517, 330 U.N.T.S. 38 (the "Convention"). The United States adopted the Convention in 1970 and enacted Chapter 2 of the Federal Arbitration Act ("the Act") to provide for its enforcement in federal court. Pub. L. No. 91-368, 84 Stat. 692 (1970), codified at 9 U.S.C. §§ 201 et seq. The United States Supreme Court has explained that the goal of the Convention is "to encourage the recognition and enforcement of commercial arbitration agreements in international contracts and to unify the standards by which agreements to arbitrate are observed and arbitral awards are enforced in the signatory countries." Scherk v. Alberto-Culver Co., 417 U.S. 506, 520 n.15, 94 S.Ct. 2449, 2457 n.15, 41 L.Ed.2d 270 (1974) (internal citations omitted). In analyzing Convention cases, this Court is mindful of the "emphatic federal policy in favor of arbitral dispute resolution[,] . . . [which] applies with special force in the field of international commerce." MitsubishiMotors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 631, 105 S.Ct. 3346, 3356, 82 L.Ed.2d 444 (1985).
Chapter 2 of the Act indicates Congress's desire to "promote the development of a uniform body of law under the Convention[,]" Beiser v. Weyler, 284 F.3d 665, 672 (5th Cir. 2002), which is "'best served by trying all [Convention] cases in federal court unless the parties unequivocally choose otherwise,'" Acosta v. Master Maintenance & Constr. Inc., 452 F.3d 373, 377 (5th Cir. 2006), quoting McDermott Int'l v. Lloyds Underwriters of London, 944 F.2d 1199, 1207-1208 (5th Cir. 1991). To this end, "Congress granted the federal courts jurisdiction over Convention cases and added one of the broadest removal provisions, § 205, in the statute books." Id. (internal footnote omitted).
The Act provides that an action "falling under the Convention shall be deemed to arise under the laws and treaties of the United States[,]" and district courts "shall have original jurisdiction over such an action or proceeding, regardless of the amount in controversy." 9 U.S.C. § 203; see Bautista v. Star Cruises, 396 F.3d...
To continue reading
Request your trial