White v. Bastrop Energy Partners LP
| Decision Date | 21 September 2021 |
| Docket Number | Civil Action H-21-870 |
| Parties | ROBERT WHITE, et al., Plaintiffs, v. BASTROP ENERGY PARTNERS LP, et al., Defendants. |
| Court | U.S. District Court — Southern District of Texas |
In February 2021, a winter storm brought Texas days of freezing weather. The Texas electric power generation grid froze as well. Throughout the state, Texans huddled in their dark homes and businesses, with no heat or running water, watching as their pipes burst and homes and businesses flooded. Litigation swiftly followed.
The issue in this multi-plaintiff, multi-defendant removed state-court action is whether the single event exclusion or the local controversy exception to the Class Action Fairness Act, 28 U.S.C. § 1332, applies. Either requires remand. Based on the motion to remand and response, the briefs, the record, the parties' arguments, and the law, the court grants the motion to remand. The reasons are set out below.
In February 2021, Winter Storm Uri caused days of below-freezing temperatures throughout Texas and other states. Texas has a separate state electrical power generation and distribution grid, directed by the Electric Reliability Council of Texas (ERCOT). The grid froze and failed to generate or deliver electricity to Texas.
In March 2021, Robert White and more than 100 individuals residing in Texas sued over 100 power generation and power transmission or distribution companies operating in and out of Texas, in state court in Harris County, Texas. The plaintiffs alleged that they suffered “loss of life and/or personal injuries, damages to their property and/or other losses during the February 2021 cold weather.” (Docket Entry No. 1, Ex. B, ¶ 1). They alleged that they “incurred property damages, substantial interference with the use and enjoyment of property, out of pocket losses, medical expenses in the past and future, lost wages and lost future earning capacity, extreme mental anguish and suffering, and other injuries and damages.” (Id., ¶ 31). The recovery sought included actual, consequential, and punitive damages, and attorneys' fees. (Id., ¶ 80).
The plaintiffs asserted Texas state-law claims for negligence and gross negligence, breach of contract, product liability and strict liability based on an abnormally dangerous activity, fraud, negligent misrepresentation, civil conspiracy, breach of a continuing duty to warn, and breach of express and implied warranties. All the claims arose from the alleged failure to prepare the grid for freezing temperatures and the failure to let consumers know of the potential for power interruption.
The plaintiffs identified two groups of defendants: the Power Generators, which own and operate power generation facilities and contract with the Power Distributors, and the Power Distributors, which transmit and distribute the generated power through lines that in turn deliver electricity to indirect (transmission and subtransmission) customers and then to primary and secondary customers. (Id., ¶ 2). ERCOT, the plaintiffs alleged, does not generate or transmit power, but instead schedules and manages the flow of electricity through the grid. (Id.) The plaintiffs based this lawsuit on the Power Generators' and the Power Distributors' “individual and collective failures to implement long known and recommended measures to weatherize their power generating facilities/stations and equipment to protect against foreseeable cold weather to avoid a catastrophe just like Texas suffered in February 2021 and because of their individual and collective operational failures during the February 2021 cold weather.” (Id., ¶ 2).
The plaintiffs alleged negligence and gross negligence from the following “individual and collective” failures by both sets of defendants: to comply with safety standards, customs, and practices to weatherize facilities and equipment to prevent this kind of disaster; to supervise the facilities and equipment to make sure they were weatherized; to properly train workers to be sure they weatherized the facilities and equipment; and to protect Texans from power loss during an extreme winter storm by weatherizing. (Id., ¶ 27(a)-(d)).
The plaintiffs alleged negligence and gross negligence specifically against the Power Distributors for failing to “make all reasonable efforts to prevent interruptions of service, ” and to “make reasonable provisions to manage emergencies resulting from failure of service, ” in violation of 16 Tex. Admin. Code § 25.52. (Id., ¶ 27(e), (f)).
The plaintiffs alleged the following product and strict liability defects against the Power Generators: defective design, manufacture, assembly, inspection, and testing “from a stability and safety standpoint, so the[ facilities] would not freeze up in cold weather conditions, ” defects that, with defective maintenance, “failed to prepare the[ facilities] to function and provide power to consumers in cold weather conditions”; that “failed to provide a safety mechanism to prevent failure in cold weather conditions”; and that failed to “weatherize[ the facilities] to protect against cold weather conditions . . . and provide continuous electrical power.” (Id., ¶ 35(a)-(e)). The plaintiffs added alleged failures to implement government agencies' suggestions to weatherize power generation facilities, making the facilities inherently dangerous, and alleged failures to test and inspect to ensure that the facilities could “withstand and continue to produce electric power in cold weather conditions.” (Id., ¶ 35(e), (g)). The alleged safer alternative design: “simply weatherizing.” (Id., ¶ 38).
As to both groups of defendants, the plaintiffs alleged strict liability based on the abnormally dangerous activity of manufacturing and supplying electricity, exposing the public and the plaintiffs to “a high degree of risk of serious injury and harm if their power generation facilities malfunctioned and/or failed to operate as occurred in February 2021.” (Id., ¶ 39).
The plaintiffs alleged similar breach of warranty, negligent misrepresentation, and fraud claims against both the Power Generator and the Power Distribution defendants. These allegations are based on claims that the two groups of defendants made various representations about their ability to provide electric power without mentioning that power could be interrupted during extended below-freezing temperatures. As to the fraud claims, the plaintiffs alleged that the representations were made with knowledge of their falsity and the intent to induce the plaintiffs to rely on them in receiving electric power. Similarly, the duty to warn allegations against both sets of defendants are based on the failure to warn that a long freeze could interrupt service. The fraud claims alleged that the defendants made the representations knowing they were false; the negligence claims alleged that the defendants knew or reasonably should have known that the representations were false. (Id., ¶¶ 40-53).
The plaintiffs alleged a breach of a continuing duty to warn them of “potential weather-related issues that could likely affect the character and quality of the electric power they were providing and cause an interruption in service, ” issues that the defendants “knew, should have known, or should have discovered” because they “were the result of their design, testing, manufacturing, marketing, transmitting and/or delivering of the electric power.” (Id., ¶¶ 54-67). The plaintiffs also alleged breach of express and implied warranties by both sets of defendants, based on “material affirmative representations, ” by “advertisements, pamphlets, and otherwise, ” that the plaintiffs “could safely and reliably use their electric power service, ” made when the defendants knew, or should have known that their only purpose was to provide safe and reliable electric power. (Id., ¶¶ 69-78). And the plaintiffs allege that the defendants' acts and omissions amounted to a civil conspiracy.
The counts do not specify the acts or omissions, or the role of the various defendants, beyond the references to failures to “weatherize” against prolonged freezing temperatures. Whether the claims are sufficiently pleaded is the subject of a motion to dismiss, but the threshold question is whether this court has federal removal jurisdiction under CAFA. The plaintiffs have moved to remand, the defendants responded, and the plaintiffs replied. (Docket Entries Nos. 16, 24, 31). This court heard argument on the motions. Based on the pleadings, the motion and briefs, the arguments, and the applicable law, the court grants the motion to remand. The reasons are explained in detail below.
A. CAFA and Removal Jurisdiction
The Class Action Fairness Act of 2005 expanded federal subject matter jurisdiction over state-law class and mass actions. If there are 100 or more plaintiffs who are minimally diverse, an aggregate amount in controversy of $5 million, and a timely removal, federal removal jurisdiction is present. 28 U.S.C. § 1332(d)(2). There is no dispute here that the defendants' CAFA removal was timely and satisfied the statutory thresholds of an amount in controversy exceeding $5 million and minimal diversity. The parties agree that this is not pleaded as a class action. The remand argument centers on whether the “single event” exclusion or the “local controversy” exception to CAFA removal jurisdiction applies. Either would require remand.
The single event exclusion is a limit on the definition of a mass action removable under CAFA. “[T]he term ‘mass action' means any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that ...
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