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Parish v. Equitable Petroleum Corp.

United States District Court, E.D. Louisiana

May 18, 2015

JEFFERSON PARISH,
v.
EQUITABLE PETROLEUM CORP., ET AL., Section: R

ORDER

SARAH S. VANCE, District Judge.

Before the Court is a Motion to Remand filed by plaintiff, Jefferson Parish, on its own behalf and on behalf of the State of Louisiana.[1] Because the Court finds that subject-matter jurisdiction is lacking, plaintiff's motion to remand is GRANTED and the Court hereby remands this matter to the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana.

I. Background

This case is one of several cases filed by the Parish of Jefferson against various defendants for alleged violations of permits issued under the State and Local Coastal Resources Management Act of 1978, La. R.S. § 49:214.21, et seq., along with the state and local regulations, guidelines, ordinances, and orders promulgated thereunder ("CZM laws"). Jefferson Parish initiated the instant suit in the 24th Judicial District Court for the Parish of Jefferson against thirteen defendants.[2] Three of these defendants are Louisiana companies: Graham Exploration, Ltd., Equitable Petroleum Corp., and Baby Oil, Inc.[3] Additionally, in its state-court petition, plaintiff disavows any other type of claim, cause of action, or legal theory potentially cognizable on the facts alleged, including any claim that could form the basis for jurisdiction in federal court.[4]

Defendants nevertheless removed the case to this Court alleging three bases for federal subject-matter jurisdiction: (1) diversity jurisdiction; (2) the Outer Continental Shelf Lands Act ("OCSLA"); and (3) general maritime law.[5] Plaintiff filed a motion to remand.[6] On February 26, 2014, the Court issued an order deferring its ruling on the motion to remand and staying proceedings until another section of this Court resolved a motion to remand presenting substantially identical issues.[7]

On December 1, 2014, Judge Zainey issued a decision remanding Parish of Plaquemines v. Total Petrochemical & Refining USA, Inc., et al. (" Total ") to state court.[8] After a thorough analysis, Judge Zainey determined that he lacked diversity jurisdiction, as well as OCSLA, admiralty, and federal question jurisdiction over substantially identical claims as those brought by plaintiff in this case. Shortly thereafter, the Court granted the parties' joint motion to file supplemental memoranda and directed the parties to brief the issue of the applicability of Judge Zainey's order in Total to the specific facts of this case.[9] In their supplemental briefing, defendants do not distinguish the facts of Total from this case, but instead argue that Judge Zainey's "analysis contradicts the governing authorities on the issues presented."[10] Defendants in several other sections of the Court have taken a similar tack to no avail. See Plaquemines Parish v. Rozel Operating Co., et al., Civ. A. No. 13-6722 (E.D. La. Jan. 29, 2015) (Africk, J.); Jefferson Parish v. Anadarko E&P Onshore LLC, et al., Civ. A. No. 13-6701 (E.D. La. Mar. 9, 2015) (Lemelle, J.); Plaquemines Parish v. Hilcorp Energy Co., et al., Civ. A. No. 13-6727 (E.D. La. Apr. 29, 2015) (Feldman, J.); Plaquemines Parish v. Devon Energy Prod. Co., et al., Civ. A. No. 13-6716 (E.D. La. May 12, 2015) (Barbier, J.).

As noted above, the facts and issues presented in this case are substantially identical to the foregoing cases. Plaintiff asserts that defendants' activities associated with the development of the Little Lake and Little Temple Oil & Gas Fields in Jefferson Parish violated the CZM laws and that these violations caused damage to land and water bodies located in Jefferson Parish.[11] For the purposes of resolving the instant motion, it is enough to note that (1) plaintiff and at least one defendant are citizens of Louisiana, (2) the conduct that is alleged to have violated the permits at issue occurred within Jefferson Parish and not on the Outer Continental Shelf, and (3) plaintiff disclaims any and all claims other than state-law permit violation claims.[12]

II. Legal Standard

Unless a federal statute expressly provides otherwise, a defendant may remove a civil action filed in state court to federal court if the federal court would have had original jurisdiction over the case. 28 U.S.C. § 1441(a). The removing party "bears the burden of showing that federal jurisdiction exists and that removal was proper." Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013) (citing Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)). In assessing whether removal was appropriate, the Court is guided by the principle, grounded in notions of comity and the recognition that federal courts are courts of limited jurisdiction, that "removal statute[s] should be strictly construed in favor of remand." Manguno, 276 F.3d at 723 (citing Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir. 2000)).

III. Discussion

Defendants allege three separate grounds for subject matter jurisdiction: (1) diversity jurisdiction; (2) jurisdiction under OCSLA; and (3) general maritime jurisdiction. The Court will address each of these potential bases for jurisdiction in turn.

A. Diversity Jurisdiction

For diversity jurisdiction to exist, the amount in controversy must exceed $75, 000, and there must be complete diversity between plaintiffs and defendants. See 28 U.S.C. § 1332(a); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978). When a nondiverse party is properly joined as a defendant, no defendant may remove the case under 28 U.S.C. § 1332. But a defendant may remove despite the presence of a nondiverse defendant by showing that the nondiverse party was joined fraudulently due to plaintiff's inability to establish a claim under state law against the nondiverse defendant or due to fraud in the pleading of jurisdictional facts. See, e.g., Melder v. Allstate Corp., 404 F.3d 328, 329 (5th Cir. 2005).

As was the case in Total, complete diversity of citizenship is lacking on the face of plaintiff's complaint because at least two of the defendants are citizens of Louisiana, [13] and Jefferson Parish, as a subdivision of the State of Louisiana, is considered a citizen of Louisiana for jurisdictional purposes. See Moor v. Alameda Cnty., 411 U.S. 693, 717 (1973). Defendants acknowledge the presence of nondiverse codefendants, but argue that plaintiff fraudulently joined these nondiverse defendants to defeat diversity jurisdiction.14 Defendants, however, do not argue that plaintiff cannot establish a claim against the nondiverse defendants or that plaintiff fraudulently pleaded jurisdictional facts. Instead, defendants premise their fraudulent joinder argument on a principle first established in Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353 (11th Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). In Tapscott, the Eleventh Circuit recognized the possibility of fraudulent joinder when a diverse defendant is joined with a nondiverse defendant and the claim against the diverse defendant has no rational connection to the claim against the nondiverse defendant. Id. Under Tapscott, only "egregious" misjoinder of parties with no real connection to each other, and not "mere" misjoinder, constitutes fraudulent joinder. Id. at 1360.

Although the Fifth Circuit has never expressly adopted the Tapscott doctrine, several cases indicate this circuit's approval of the Tapscott notion of fraudulent joinder. In In re Benjamin Moore & Co., 309 F.3d 296 (5th Cir. 2002), the Fifth Circuit stated that a district court in its jurisdictional determination should consider whether misjoinder of a nondiverse party can defeat diversity jurisdiction. Id. at 298 (citing Tapscott, 77 F.3d at 1360). In a later petition for a writ of mandamus in that case, the Fifth Circuit held that it did not have jurisdiction to issue a writ and stated that its decision did not "detract[] from the force of the Tapscott principle that fraudulent misjoinder of plaintiffs is no more permissible than fraudulent misjoinder of defendants to circumvent diversity jurisdiction." In re Benjamin Moore & Co., 318 F.3d 626, 630-31 (5th Cir. 2002).

Four years later, the Fifth Circuit appeared to recognize the Tapscott principle in Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529 (5th Cir. 2006). There, the Fifth Circuit determined that federal jurisdiction over removed claims against a diverse defendant was proper, even though removal was precipitated by the state court's severance of these claims from plaintiff's claims against a nondiverse defendant over plaintiff's objection. Id. at 533. Plaintiff argued that the removal was improper because the severance of the nondiverse defendants was not a voluntary act of the plaintiff. The Fifth Circuit rejected plaintiff's argument and confirmed that dismissal of a fraudulently joined claim was an exception to the voluntary-involuntary rule. Id. The court then held that even if the scenario before it did not satisfy the criteria for traditional fraudulent joinder ( i.e. fraud in the pleading of jurisdictional facts or inability to establish a cause of action against the in-state defendant), a like exception to the voluntary-involuntary rule applied to the fraudulently joined claims. The Court further stated that "[t]he fraudulent joinder exception to the voluntary-involuntary rule is designed to prevent plaintiffs ...


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