City of Neodesha v. BP Corp. N. Am. Inc.

176 F.Supp.3d 1233

City of Neodesha, Plaintiff,

v.BP Corporation North America Inc., Defendant.

CIVIL ACTIONS Nos. 15-4025-KHV through 15-4844-KHV

No. 15-4847-KHV [Consolidated under No. 15-4014-KHV for purposes of rem

motion only]

United States District Court, D. Kansas.

Signed March 31, 2016

David W. Edgar, Edgar Law Firm, LLC, Denver, CO, John M. Edgar, Matthew J. Limoli, Edgar Law Firm, LLC, Kansas City, MO, for Plaintiff.

Arthur S. Chalmers, F. James Robinson, Jr., Richard C. Hite, Stephen H. Netherton, Hite, Fanning & Honeyman, LLP, Wichita, KS, Catherine L. Fitzpatrick, Amark S. Lillie, Richard C. Godfrey, Kirkland & Ellis, Chicago, IL, Cory R. Buck, Case Linden, PC, Kansas City, MO, Jeffrey B. Clark, Kirkland & Ellis, Washington, DC, for Defendant.

MEMORANDUM AND ORDER

Kathryn H. Vratil, United States District Judge

On December 19, 2014, the City of Neodesha, Kansas filed 821 complaints in Neodesha Municipal Court alleging that BP Corporation North America Inc., had violated the City waste ordinance.¹ On January 28, 2015, BP filed notices of removal in the 821 cases. See Case Nos. 15–4025 through 15–4844 and 15-4847-KHV (Municipal Court Case Nos. 2014-1202, et seq.). This matter comes before the Court on the Motion For Remand (Primary Motion)(Doc. #14) which the City filed February 10, 2015 in Case No. 15-4014-KHV. These cases require interpretation of newly enacted provisions of the Neodesha Municipal Code and present novel issues of law. For reasons set forth below, the Court finds that the City's motion to remand should be overruled.

I. Factual And Procedural Background

Standard Oil, the predecessor of BP, owned and operated an oil refinery in Neodesha for 74 years, from 1897 to 1970.

The refinery leaked petroleum by-products into ground water and subsurface soil. In March of 2004, the City, individually and as a class representative for all real property owners in Neodesha, filed a civil suit against BP and related entities in the District Court of Wilson County, Kansas. Plaintiffs alleged negligence, strict liability, nuisance, trespass, violation of K.S.A. § 65–6203,² unjust enrichment, fraudulent concealment/fraud by silence, breach of fiduciary duty and breach of contract.³ Plaintiffs sought damages and declaratory and injunctive relief, including remediation. After a 17-week trial which began in August of 2007, a jury found for BP on all claims. Notwithstanding the verdict, the trial court entered judgment for plaintiffs on the class claim that BP was strictly liable for water contamination from the refinery. In an interlocutory appeal, the Kansas Supreme Court reversed and remanded with directions that the district court reinstate the jury verdict and enter judgment for BP on all claims. See City of Neodesha v. BP Corp., 295 Kan. 298, 287 P.3d 214 (2012). Plaintiffs then moved for a new trial. The district court denied that motion. Plaintiffs appealed. On August 22, 2014, the Court of Appeals affirmed judgment for BP. See City of Neodesha v. BP Corp., 50 Kan.App.2d 731, 334 P.3d 830 (2014), review denied, Oct. 7, 2015.⁴

Meanwhile, on November 12, 2014, while the petition for review was pending in the Kansas Supreme Court, the Board of Commissioners of Neodesha expanded the substantive provisions of the city waste ordinance. Presumably, its purpose in doing so was to specifically cover the contamination at issue in the underlying state litigation. See Appendix, Section 36-407. Specifically, the Board amended the existing Section 36-407 waste ordinance to require that owners and occupants maintain their premises free of industrial and hazardous wastes, see Amended Section 36-407(b), and made it unlawful (1) to allow hazardous or industrial wastes to accumulate or run off by natural or unnatural migration on or under the surface, see Amended Section 36-407(a); (2) to accumulate industrial waste, hazardous waste or spillage, see Amended Section 36-407(d); or (3) for any person or entity responsible for industrial, bulky or hazardous wastes, to allow such wastes to trespass or migrate, naturally or unnaturally, on or under the property of another, see Amended Section 36-407(e). See Neodesha, Ks. Ordinance No. 1634.⁵ The Board also enacted new penalties for violations of the waste ordinance. Specifically, it enacted Section 36-415 to provide “civil penalties” of $500 to $1,000 per day for violation of Section 36-407, effective on the date of publication (November 20, 2014). See Appendix, Section 36-415.

Thirty days after the revised ordinances went into effect, on December 19, 2014, the City filed 821 complaints in Neodesha Municipal Court, alleging that BP had violated Amended Section 36-407. Each complaint alleged that as to a specific tract of property in the City, from September 1, 2009 through December 19, 2014 and beyond, BP violated Section 36-407(a) (Counts One and Two); Section 36-407(b) (Count Three); Section 36-407(c) (Count Four) and Section 36-407(d) (Count Five). See, e.g., Doc. #1-2 filed January 28, 2015 in Case No. 15-4025-KHV. See Appendix, Waste Complaint. For each tract, the pertinent complaint charged separate violations of Section 36-407. As provided by a new Code provision, Section 26-1, the city administrator signed the unsworn complaints.⁶

On January 27 and 28, 2015, BP filed notices of removal in the 821 cases. See Case Nos. 15-4025-KHV through 15-4844-KHV, and Case No. 15-4847-KHV (Municipal Court Nos. 2014-1202, et seq.).⁷ The City asks the Court to remand these cases, arguing that the Court lacks subject matter jurisdiction because they are not “civil actions” that can be removed under 28 U.S.C. §§ 1332 and 1441.

II. Legal Standards

A defendant may remove a state court civil action if a federal court has original jurisdiction over the claim. 28 U.S.C. § 1441(a) ; see Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (civil action removable if plaintiff could have originally brought action in federal court).⁸ Because federal courts are courts of limited jurisdiction, the law imposes a presumption against federal jurisdiction. See Frederick & Warinner v. Lundgren, 962 F.Supp. 1580, 1582 (D.Kan.1997) (citing Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974) ). It requires the Court to deny jurisdiction in all cases where such jurisdiction does not affirmatively appear in the record. See Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). Accordingly, federal courts strictly construe removal statutes and resolve all doubts in favor of remand.⁹

Defendant bears the burden to demonstrate the propriety of removal from state to federal court. Baby C v. Price, 138 Fed.Appx. 81, 83 (10th Cir.2005) ; Montoya v. Chao, 296 F.3d 952, 955 (10th Cir.2002).

BP asserts that this Court has subject matter jurisdiction under 28 U.S.C. § 1332, the general diversity jurisdiction statute, which provides that a federal district court has original jurisdiction over “civil actions” in which the parties are of diverse citizenship and “the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a).¹⁰ As the party requesting removal, BP has satisfied its obligation to provide “a short and plain statement of the grounds for removal.” Dart Cherokee Basin Operating Co. v. Owens, ––– U.S. ––––, 135 S.Ct. 547, 551, 553–54, 190 L.Ed.2d 495 (2014) (citing 28 U.S.C § 1446(a) ). To assess diversity jurisdiction, the Court looks to the claims in the state court complaint at the time of removal. See Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002).

III. Analysis

The City urges the Court to remand because the waste ordinance complaints which it filed in Neodesha Municipal Court on December 19, 2014 are not “civil actions” under 28 U.S.C. §§ 1332 and 1441(a).¹¹ Specifically, the City argues that the complaints are criminal or quasi-criminal actions which seek to impose a punishment or penalty to enforce a public right.

In the notices of removal, BP asserts that the complaints allege violations of Municipal Code Section 36-407 for which the Code explicitly provides “civil penalties,” and that under K. S. A. § 21–5102, an offense (other than a cigarette or traffic infraction) is not criminal unless imprisonment is a potential penalty. BP argues that because Amended Section 36-415 does not authorize imprisonment for violations of Amended Section 36-407, the charged violations are civil actions which are removable under 28 U.S.C. § 1441(a). In response to the City's motion to remand, BP more specifically notes that the new penalty provisions (1) explicitly provide for only monetary penalties and costs of remediation, (2) refer to the monetary penalties as “civil penalties” and (3) provide that costs or fees shall be enforced as “judgments for payment of money in civil cases.” See BP Corporation North America's Response To Plaintiff's Motion For Remand (Primary Motion)(Doc. #23) filed March 3, 2015 at 19-22 (quoting Amended Section 36-415).

Federal law determines whether a state court action is removable under the federal removal statute. 14 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure§ 3721, at 36-37 (4th ed. 2009 & Supp. 2010) ; see Mach v. Triple D. Supply, LLC., 773 F.Supp.2d 1018, 1045 (D.N.Mex.2011) ; see also Grubbs v. Gen. Elec. Corp., 405 U.S. 699, 705, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972). State law is relevant, however, to determine whether an action is a “civil action” and thus removable under Section 1441(a). See Mach, 773 F.Supp.2d at 1030 ; Nungesser v. Bryant, No. 07–1285–WEB, 2007 WL 4374022, at *6 (D.Kan. Dec. 7, 2007).

As noted, BP bears the burden of demonstrating that removal was proper. To satisfy that burden, it relies on the face of the complaints, the language of the Neodesha Municipal Code, the Kansas statutory definition of a crime, see K. S. A. § 21–5102, and federal and...