Sims v. Shell Oil Co., Civ.A. 3:98-CV-282WS.

Decision Date31 March 1999
Docket NumberNo. Civ.A. 3:98-CV-282WS.,Civ.A. 3:98-CV-282WS.
Citation130 F.Supp.2d 788
PartiesRudy H. SIMS, Jr., J.W. King, Jerry Johnston, B.L. Chain, Frank Perkins, J.L. Patton and Mildred R. Tootle, Plaintiffs, v. SHELL OIL COMPANY, Defendant.
CourtU.S. District Court — Southern District of Mississippi

Sam S. Thomas, Heidelberg & Woodliff, Jackson, MS, John F. Perry, III, Langston, Langston, Michael, Bowen & Tucker, Booneville, MS, H. Mitchell Cowan, Watkins Ludlam Winter & Stennis, P.A., Jackson, MS, Ernest G. Taylor, Jr., Ernest G. Taylor, Jr., Attorney, Jackson, MS, Jeffery P. Reynolds, Jeffery P. Reynolds, P.A., Jackson, MS, for Plaintiffs.

Charles Clark, William F. Goodman, Jr.,Paul H. Stephenson, III, Watkins & Eager, Jackson, MS, for Defendant.

MEMORANDUM OPINION AND ORDER

WINGATE, District Judge.

Before the court is the motion of plaintiff, Rudy H. Sims, Jr., J.W. King, Jerry Johnston, Bobby L. Chain, Frank Perkins, J.L. Patton and Mildred R. Tootle, brought pursuant to Title 28 U.S.C. § 1447,1 to remand this civil action to the Circuit Court of Jones County, Mississippi where it originated. The defendant, Shell Oil Company ("Shell"), opposes plaintiffs' motion, arguing that this court has jurisdiction over this dispute under the All Writs Act, Title 28 U.S.C. § 1651,2 and that removal to this court was proper. Defendant further argues, as an alternative ground for denying plaintiffs' motion, that federal diversity jurisdiction here exists under Title 28 U.S.C. § 1332,3 since, according to the defendant, plaintiffs, Sims and Patton, were improperly and fraudulently joined by plaintiffs in an effort to defeat this court's diversity of citizenship jurisdiction.

At an earlier hearing on this matter, this court announced from the bench that it was inclined to deny plaintiffs' motion to remand. After further analysis of the applicable law and facts, as well as the submissions of counsel, this court is now persuaded that plaintiffs' motion to remand should be granted for the reasons which follow.

I. BACKGROUND

Plaintiffs, the alleged owners of oil and gas royalty interests of certain wells located in Rankin County, Mississippi, originally filed this civil action in the Circuit Court of Jones County, Mississippi, against Shell Oil Company alleging: (1) breach of lease agreements between plaintiffs and Shell; (2) breach of the implied covenant of good faith and fair dealing; (3) unjust enrichment and the imposition of a constructive trust against royalty money wrongfully retained by Shell; and (4) punitive damages for Shell's charged intentional, callous and malicious conduct and reckless disregard for the rights of the plaintiffs. Defendant, Shell Oil Company, while denying plaintiffs' allegations, subsequently removed plaintiffs' lawsuit to this court based upon the grounds previously described.

Related to this litigation is a class action lawsuit styled Piney Woods Country Life School, et al. v. Shell Oil Co., No. J74-307W (S.D.Miss.) (hereinafter "Piney Woods"), which began in 1974. An understanding of the scope and history of this litigation is essential for an appreciation of defendant's argument that its removal of this lawsuit from state court to this court was proper under the All Writs Act.

The Piney Woods plaintiffs, claiming that Shell had failed to pay adequate market value royalties beginning in 1973, sued Shell in this court for underpayment of royalties on gas produced and purchased by Shell. On December 27, 1976, the Honorable Judge Dan M. Russell, Jr., of this court tentatively certified and defined the Plaintiff Class in Piney Woods as follows:

... all individuals or entities who are royalty owners in the Thomasville, Piney Woods, and Southwest Piney Woods Fields whose gas is being processed through Shell Oil Company's Thomasville plant located at Thomasville, Mississippi, whose claims exceed the jurisdictional amount of $10,000.00 or over.

On or about September 27, 1977, the Piney Woods class representatives mailed copies of the approved notice to all persons and entities, who, at that time, were within the class. On June 5, 1978, the court ordered the class representatives to forward additional notice to persons and entities who fell within the class definition subsequent to delivery of the first notice. On December 15, 1978, Judge Russell filed an Order finalizing the class certification which had been previously tentatively announced by the December 27, 1976, Order. On October 10, 1985, the Piney Woods plaintiffs moved the court to order additional notice to persons and entities who had fallen within the class definition since the time of the second class notice in 1978. Then, later, in 1986, after the Piney Woods lawsuit had been transferred to the undersigned judge, the undersigned judge, deciding to wait until liability issues had been resolved, refused to issue additional notice and held:

It is undisputed that notice to class members is appropriate once liability of a defendant has been established. However, the unresolved issues which form the basis for the determination of individual claims for relief in the case sub judice convinces this court that notice directed to class members at this point in the litigation is premature. Upon resolution of the pending issues regarding discovery matters, "market value," and the reasonability of processing costs, this Court will readily entertain plaintiffs' motion for proposed notice to class members with reference to the substitution of plaintiffs' heirs, assignees, and the adding of new class members whose claims have, since initial certification, exceeded the $10,000.00 jurisdictional amount.

See Memorandum Opinion and Order dated December 29, 1986, p. 17. Not until 1997, after the issue of liability was resolved, was the issue of supplemental notice revisited by this court. On September 17, 1997, this court granted the Piney Woods plaintiffs' request for supplemental notice to prospective plaintiffs whose claims exceeded the jurisdictional amount, but this court concluded that prospective plaintiffs whose claims failed to reach the jurisdictional amount should not be entitled to inclusion in the class.

In the case sub judice, defendant argues that the Piney Woods litigation and this lawsuit sub judice are inextricably related and would require whatever court to which the lawsuit sub judice is assigned to interpret the various orders and decisions of this court during the 23 years of the Piney Woods litigation. As proof of the intertwinement of the two cases and the claims therein, the defendant points to the following language in plaintiffs' Amended Complaint:

30. Beginning in 1974 and continuing for a period of over 23 years, Shell has engaged in a deliberate pattern and practice of conduct that was designed to prevent the Royalty Owners from obtaining proper royalties based upon the fair market value of gas produced by Shell. With callous indifference and reckless disregard for the rights of the Royalty Owners, Shell has engaged in litigation practices and conduct that was designed to delay the fair and efficient resolution of the Royalty Owners' claims. Shell's plan and purpose during this 23-year period has been to delay and frustrate the administration of justice, to withhold money rightfully belonging to the Royalty Owners, to convert those funds to its own use and profit and to obfuscate and conceal its wrongful acts.

31. Even (sic) since the Federal District Court ruled that Shell had violated its contract by failing to pay royalty at market value rates, Shell has arbitrarily continued to withhold payment and has not even responded to the plaintiffs' May 6 letter requesting payment in accordance with the Court's ruling.

Defendant, relying upon the All Writs Act as authority, argues that this court is best suited to resolve plaintiff's claims, since this court has a "complete understanding of the class action proceedings in Piney Woods." Furthermore, defendant argues that the claims of the plaintiffs, whose joinder defeats diversity (Sims and Patton), are time barred by the relevant statutes of limitations.

Plaintiffs, on the other hand, argue that Shell's removal of this action to federal court was improper. According to plaintiffs, the state court is a proper forum to decide the issues of this case based upon the Piney Woods precedent.

II. ALL WRITS JURISDICTION

The All Writs Act provides that "[t]he Supreme Court and all courts established by Act of Congress may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." Title 28 U.S.C. § 1651(a). The United States Supreme Court repeatedly has recognized the power of a federal court to issue such commands under the All Writs Act as may be necessary or appropriate to effectuate and prevent the frustration of orders it has previously issued in its exercise of jurisdiction otherwise obtained. See U.S. v. New York Telephone Co., 434 U.S. 159, 172, 98 S.Ct. 364, 372, 54 L.Ed.2d 376 (1977), citing Harris v. Nelson, 394 U.S. 286, 299, 89 S.Ct. 1082, 1090, 22 L.Ed.2d 281 (1969); Price v. Johnston, 334 U.S. 266, 282, 68 S.Ct. 1049, 1058, 92 L.Ed. 1356 (1948); Adams v. U.S. ex rel. McCann, 317 U.S. 269, 273, 63 S.Ct. 236, 239, 87 L.Ed. 268 (1942). However, the All Writs Act is not a "jurisdictional blank check" which district courts may use whenever they deem it advisable. In re Agent Orange Product Liability Litigation, 996 F.2d 1425, 1431 (2d Cir.1993), cert. denied 510 U.S. 1140, 114 S.Ct. 1125, 127 L.Ed.2d 434 (1994). "Although the Act empowers federal courts to fashion extraordinary remedies when the need arises, it does not authorize them to issue ad hoc writs whenever compliance with statutory procedures appears inconvenient or less appropriate." Fidelity Financial v. Robinson, 971 F.Supp. 244, 247 (S.D.Miss.1997), citing Pennsylvania Bureau of Correction v. U.S. Marshals Serv., 474 U.S. 34, 106 S.Ct. 355,...

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