Village Imp. Ass'n of Doylestown v. Dow Chemical Company

• Decision Date: 06 March 1987
• Docket Number: Civ. A. No. 86-7582.
• Citation: 655 F. Supp. 311
• Parties: VILLAGE IMPROVEMENT ASSOCIATION OF DOYLESTOWN, PA. a/k/a Doylestown Hospital v. The DOW CHEMICAL COMPANY, Dow Chemical U.S.A., Amspec, Inc., Irwin & Leighton, Inc., John B. Kelly, Inc., George H. Duross, Inc., E.L. Conwell & Company, Ewing Cole Cherry & Parsky, and Masonry Systems of Pennsylvania, Inc.
• Court: U.S. District Court — Eastern District of Pennsylvania

655 F. Supp. 311

VILLAGE IMPROVEMENT ASSOCIATION OF DOYLESTOWN, PA. a/k/a Doylestown Hospital v. The DOW CHEMICAL COMPANY, Dow Chemical U.S.A., Amspec, Inc., Irwin & Leighton, Inc., John B. Kelly, Inc., George H. Duross, Inc., E.L. Conwell & Company, Ewing Cole Cherry & Parsky, and Masonry Systems of Pennsylvania, Inc.

Civ. A. No. 86-7582.

United States District Court, E.D. Pennsylvania.

March 6, 1987.

Amy B. Ginensky, Philadelphia, Pa., for Doylestown Hosp.

Joanne D. Sommer, Doylestown, Pa., for Village Imp. Ass'n.

Mark A. Welge, Philadelphia, Pa., for Dow Chemical, Dow Chemical U.S.A., and AMSPEC, Inc.

Steven R. Waxman, Philadelphia, Pa., for Duross.

Elizabeth McKenna, Philadelphia, Pa., for Ewing, Cole, Cherry et al.

Jonathan D. Herbst, Philadelphia, Pa., for Masonry Systems.

A.R. Stone, J.W. Stahl, Philadelphia, Pa., for Irwin & Leighton.

Howard I. Langer, John M. Cleary, Philadelphia, Pa., for John B. Kelly, Inc.

MEMORANDUM AND ORDER

TROUTMAN, Senior District Judge.

The plaintiff instituted this action in the Court of Common Pleas of Bucks County of the Commonwealth of Pennsylvania. It alleged in its original complaint against the above named defendants filed on January 14, 1986, various state law claims relating to alleged defects in a high bond mortar additive known as "Sarabond", which was manufactured by defendant Dow and utilized in the construction of a hospital owned by the plaintiff. On March 31, 1986, the plaintiff filed an amended complaint against the defendants which, in addition to the state law claims, stated a cause of action against Dow pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.A. §§ 1961-1968 (West 1984 & Supp.1986). Dow, on April 18, 1986, filed "Preliminary Objections" to the plaintiff's RICO claim with the state court contending that the state court lacked subject matter jurisdiction to entertain the "federal" RICO claim.

Dow thereafter filed a petition for removal of the aforementioned state court action to this Court on December 30, 1986, approximately eight (8) months after it was served with the plaintiff's amended complaint on April 1, 1986. Presently before us are plaintiff's: (1) motion to remand this action to the state court; (2) motion to impose Rule 11 sanctions upon Dow; and (3) motion for an award of costs and attorney's fees pursuant to 28 U.S.C.A. § 1447(c) (West 1973).

I. The State Court's Jurisdiction Over The Rico Claim.

Dow removed the state court action to this Court pursuant to 28 U.S.C.A. § 1441(c) (West 1973), averring that the RICO claim against it constituted a separate and independent claim or cause of action over which this Court possesses original jurisdiction. Prior to removal of this action, however, Dow filed, as stated above, preliminary objections to the plaintiff's amended complaint in the form of a motion to dismiss the plaintiff's RICO claim for lack of subject matter jurisdiction. Under the doctrine of "derivative jurisdiction", an action could not be removed from state court to federal court where the state court lacked subject matter jurisdiction over the matter since the federal court "derived" its removal jurisdiction from the state court. See Recchion, Westinghouse Electric Corp. v. Kirby, 637 F.Supp. 290 (W.D.Pa.1986); Essington Metal Works, Inc. v. Retirement Plans of America, 609 F.Supp. 1546 (E.D.Pa.1985); and cases cited therein. Congress, by statute, expressly repealed the derivative jurisdiction doctrine in 1986. See Judicial Improvements Act of 1985, Pub.L. No. 99-336, § 3, 100 Stat. 633, 637 (1986) (adding new subsection (e) to 28 U.S.C.A. § 1441(e) (West Supp. III 1986)). Congress provided, however, in § 3(b) of the Judicial Improvements Act of 1985 that the amendment made by § 3(a) only applied to civil actions commenced in state courts on or after June 19, 1986. Despite Dow's arguments to the contrary, clear precedent of the Third Circuit Court of Appeals dictates, without exception, dismissal of an action commenced in state court prior to June 19, 1986, and removed to federal court, where the state court lacked subject matter jurisdiction over the matter. See Bradshaw v. General Motors Corp., Fisher Body Division, 805 F.2d 110 (3d Cir.1986); but see, Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); Nordlicht v. New York Telephone Co., 799 F.2d 859 (2d Cir.1986); and Salveson v. Western States Bankcard Association, 731 F.2d 1423 (9th Cir.1984). Further, even if we were to conclude that the precedent of this Circuit would allow recognition of an exception to the doctrine of derivative jurisdiction, we do not believe this case presents the circumstances in which the fashioning of such an exception would be justified. Thus, if the state court lacked jurisdiction to entertain the plaintiff's RICO claim, as Dow asserts it did not, we must dismiss the plaintiff's RICO claim for lack of subject matter jurisdiction.

The question of whether the state court possessed subject matter jurisdiction over the RICO action is one which we are by necessity empowered to answer in this context. We need not concern ourselves with whatever collateral effect our determination might have upon any possible future inquiry by the state court into this issue. Of the courts which have addressed this issue, both state and federal, it appears that an approximately equal number have come down on opposite sides of the question. Interestingly, it seems that state courts have been more prone than federal courts to conclude that RICO vests jurisdiction to entertain civil actions pursuant to the statute exclusively in the federal courts. Our research has failed to disclose a single instance in which the Supreme Court or our own Circuit Court have addressed this precise question. Our own court has stated on at least two occasions that the RICO statute vests concurrent jurisdiction in both the state and federal courts. See Vincent v. Metropolitan Hospital, No. 86-0948, slip op. (E.D.Pa. June 30, 1986) (Ludwig, J.) Available on WESTLAW, DCTU database and Chas. Kurz Co. v. Lombardi, 595 F.Supp. 373, 381 n. 11 (E.D.Pa.1984) (VanArtsdalen, J.). We also find highly enlightening the opinion of the district court in Karel v. Kroner, 635 F.Supp. 725 (N.D.Ill.1986), and for the reasons stated therein, we similarly conclude that both the state and federal courts possess concurrent jurisdiction to entertain civil actions brought pursuant to the RICO statute. The plaintiff's RICO claim, therefore, is not subject to dismissal under the doctrine of derivative jurisdiction.

II. The Motion to Remand.

The plaintiff, as well as certain of the defendants who have joined in the plaintiff's motion, moves this Court to remand this action to state court on two grounds. The first is that Dow filed its petition for removal beyond the thirty-day limit specified in 28 U.S.C.A. § 1446(b) (West 1973). The second is that Dow improvidently removed this case pursuant to 28 U.S.C.A. § 1441(c) (West 1973).

A. Section 1446(b)

Section 1446(b) of Title 28 provides as follows:

The petition for removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief ...

If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

28 U.S.C.A. § 1446(b) (West 1973).

It is undisputed that Dow possessed no grounds to remove this action to this Court until April 1, 1986, i.e., the date on which it was served with the plaintiff's amended complaint stating a cause of action against Dow pursuant to the RICO statute. Thus, absent a tolling or extension of the thirty-day limit delineated in § 1446(b), Dow was required to file its petition for removal on or before May 1, 1986. It is also undisputed that Dow did not file its petition until December 30, 1986. Therefore, absent some tolling or extension of the aforementioned thirty-day period, we must remand this action to the state court from whence it came as having been untimely removed.

In memoranda we charitably describe as creative, Dow argues that we should overlook the untimeliness of its removal petition because of the "equitable consideration" involved. As correctly stated by Dow, an untimely removal petition does not create a jurisdictional defect. The plaintiff may, if it chooses, ignore the untimeliness of the petition and submit to the jurisdiction of the federal court. The plaintiff here, however, has not chosen to waive § 1446(b)'s temporal limitation, nor does Dow even contend that such a waiver exists. Rather, Dow argues that, "when it decided to remove, (it) could reasonably have anticipated that (the) plaintiff would have chosen to waive the time limit in order to obtain the efficiencies of multidistrict litigation ..." (Dow's Memorandum In Opposition To Motion To Remand, Paper # 3, pp. 1-2). We fail to see the relevance of what Dow might have reasonably anticipated plaintiff's response to its removal of this action to be.¹ Reality is that the plaintiff did not waive § 1446(b)'s time limitations and has, in fact, strenuously fought removal of this action.

We also fail to see the relevance, with regard to Dow's failure to timely remove this action from state court, of any efficiencies that might be presented by multidistrict litigation. Counsel for Dow has not cited, nor has our research disclosed, a single instance in which a court has ignored an opposed untimely removal petition in order to allow the action to be subjected to multidistrict litigation. We entirely agree that the utilization of multidistrict litigation as allowed by ...