Westlake Vinyls, Inc. v. Goodrich Corporation et al
Filing
58
MEMORANDUM OPINION AND ORDER by Senior Judge Thomas B. Russell on 7/19/2014; Defendants Motions to Dismiss, (Docket Nos. 40, 42), are hereby GRANTED, and all claims against each Defendant are hereby DISMISSED. An appropriate order shall issue concurrently with this opinion.cc:counsel (DAK)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
PADUCAH DIVISION
CIVIL ACTION NO. 5:14-CV-00041-TBR
WESTLAKE VINYLS, INC.
Plaintiff,
v.
GOODRICH CORPORATION, et al.
Defendants.
MEMORANDUM OPINION AND ORDER
This matter comes before the Court upon the Motion to Dismiss First Amended
Complaint Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6) filed by
Defendant PolyOne Corporation (“PolyOne”). (Docket No. 40.) Also before the Court is the
Motion to Dismiss of Defendant Goodrich Corporation (“Goodrich”), filed pursuant to the same
rules. (Docket No. 42). Plaintiff Westlake Vinyls, Inc. (“Westlake”) has responded to these
motions, (Docket No. 49), and each defendant has replied, (Docket Nos. 54, 55). Fully briefed,
this matter is now ripe for adjudication. For the reasons explained below, the Court will GRANT
the defendants’ Motions to Dismiss. (Docket Nos. 40, 42.)
Factual Background
This lawsuit is born from the lengthy and complex litigation concerning the allocation of
environmental costs arising at the former BF Goodrich Industrial Complex, a Calvert City,
Kentucky manufacturing site.
After several years of hard-fought proceedings, Westlake,
PolyOne, and Goodrich reached consensus and executed a Settlement Agreement.
The
Agreement provided for arbitration proceedings between Westlake and PolyOne concerning
liability for certain environmental costs associated with the Calvert City site. Goodrich is not a
1
party to the Settlement Agreement’s arbitration provisions, having specifically agreed that it
bears “no right or obligation” with respect to such proceedings. Additionally, the Agreement’s
forum selection clause establishes exclusive jurisdiction in the Western District of Kentucky over
any action or proceeding arising out of or related to the Agreement. (Docket No. 1 at 2-3.)
In March 2010, PolyOne initiated an arbitration proceeding against Westlake concerning
liability for various environmental costs. The arbitration panel ordered PolyOne to produce
information to Westlake regarding insurance coverage for site-related environmental liabilities.
PolyOne itself has asserted no privilege; however, Goodrich has demanded that PolyOne
withhold certain documents, pointing to the attorney-client privilege and work product doctrine.
When PolyOne initially withheld such documents, the arbitration panel ruled that the Settlement
Agreement required their production. (Docket No. 32-1.) Shortly after, the panel granted
Goodrich’s motion to intervene in the arbitration. PolyOne requested that the panel rescind its
order obligating PolyOne to produce insurance-related information in its possession to Westlake;
the panel denied this motion. (Docket No. 32 at 6.) After an additional round of briefing, the
panel affirmed that PolyOne was required to produce the information at issue.
On March 13, 2014, Goodrich initiated a complaint in an Ohio state court, naming as
defendants Westlake, PolyOne, and each of the members of the arbitration panel. See Goodrich
Corp. v. PolyOne Corp., Westlake Chem. Corp., Gordon Doerfer, Eric Van Loon, & William
Hartgering, Court of Common Pleas, Summit County, Ohio, Case No. CV-2014-03-1308.
Goodrich sought relief to include a temporary restraining order that would vacate enforcement of
the arbitration panel’s order, compelling the defendants to instead “keep confidential
[Goodrich’s] documents protected by the attorney-client privilege and work-product doctrine and
settlement negotiation communications related to an action currently pending before the Court of
2
Common Pleas in Summit County, Ohio . . . .” (Docket No. 32-4 at 2.) On the same day, a
magistrate entered a temporary restraining order prohibiting PolyOne from producing such
documents to Westlake. On March 17, 2014, Westlake removed the Ohio litigation to the United
States District Court for the Northern District of Ohio. (Docket No. 32 at 9.)
In this action, Westlake asserts that Goodrich’s Ohio state court action violates the
Settlement Agreement’s form selection clause. Although PolyOne is named as a defendant in
the Ohio litigation, Westlake insists that PolyOne has allied itself with Goodrich, violating the
Settlement agreement by “actively resist[ing]” Westlake’s attempt to litigate in the Western
District of Kentucky.
(Docket No. 32 at 9.)
Westlake seeks a declaratory judgment and
injunctive relief preventing Goodrich “from pursuing the matters raised in the Ohio Litigation in
any other Court except for the United States District Court for the Western District of
Kentucky.” (Docket No. 32 at 10-11.) Westlake also raises a breach of contract claim, alleging
that Goodrich and PolyOne violated the Settlement Agreement, Goodrich by initiating the Ohio
litigation and PolyOne by supporting Goodrich. Westlake claims that both Defendants breached
the Settlement Agreement by resisting efforts to have the matters at issue addressed in the
Western District of Kentucky. (Docket No. 32 at 12.)
Legal Standard
The Court will first address the Defendants’ challenge to subject matter jurisdiction, this
issue concerning “a threshold determination,” Am. Telecom Co. v. Leb., 501 F.3d 534, 537 (6th
Cir.2007) (citing Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 101 (1998)), that “may be
raised at any stage in the proceedings,” Schultz v. Gen. R.V. Ctr., 512 F.3d 754, 756 (6th
Cir.2008). Federal Rule of Civil Procedure 12(b)(1) provides that a party may file a motion
asserting “lack of subject-matter jurisdiction.” Fed.R.Civ.P. 12(b)(1). “A Rule 12(b)(1) motion
3
can either attack the claim of jurisdiction on its face, in which case all allegations of the plaintiff
must be considered as true, or it can attack the factual basis for jurisdiction, in which case the
trial court must weigh the evidence and the plaintiff bears the burden of proving that jurisdiction
exists.” DLX, Inc. v. Kentucky, 381 F.3d 511, 516 (6th Cir.2004). “A facial attack on the subjectmatter jurisdiction alleged in the complaint questions merely the sufficiency of the pleading.”
Gentek Bldg. Prods., Inc. v. Steel Peel Litig., 491 F.3d 320, 330 (6th Cir.2007). “If the court
determines at any time that it lacks subject matter jurisdiction, the court must dismiss the action.”
Fed.R.Civ.P. 12(h)(3); see also Bauer v. RBX Indus. Inc., 368 F.3d 569 (6th Cir. 2004).
The Court will additionally address the parties’ arguments concerning Rule 12(b)(6).
“When considering a motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil
Procedure, the district court must accept all of the allegations in the complaint as true, and
construe the complaint liberally in favor of the plaintiff.” Lawrence v. Chancery Court of Tenn.,
188 F.3d 687, 691 (6th Cir. 1999) (citing Miller v. Currie, 50 F.3d 373, 377 (6th Cir.1995)).
To survive a Rule 12(b)(6) motion to dismiss, the complaint must include “only enough
facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007); see also Ashcroft v. Iqbal, 129 S.Ct. 1937, 1950 (2009). The “[f]actual
allegations in the complaint must be enough to raise a right to relief above the speculative level
on the assumption that all the allegations in the complaint are true.” Twombly, 550 U.S. at 555
(internal citation and quotation marks omitted). A plaintiff must allege sufficient factual
allegations to give the defendant fair notice concerning the nature of the claim and the grounds
upon which it rests. Id.
Furthermore, “a plaintiff's obligation to provide the grounds of his entitlement to relief
requires more than labels and conclusions, and a formulaic recitation of the elements of a cause
4
of action will not do.” Id. A court is not bound to accept “[t]hreadbare recitals of the elements of
a cause of action, supported by mere conclusory statements.” Iqbal, 129 S.Ct. at 1949.
Analysis
Westlake contends that this Court maintains jurisdiction over this litigation based on
diversity of the parties, pursuant to 28 U.S.C. 1332. When a party brings a lawsuit to federal
court on the alleged basis of diversity jurisdiction, the federal court lacks subject matter
jurisdiction over the case unless there is complete diversity of citizenship between the parties and
an amount in controversy exceeding $75,000. 28 U.S.C. § 1332; Medlen v. Estate of Meyers,
273 Fed. Appx. 464, 469 (6th Cir. 2008). Generally, the amount alleged in the complaint will be
sufficient, unless it appears to a legal certainty that the plaintiff cannot claim the jurisdictional
amount in good faith. Klepper v. First Am. Bank, 916 F.2d 337, 340 (6th Cir. 1990). This liberal
standard permits dismissal only if it appears that the original claim was really for less than the
amount-in-controversy requirement. Gafford v. Gen. Elec. Co., 997 F.2d 150, 157 (6th Cir.
1993).
However, when the existence of the jurisdictional amount is disputed, the burden of proof
falls upon the invoking party to demonstrate the jurisdictional requirements by a preponderance
of the evidence. See Everett v. Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006)
(quoting Gafford v. Gen. Elec. Co., 997 F.2d 150, 155) 6th Cir. 1993)); see also Sellers v.
O’Connell, 701 F.2d 575, 578 (6th Cir. 1993) (citing McNutt v. Gen. Motors Acceptance Corp.,
298 U.S. 178, 189 (1936)).
If the party fails to carry this burden with respect to either
requirement, the federal court has no subject matter jurisdiction to hear the case. Despite the
parties’ agreed-upon forum selection clause, they “can neither waive nor consent to subject
5
matter jurisdiction . . . .” Mich. Empl. Sec. Comm’n v. Wolverine Radio Co., 930 F.2d 1132,
1137-38 (6th Cir. 1991).
“[A] plaintiff who bases diversity jurisdiction on the value of injunctive relief must show
that the benefit to be obtained from the injunction is sufficiently measurable and certain to satisfy
the . . . amount in controversy requirement . . . .” Davis v. DCB Fin. Corp., 259 F. Supp. 2d 664,
675 (S.D. Ohio 2003) (quoting Ericsson GE Mobile Comm., Inc. v. Motorola Comm. & Elecs.,
Inc., 120 F.3d 216, 218-20 (11th Cir. 1997)). Injunctive relief that is “too speculative and
immeasurable” fails to satisfy the amount-in-controversy requirement and does not afford federal
jurisdiction. Lacking such evidence regarding the amount in controversy, the Court cannot find
that Westlake has satisfied its burden of proving that this requirement is satisfied. See King v.
Household Fin.Corp. II, 593 F. Supp. 2d 958, 960 (E.D. Ky. 2009).
Here, Westlake has not shown that the benefit of the injunctive relief it seeks satisfies the
$75,000 jurisdictional threshold.
Although Westlake’s Amended Complaint avers that it
suffered damages in excess of $75,000, (Docket No. 32 at 10), it fails to present sufficient
evidence to support its averment, offering only a conclusory allegation as to the harm it suffered.
Although a claim for injunctive relief may satisfy the amount-in-controversy requirement, courts
generally require specific estimates of harm. See, e.g., Popa v. CNX Gas Co., 2014 WL 1369605
(N.D. Ohio Apr. 7, 2014) (citing estimates of the amount of oil and gas that would be extracted
from the property at issue, an analysis of future gas prices, and a calculation of the present value
of the lease’s projected revenues); Chesapeake Appalachia, LLC v. Williams, 2010 WL 4412137
(E.D. Ky. Nov. 1, 2010) (identifying the specific costs alleged in plaintiff’s complaint).
Westlake’s claim lacks such specificity regarding the benefit associated with the injunctive relief
it seeks.
6
Westlake identifies the environmental costs exceeding $1.4 million at the heart of the
arbitration. This figure, however, does not relate to the relief that Westlake seeks in this
action—that is, enforcement of the Settlement Agreement’s forum selection clause. The Court
must therefore determine the amount in controversy based on Westlake’s purported harm arising
from the alleged breach of the Settlement Agreement.
The threshold question, then, becomes whether the value of having the parties’ dispute
adjudicated by this Court, rather than in an Ohio forum, exceeds $75,000. See Penn. R. Co. v.
City of Girard, 210 F.2d 437, 439 (6th Cir. 1954) (amount in controversy determined by the
value of injunctive relief to the plaintiff). Simply put, this relief cannot be subject to monetary
valuation. See Goldsmith v. Sutherland, 426 F.2d 1395, 1398 (6th Cir. 1970) (explaining that the
amount-in-controversy requirement is not satisfied when “the right to be protected . . . is
incapable of valuation in monetary terms”). Westlake articulates no quanitfiable benefit to
litigating in this district, rather than the Northern District of Ohio, that is “sufficiently
measurable and certain to satisfy the amount in controversy requirement.” Davis, 259 F. Supp.
at 675.
Westlake points to the attorney fees and costs it incurred in the Ohio case as satisfying
the jurisdictional threshold, alleging that these figures represent actual and direct damages it
suffered due to the alleged breach. (Docket No. 49 at 6.) However, no apposite authority
suggests that the amount in controversy should be measured based on the amount that amount of
legal fees that a party is willing to absorb in such a scenario. As Westlake notes, the Sixth
Circuit has authorized the award of attorney fees in a case involving a covenant not to sue.
Anchor Motor Freight, Inc. v. Int’l Brotherhood of Teamsters, 700 F.2d 1067 (6th Cir. 1983).
However, such a provision differs fundamentally from a forum selection clause. A covenant not
7
to sue, of course, seeks to avoid litigation; a forum selection clause serves no such function, only
placing the litigation in an agreed-upon forum.
Westlake’s reliance upon Batson v. Clark, 980 S.W.2d 566 (Ky. Ct. App. 1997), is also
misplaced. Batson held that a court may consider the specific circumstances of each particular
case, using its discretion to determine the suitability of an award of attorney fees. Id. at 577.
However, this equitable exception is applied only in limited circumstances, and “[e]xactly what
circumstances would justify this exception to the general rule has never been spelled out.”
Cummings v. Covey, 229 S.W.3d 59, 62 (Ky. Ct. App. 2007). No binding precedent compels the
Court to award attorney fees to remedy what is essentially an alleged breach of contract.
Certainly, Kentucky law does not contemplate an award of attorney fees in such
circumstances; rather, “attorney’s fees are not allowable as costs in absence of statute or contract
expressly providing therefore.” Batson, 980 S.W.2d at 577 (quoting Ky. State Bank v. AG Servs.,
Inc., 663 S.W.2d 754, 755 (Ky. App. 1984)). This reasoning accords with the “American Rule,”
which obligates each party to bear its own attorney fees. Courts considering similar questions
have held that attorney fees are not recoverable as damages for breach of a forum selection
clause, where such recovery is not specifically provided for in a contractual or statutory
provision. See, e.g., Fednav Int’l Ltd. v. Continental Ins. Co., 624 F.3d 834 (7th Cir. 2010)
(declining to craft an exception to the American Rule in the absence of specific contractual or
legislative provision); Gruver v. Midas Int’l Copr., 925 F.2d 280, 284 (9th Cir. 1991) (same).
Neither condition is satisfied here: the Settlement Agreement does not provide for the recovery
of attorney fees for a breach of the forum selection clause, and no Kentucky statute or court rule
authorizes the Court to award attorney fees in this circumstance. Batson, therefore, confirms that
Westlake cannot recover attorney fees in an action for contract damages. For these reasons,
8
Westlake has not demonstrated that its claims satisfy the jurisdictional threshold, and the Court
consequently lacks jurisdiction over this claim.
Furthermore, the jurisdictional doctrine of mootness precludes Westlake’s claims for
relief. A case becomes moot when the issues presented are no longer live or the parties lack a
“legally cognizable interest” in the case’s outcome. Chirco v. Gateway Oaks, L.L.C., 384 F.3d
307, 309 (6th Cir. 2004) (citing Powell v. McCormack, 395 U.S. 486, 496 (1969)).
If a
controversy is moot, a federal court has no subject matter jurisdiction over the claim and must
accordingly dismiss it. Church of Scientology v. United States, 506 U.S. 9, 12 (1992). Count II
of Westlake’s First Amended Complaint asks this Court to prohibit Goodrich and PolyOne “from
pursuing the matters raised in the Ohio Litigation” in any court other than the United States
District Court for the Western District of Kentucky. (Docket No. at 11.) Goodrich’s action is
presently pending before this Court in accordance with the April 8, 2014 transfer order of the
United States District Court for the Northern District of Ohio. Upon the case’s transfer, no party
is pursuing the matters at issue in any court outside of this district.
Having determined that no subject matter jurisdiction exists and that Westlake’s claim is
now moot, the Court has no basis upon which to reach the substance of Westlake’s claims.
However, the Court nonetheless notes that Westlake’s claim against PolyOne suffers a
fundamental flaw:
Westlake has not alleged that PolyOne has initiated litigation against
Westlake in any jurisdiction. The cardinal rule of contract interpretation guides the Court’s
analysis: that is, “[i]n the absence of ambiguity a written instrument will be enforced strictly
according to its terms.” O’Bryan v. Massey-Ferguson, Inc., 413 S.W.2d 891, 893 (Ky. 1996).
The Court must give the contract’s plain, unambiguous language its usual meaning. Id. (citing
Bays v. Mahan, 362 S.W.2d 732 (Ky. 1962)); United Ins. Co. of Am. V. Gerstle, 339 S.W.2d 945,
9
946 (Ky. 1960) (citing U.S. Fidelity & Guaranty Co. v. Lairson, 271 S.W.2d 897 (Ky. 1954)).
Here, given their plain meaning, the terms of the contract cannot be construed to preclude
PolyOne from filing responsive briefs or arguing that no subject matter jurisdiction exists.
Moreover, PolyOne initiated no “action[s] or proceeding[s]” in Ohio Court—indeed, PolyOne
was named as a defendant. Accordingly, Westlake’s breach of contract claim against PolyOne is
subject to dismissal.
Therefore, the Defendants’ Motions to Dismiss, (Docket Nos. 40, 42), are hereby
GRANTED, and all claims against each Defendant are hereby DISMISSED. An appropriate
order shall issue concurrently with this opinion.
June 19, 2014
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?