Venoco, LLC v. Plains Pipeline, L.P.

VENOCO, LLC, FKA Venoco, Inc., a Delaware limited liability company, Plaintiff-Appellant, v. PLAINS PIPELINE, L.P., a Texas limited partnership; et al., Defendants-Appellees.

No. 21-55193

United States Court of Appeals, Ninth Circuit

April 12, 2022

NOT FOR PUBLICATION

Argued and Submitted March 9, 2022 Pasadena, California

Appeal from the United States District Court for the Central District D.C. No. 2:16-cv-02988-PSG-JEM of California Philip S. Gutierrez, Chief District Judge, Presiding

Before: WARDLAW and HURWITZ, Circuit Judges, and MOLLOY ^[**] District Judge.

MEMORANDUM^[*]

Venoco LLC (Venoco) appeals the district court's denial of its motion to set aside a judgment under Rule 60(b)(6) of the Federal Rules of Civil Procedure.

Venoco managed an offshore crude oil production platform that it leased from the California State Lands Commission (Commission), and Plains Pipeline, L.P. (Plains)^[1] owned and operated an oil pipeline that Venoco depended on to transport oil to its onshore contractors. After this pipeline ruptured, Venoco sued Plains, and the district court granted Plains' motion for judgment on the pleadings based on its application of California's common law public utility rule. Venoco appealed, and we affirmed the district court. Venoco, LLC v. Plains Pipeline, L.P., 814 Fed.Appx. 318 (9th Cir. 2020). Shortly thereafter, the California Court of Appeal rejected the Venoco panel's interpretation of the public utility rule in a lawsuit that the Commission brought against Plains. Venoco moved to set aside the district court's prior judgment and reopen the case due to an intervening change of law under Rule 60(b)(6), the district court denied the motion, and Venoco timely appealed. We have jurisdiction under 28 U.S.C. § 1291, and because the district court abused its discretion in denying the motion, we reverse.

1. The California Court of Appeal's decision in State Lands Commission v. Plains Pipeline, L.P., 57 Cal.App. 5th 582 (Cal.Ct.App. 2020) (State Lands), constituted an intervening change of law for the purposes of Rule 60(b)(6). Courts are required to "follow a published intermediate state court decision regarding California law unless . . . convinced that the California Supreme Court would reject it." Muniz v. United Parcel Serv., Inc., 738 F.3d 214, 219 (9th Cir. 2013). As the district court was not convinced that the California Supreme Court would reject State Lands, it should have concluded that State Lands changed the law regarding whether the California public utility rule immunized Plains from liability. See Phelps v. Alameida, 569 F.3d 1120, 1131 (9th Cir. 2009) (opinion constituted a change in law because it altered the outcome of the case).^[2]

2. Furthermore, Venoco demonstrated extraordinary circumstances warranting Rule 60(b)(6) relief. To determine whether an intervening change in law warrants Rule 60(b)(6) relief, we consider six "well-reasoned principles," id. at 1140: (1) the nature of the change in the law; (2) the movant's diligence; (3) the parties' reliance interests in the case's finality; (4) the delay; (5) the relationship between the original judgment and the change in the law; and (6) comity. Henson v. Fidelity Nat'l Fin., Inc., 943 F.3d 434, 446-53 (9th Cir. 2019). Although this list is neither rigid nor exhaustive, courts must "intensively balance all the relevant factors," id. at 444 (internal quotation marks omitted), which did not happen here.

First, the nature of the intervening change in law here counsels in favor of granting relief. It neither "upset or overturn[ed] a settled legal principle," as the application of the public utility rule to companies like Plains "was decidedly unsettled at the time [the question] was before the district court." Phelps, 569 F.3d at 1136.^[3] Moreover, when the California Court of Appeal weighed in on this question, it vindicated "the interpretation [Venoco] had pressed all along." Id.

Second, Venoco acted diligently in pursuing relief. While Venoco could have requested a stay pending the California Court of Appeal's State Lands decision before the Ninth Circuit issued its decision, Venoco diligently advocated its position in a number of other ways. See id. at 1136-37. It advocated its position before the district court in its opposition to Plains' motion to dismiss and in its Rule 59(e) motion, before our circuit on appeal, and before the California Court of Appeal as an amicus curiae in the State Lands case. Furthermore, Venoco filed its Rule 60(b)(6) within a month of the State Lands decision, which is a "reasonable time" to seek relief. See Bynoe v. Baca, 966 F.3d 972, 984-85 (9th Cir. 2020).

Third, it was inappropriate to focus solely on the "abstract interest in finality, but not, as Phelps instructed, whether [the parties] had any reliance interest in the finality of the judgment." Henson, 943 F.3d at 450. Plains provides no argument that it had any reliance interest in finality, nor does our review of the record yield any evidence of reliance interests.

Fourth, the length of delay weighs in Venoco's favor. Venoco filed its Rule 60(b)(6) motion less than a month after the California Court of Appeal issued the State Lands decision, see Bynoe, 966 F.3d at 980, and just over four months after the Ninth Circuit decision affirming the district court's dismissal of Venoco-in fact, Venoco's deadline to petition for certiorari had not yet expired. Cf. Phelps, 569 F.3d at 1126-27.

Fifth, the direct relationship between the original judgment and the change in law is especially important here. State Lands involved the same oil spill, the same legal doctrine, and the same defendant as the ruling that Venoco challenged. Given the "close connection between the two cases," this factor tips the scales heavily toward finding "the circumstances sufficiently extraordinary to justify disturbing the finality of the original judgment." Id. at 1139 (cleaned up).

Finally, granting relief under Rule 60(b)(6) advances the interests of comity. As this is a diversity case that hinges on the application of a California common law doctrine, it goes to the heart of comity's concern with tensions "between the independently sovereign state and federal judiciaries." Henson, 943 F.3d at 453 (internal quotation marks omitted). Rejecting the California Court of Appeal's interpretation of its own state law doctrine would only injure comity interests, especially because it applied this doctrine to the same defendant on the basis of virtually identical facts.

Therefore, we REVERSE the district court's order denying Venoco's Rule 60(b)(6) motion and REMAND to the district court with directions to reopen the case.

HURWITZ, Circuit Judge, dissenting:

"We require 'extraordinary circumstances justifying the reopening of a final judgment' under Rule 60(b)(6) and have outlined 'six factors that may be considered, among others, to evaluate whether extraordinary circumstances exist.'" Riley v. Filson, 933 F.3d 1068, 1071 (9th Cir. 2019) (citations omitted). But "the key issue is whether there was 'a change in the law,' and so we do not need to reach the other five factors if there was no change." See id. (citations omitted); see also Polites v. United States, 364 U.S. 426, 433 (1960) (affirming denial of Rule 60(b) relief in absence of "a clear and authoritative change in governing law"). Because the decision of a divided panel of the California Court of Appeal in State Lands Commission v. Plains Pipeline, L.P., 57 Cal.App. 5th 582 (2020) was not a change in California law, the district court did not abuse its discretion in denying relief under Rule 60(b)(6). I therefore respectfully dissent.

1. To be sure, State Lands directly conflicts with our decision in Venoco, LLC v. Plains Pipeline, L.P., 814 Fed.Appx. 318 (2020).^[1] But a change in the law for purposes of Rule 60(b)(6) relief is generally not established simply because a state court disagrees with a federal court's prior interpretation of an unsettled issue. See Hollister v. Forsythe, 1996 WL 416242, at *1 n.3 (9th Cir. 1996) ("Hollister is essentially arguing that a subsequent decision by the Montana Supreme Court renders the federal court's previous application of unsettled state law invalid and, therefore, extraordinary circumstances exist for relief from judgment. We reject this argument."); Kan. Pub. Emps. Ret. Sys. v. Reimer & Koger Assocs., Inc., 194 F.3d 922, 925 (8th Cir. 1999) ("[T]here is nothing in the Erie doctrine that requires federal courts to sacrifice the finality of their judgments because state courts subsequently interpret state law differently than the federal courts have done."); Cincinnati Ins. Co. v. Flanders Elec. Motor Serv., Inc., 131 F.3d 625, 628-29 (7th Cir. 1997) (noting that "[g]enerally, a change in state decisional law is insufficient to constitute an extraordinary circumstance warranting relief under Rule 60(b)," and concluding that the district court's interpretation of Indiana law was "valid and well-reasoned"); Batts v. Tow-Motor Forklift Co., 66 F.3d 743, 750 (5th Cir. 1995) ("The general rule that a change in decisional law will not ordinarily warrant Rule 60(b)(6) relief has greater force in an Erie case because in this context a federal court is doing no more than fulfilling its obligation scrupulously to determine how a state court would decide a question."); DeWeerth v. Baldinger, 38 F.3d 1266, 1273-74 (2d Cir. 1994) ("The very nature of diversity jurisdiction leaves open the possibility that a state court will subsequently disagree with a federal court's interpretation of state law.

However this aspect of our dual justice system does not mean that all diversity judgments are subject to revision once a state court later addresses the litigated issues....