Catron v. Colt Energy Inc et al

Filing 106

MEMORANDUM AND ORDER denying Defendants' 74 Motion to Dismiss. Further, the case is remanded to the District Court of Wilson County, Kansas. The Court makes no ruling on the other pending 84 , 87 Motions. Signed by District Judge Carlos Murguia on 06/29/2015. (mg)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF KANSAS
RICHARD CATRON, individually, and on
behalf of those similarly situated,
Plaintiff,
v.
COLT ENERGY, INC., et al.,
Defendants.

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Case No. 13-4073-CM

MEMORANDUM AND ORDER
Plaintiff Richard Catron filed this case in the District Court of Wilson County, Kansas,
individually and on behalf of those similarly situated. Plaintiff claims that defendants Colt Energy,
Inc.; Layne Energy Resources, Inc.; and Layne Energy Operating, LLC violated law prohibiting
restraint of trade in leasing minerals in Southeast Kansas. Defendants removed the case to federal
court, basing removal on the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2). Upon a
motion to dismiss filed by defendants, this court rejected some of plaintiff’s damages theories and
dismissed one of plaintiff’s claims. The case is now before the court on three interrelated motions:
Defendants’ Motion to Dismiss (Doc. 74); Motion to Intervene as Named Plaintiffs by Steven B. Friess
Irrevocable Trust and Steven B. Friess Living Trust (Doc. 84); and Plaintiff’s Motion to Join Steven B.
Friess Irrevocable Trust and Steven B. Friess Living Trust as Named Plaintiffs and for Leave to File
“Third Amended Complaint – Class Action” (Doc. 87). Because defendant’s motion to dismiss calls
into question this court’s jurisdiction, the court must address that motion first.
Defendants claim that the named plaintiff—Richard Catron—lacks standing to pursue the
remaining cause of action. The court agrees. The complaint alleges that defendants entered into an
agreement to divide the market for leases in 2004 or 2005. But plaintiff Catron entered into his

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contract on July 3, 2001, taking him out of the putative class. He lacks standing to bring this action,
which deprives the court of subject matter jurisdiction. See Bender v. Williamsport Area Sch. Dist.,
475 U.S. 534, 541–42 (1986) (considering standing a question of subject matter jurisdiction). The
court must therefore decide whether to remand the action to state court or dismiss it.1
The statute governing procedures after removal addresses remands based on lack of subject
matter jurisdiction: “If at any time before final judgment it appears that the district court lacks subject
matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). This command is mandatory.
See Int’l Primate Prot. League v. Adm’rs of Tulane Educ. Fund, 500 U.S. 72, 89 (1991) (“[T]he literal
words of § 1447(c) . . . on their face, give no discretion to dismiss rather than remand an action. The
statute declares that, where subject matter jurisdiction is lacking, the removed case shall be remanded.”
(internal quotation marks, citation, and ellipses omitted)); Hill v. Vanderbilt Capital Advisors, LLC,
702 F.3d 1220, 1226 (10th Cir. 2012) (“The plain language of § 1447(c) gives no discretion to dismiss
rather than remand an action removed from state court over which the court lacks subject-matter
jurisdiction.” (citation and internal quotation marks omitted)).
Defendants ask the court to apply a futility exception to this mandatory rule. In support,
defendants cite several cases from other circuits and other districts. See, e.g., Bell v. City of Kellogg,
922 F.2d 1418, 1425 (9th Cir. 1990) (“Because we are certain that a remand to state court would be
futile . . . [t]he district court correctly denied the motion to remand and dismissed the state claims.”);
Mignogna v. Sair Aviation, Inc., 937 F.2d 37, 41 (2d Cir. 1991) (“[R]emand might be improper if it
would be futile, as it would be if the state court could not exercise jurisdiction over [the] claim against

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Plaintiff raised the argument that the case should be remanded (rather than dismissed) in his reply brief to his motions to
intervene and join—not in response to defendants’ motion to dismiss. In this same reply brief, plaintiff conceded that he
lacks standing, although this was not his position in plaintiff’s response to defendants’ motion to dismiss. The court does
not condone this method of “cross-briefing,” but believes that under the circumstances of this case, any prejudice to
defendants has been effectively cured. The court allowed defendants to file a surreply to the motions to intervene and join
in order to have full briefing on the remand/dismissal question.

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[defendant].” (internal citation omitted)); Asarco, Inc. v. Glenara, Ltd., 912 F.2d 784, 787 (5th Cir.
1990) (“A remand thus would be a futile gesture, wasteful of scarce judicial resources, an exercise in
which we decline to engage”). The Tenth Circuit also essentially applied the futility exception in Wolff
v. United States, 76 F. App’x 867, 870 (10th Cir. 2003), determining that dismissal—not remand—was
appropriate. Wolff did not specifically refer to its application of the concept as the “futility exception,”
but the court used the same rationale. It stated: “We decline to waste further judicial resources by
requiring the district court to remand Mr. Wolff’s case to the Wyoming state court, which would
inevitably dismiss the matter for lack of jurisdiction.” Id. at 870. This decision, however, was based
on the sovereign immunity of the United States to suit in state court. Id. at 869–70.
The rationale in these cases has some appeal. But it also contradicts the plain language of
§ 1447(c) and the Tenth Circuit’s language in Hill v. Vanderbilt Capital Advisors, LLC. The court
understands that Hill’s language is dicta, but finds it persuasive and representative of the better
approach. It is also supported by language in two other Tenth Circuit cases, Fent v. Oklahoma Water
Resources Board and Jepsen v. Texaco. Fent noted that “the courts generally recognize that ‘there is
no implicit futility exception hidden behind the plain language of § 1447(c).’” 235 F.3d 553, 557 (10th
Cir. 2000) (quoting Coyne v. Am. Tobacco Co., 183 F.3d 488, 496 (6th Cir. 1999)). And Jepsen (an
unpublished case) held that “[l]ack of standing divests the court of subject matter jurisdiction, and
therefore, upon determining that Mr. Jepsen lacked standing to bring suit, the court should have
remanded the matter to state court pursuant to 1447(c).” No. 94-6429, 1995 WL 607630, at *2 (10th
Cir. Oct. 16, 1995). Finally, as noted above, the Tenth Circuit case that affirmed an order of dismissal
rather than remand—Wolff—involved sovereign immunity, which distinguishes it from the case now
before the court.

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This court recognizes the appeal of preserving judicial resources. But the court also believes
that the plain language of § 1447(c) controls. Because plaintiff Catron lacks standing, the court lacks
subject matter jurisdiction over his claims. The court therefore must remand the case to state court.
IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss (Doc. 74) is denied.
IT IS FURTHER ORDERED that the case is remanded to the District Court of Wilson
County, Kansas.
IT IS FURTHER ORDERED that the court makes no ruling on the other pending motions
(Docs. 84 and 87).
Dated this 29th day of June, 2014, at Kansas City, Kansas.

s/ Carlos Murguia
CARLOS MURGUIA
United States District Judge

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