St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc., L.L.C.
Filing
77
ORDER & REASONS REMANDING CASE TO STATE COURT. Signed by Chief Judge Sarah S. Vance on 8/25/2011. (Attachments: # 1 Remand Letter)(rll, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ST. BERNARD PORT, HARBOR &
TERMINAL DISTRICT
CIVIL ACTION
VERSUS
NO: 11-8
VIOLET DOCK PORT, INC., LLC
SECTION: R(3)
ORDER AND REASONS
Before the Court is St. Bernard Port, Harbor & Terminal
District’s motion to remand.1
Because Violet Dock Port has not
asserted a valid basis for this Court’s jurisdiction, St. Bernard
Port’s motion is GRANTED.
I.
BACKGROUND
This case involves the expropriation by St. Bernard Port of
about 70 acres of riverfront property in St. Barnard Parish.
The
property is located six miles from St. Bernard Port’s existing
facility, and it is owned by Violet.
St. Bernard Port is a
public corporation and a political subdivision created by the
State of Louisiana to regulate all domestic, coastwise, and
intercoastal commerce and traffic in St. Bernard Parish.2
1
(R. Doc. 13.)
2
(R. Doc. 1-1 at 1.)
La.
Rev. Stat. §§ 34:1701; 34:1703(A).
Violet is a Louisiana limited
liability company.3
Since 1984, Violet has used a portion of the property at
issue to provide layberths to United States military vessels
under contracts between Violet and the United States Navy,
Military Sealift Command (MSC).
According to Donald Dieudonne,
Violet’s General Manager for Operations, those contracts have
“explicit wharf construction specifications, mooring
specifications, pier specifications, other security and service
requirements, all of which are strictly enforced by the United
States.”4
Under the current contract, executed on March 20,
2009, Violet agreed to provide layberthing services to MSC for
two U.S. Navy Large, Medium-Speed, Roll-On/Off (LMSR) ships.
The
primary mission of the ships is “to provide lift capacity for
unit equipment (vehicles and rotary wing aircraft) to support
Army divisions or other units.”5
The contract provides for an
initial fixed period of performance until September 30, 2009, and
then nine one-year periods in which MSC has the option to extend
3
(Id.)
4
(R. Doc. 31-4.)
5
(R. Doc. 2-2 at 14; R. Doc. 33-1 at 2.)
2
the contract.6
On January 12, 2011, MSC issued a Modification to
the contract, which included, inter alia, a replacement of FAR
52.211-15 (Sep. 1990) with FAR 52.211-15 (Apr. 2008).
52.211-15 (Apr. 2008) provides:
FAR
“This is a rated order certified
for national defense, emergency preparedness, and energy program
use, and the Contractor shall follow all the requirements of the
Defense Priorities and Allocation System regulation (15 CFR
700).”7
The contract also incorporates by reference clauses from
the Code of Federal Regulations that permit MSC to terminate
either for convenience8 or in the event that Violet fails to
perform.9
Before expropriating the property, St. Bernard Port
attempted to obtain it through a consensual purchase, as required
by Louisiana law.
See La. Rev. Stat. § 19:2.2 (“Before
exercising the rights of expropriation provided for in R.S. 19:2,
the state or its political corporations or subdivisions shall
. . . (2) Offer to compensate the owner an amount equal to at
least the lowest appraisal or evaluation.”).
On January 10,
6
(R. Doc. 2-2 at 2.)
7
(Id. at 32.)
8
(R. Doc. 33-5 at 3; 48 C.F.R. § 52.249-2.)
9
(R. Doc. 2-2 at 37; 48 C.F.R. § 42.249-8.)
3
2007, St. Bernard Port offered $10 million, the amount at which
the property was initially appraised.10
Violet informed St.
Bernard Port on April 17, 2007 that its stockholders had rejected
that offer.11
After more negotiations and a second appraisal,
St. Bernard Port offered to purchase the property for $16 million
on September 7, 2010.
Violet rejected that offer as well.
On September 30, 2010, the Board of Commissioners of St.
Bernard Port passed a resolution to expropriate Violet’s property
under La. Rev. Stat 19:2.1 and 19:12.12
In that resolution, the
Board provided the following statement of purpose:
St. Bernard Parish continues to recover from the devastating
hurricanes that have struck our coast since 2005, one area
of the economy that has been in the forefront of economic
growth and development is the port industry. In the St.
Bernard Parish Economic Recovery Model, the Port is one of
the basic industries of the Parish. Basic industries are
the foundation of a region’s economy because their goods and
services are exported (i.e., sold to people outside of the
region) and, therefore, bring revenues into the community.
Commerce through the Port of St. Bernard represented 24% of
the Interim Recovery Plan, the citizens of St. Bernard
Parish identified the development of the Violet Site as one
of their highest economic development priorities: The
acquisition and development of the Violet Terminal would be
the logical downriver extension of port services in St.
Bernard Parish. The Citizen’s Recovery Committee
recommended that Parish and/or State roads be extended to
directly access the Violet Site, recognizing the need for
10
(R. Doc. 13-4.)
11
(R. Doc. 13-5.)
12
(R. Doc. 2-9 at 9-15.)
4
projects to energize the Parish’s recovery. The project is
basically a port expansion project accomplished by acquiring
property and assets on the Mississippi River. The Port
would acquire three heavy duty docks and over 4,200 linear
feet of river frontage that would be available for immediate
use. The 38 acres of uplands are largely undeveloped for
cargo storage, but with a minimal investment could be
prepared as valuable lay-down area for commodities and
project cargoes[.]13
The Board further resolved that the property would be for
“predominate use by the public and shall not be for predominant
use by, or for transfer of ownership to, any private person or
entity.”14
In a letter dated November 2, 2010, MSC wrote to Violet,
stating that “[i]t has come to the Government’s attention that
there may be an issue with Violet’s ability to continue to
provide layberth services under the subject contract.”15
The
letter further stated that, under Section H-10, “this is a
performance based contract,” and “[t]he Contractor is required to
provide, operate, and maintain a safe berth for the firm and all
options periods (if exercised).”16
MSC requested that Violet
respond in writing if Violet would be unable to perform under the
13
(Id. at 11.)
14
(Id.)
15
(R. Doc. 2-14.)
16
(Id.)
5
contract, including “facts of the situation, potential impact to
the subject contract, and a timeline of events.”17
St. Bernard Port filed a petition for expropriation in the
34th Judicial District Court for St. Bernard Parish on December
22, 201018 and deposited $16 million in that court’s registry as
estimated just compensation for the expropriation.19
According
to the petition and the affidavit of Robert Schafidel, St.
Bernard Port’s executive director, the purpose of the
expropriation is for the construction of a bulk terminal facility
capable of accommodating both liquid-bulk and dry-bulk
commodities.20
Schafidel states that the construction of the
bulk terminal is planned to occur in three phases and will take
about eight to ten years to complete:
“Phase I will include the
acquisition of the Violet Dock Port site and the completion of
certain short-term improvements on the site to make the existing
facilities useful for stevedoring activities.”21
“Phase II
consists of constructing a dry bulk storage facility, rail
17
(Id.)
18
(R. Doc. 1-1.)
19
(R. Doc. 1-1 at 21-23.)
20
(R. Doc. 2-9 at 18; R. Doc. 15-1 at 2.)
21
(R. Doc. 15-1 at 2.)
6
access, truck access, queuing and weighing facility, conveyor
systems, and other dock improvements.”22
And “Phase III consists
of the development of a liquid bulk tank farm, rail access and
storage facilities, a pipe network, and other dock
improvements.”23
The petition also states that the expropriation
is intended “to create jobs and benefits to the citizens of St.
Bernard Parish” and that St. Bernard Port intends to “enter into
a new contract with Military Sealift Command for its continued
use of the Violet Port during Phase I of the acquisition and
development of the Violet Dock Port.”24
On December 29, 2010, MSC sent a letter to St. Bernard Port
explaining that it had received notice that the subject property
had been expropriated and that St. Bernard Port intended “to take
over the subject contract.”25
In light of the expropriation, MSC
requested (1) a point of contact at St. Bernard Port, (2) a
proposed timeline for transferring the subject contract “should
this contract be novated,” and (3) “confirmation that the Port
intends to accept the same terms and conditions of the subject
22
(Id.)
23
(Id.)
24
(R. Doc. 2-9 at 22.)
25
(R. Doc. 15-8.)
7
contract,” “should this contract be novated.”26
St. Bernard Port
responded on January 5, 2011, providing a point of contact,
stating that “St. Bernard Port stands ready to immediately assume
the referenced contract, subject to the current court proceedings
concerning the expropriation,” and confirming that it intends to
accept the terms and conditions of Violet’s contract with the
MSC.27
Violet removed the matter to this Court on January 3, 201128
and moved to dismiss St. Bernard Port’s expropriation.29
St.
Bernard Port then filed the instant motion to remand on January
11, 2011.30
The Court heard oral argument on the remand motion
and determined that it would be informative to have MSC take a
position on whether the expropriation would interrupt or
otherwise adversely affect the services for which it has
contracted.
On the Court’s order,31 MSC submitted a letter on
March 17, 2011.32
MSC stated: “While the expropriation of
26
(R. Doc. 15-8.)
27
(R. Doc. 15-9.)
28
(R. Doc. 1.)
29
(R. Doc. 2.)
30
(R. Doc. 13.)
31
(R. Doc. 38.)
32
(R. Doc. 44.)
8
Violet’s property has the potential to affect its ability to
perform under the terms of the contract, since the Navy has no
real property interest affected by the District’s expropriation,
it currently believes that the expropriation does not affect the
Government’s contractual rights and remedies.”33
MSC also stated
that “[t]he proposed expropriation could adversely affect the
services provided the Navy under the subject contract in the
future. . . .”34
It explained that, because Violet maintains
that it will not seek to novate the contract, “there is some
uncertainty regarding future contract performance.”35
On July
27, 2011, MSC sent an additional letter to Violet, giving it
preliminary notice that it intends to exercise its third option
on the contract, extending performance until September 30,
2012.36
II.
DISCUSSION
Violet raises three independent bases for federal
jurisdiction: 28 U.S.C. § 1442(a)(1); 28 U.S.C. § 1442(a)(2); and
33
(R. Doc. 44-1 at 1.)
34
(Id.)
35
(Id. at 2.)
36
(R. Doc. 65-4.)
9
28 U.S.C. § 1441(b).
The Court addresses each of these
jurisdictional statutes in turn.
A.
28 U.S.C. § 1442(a)(1)
Violet first argues that jurisdiction in this case is
properly founded upon the federal officer removal statute, 28
U.S.C. § 1442(a)(1).37
The federal officer removal statute
provides, in relevant part:
A civil action or criminal prosecution commenced in a State
court against any of the following may be removed by them to
the district court of the United States for the district and
division embracing the place wherein it is pending:
(1) The United States or any agency thereof or any
officer (or any person acting under that officer) of
the United States or of any agency thereof, sued in an
official or individual capacity for any act under color
of such office . . . .
28 U.S.C. § 1442(a)(1).
The Supreme Court has explained that the
purpose of this provision is to protect the lawful activities of
the federal government from undue state interference.
Willingham v. Morgan, 395 U.S. 402, 406 (1969).
See
Because the
federal government “can act only through its officers and
agents,” it has a strong interest in ensuring that the states do
not hinder those officers in the execution of their duties.
(quoting Tennessee v. Davis, 100 U.S. 257, 263 (1880)).
37
(R. Doc. 1 at 2-6; R. Doc. 31-3 at 10-32.)
10
If
Id.
federal officers acting within the scope of their authority “can
be arrested and brought to trial in a State court, for an alleged
offense against the law of the State, yet warranted by the
Federal authority they possess, and if the general government is
powerless to interfere at once for their protection . . . the
operations of the general government may at any time be arrested
at the will of one of its members.”
Id. (quoting Davis, 100 U.S.
at 263); see also Watson v. Philip Morris Companies, Inc., 551
U.S. 142 (2007) (“As Senator Daniel Webster explained [in 1833],
where state courts might prove hostile to federal law, and hence
to those who enforced that law, the removal statute would ‘give a
chance to the [federal] officer to defend himself where the
authority of the law was recognized.’”) (quoting 9 Cong. Deb. 461
(1833)).
Because of its broad language and unique purpose, the
federal officer removal statute has been interpreted to operate
somewhat differently than the general removal provision.
Unlike
the general removal statute, which must be “strictly construed in
favor of remand,”
Manguno v. Prudential Property & Casualty Ins.
Co., 276 F.3d 720, 723 (5th Cir. 2002), the federal officer
removal provision’s broad language must be liberally interpreted.
Watson, 551 U.S. at 147.
Also unlike the general removal
provision, there is no requirement in the federal officer removal
11
provision that the district court have original jurisdiction over
the plaintiff’s claim.
A case against a federal officer may be
removed even if a federal question arises as a defense rather
than as a claim apparent from the face of the plaintiff’s
well-pleaded complaint.
Jefferson County, Ala. v. Acker, 527
U.S. 423, 430-31 (1999).
As in all cases, the party asserting federal jurisdiction in
a case removed under section 1442 bears the burden of
establishing that jurisdiction exists.
Winters v. Diamond
Shamrock Chemical Co., 149 F.3d 387, 398 (5th Cir. 1998).
The
Fifth Circuit has adopted a three-part test to determine whether
a government contractor qualifies as a “person acting under [a
federal] officer” who is “sued in an official or individual
capacity for any act under color of such office.”
§ 1442(a).
28 U.S.C.
The contractor must prove that: (1) he is a “person”
within the meaning of the statute; (2) he acted pursuant to a
federal officer’s directions, and a causal nexus exists between
his actions under color of federal office and the plaintiff’s
claims; and (3) he has a colorable federal defense to the
plaintiff’s claims.
Winters, 149 F.3d at 398, 400.
With regard to whether the instant expropriation petition,
St. Bernard Port does not dispute that Violet is subject to the
directions of a federal officer, here MSC.
12
The disputed issues
are: (1) whether Violet is a “person” within the meaning of
section 1442(a)(1); (2) whether a causal nexus exists between
Violet’s actions under color of federal office and St. Bernard
Port’s claim; and (3) whether Violet is able to assert a
colorable federal defense.
As explained below, the Court finds
that Violet has not met its burden of establishing federal
officer removal jurisdiction.
1.
“Person” Requirement
Although St. Bernard Port does not explicitly challenge
Violet’s status as a “person” under section 1442(a)(1), it
states, in a footnote, that Violet is “a limited liability
company, not a corporation,” and notes that Violet did not cite
any case in its motion to remand in which “a limited liability
company has been deemed to meet the ‘person’ requirement of
§ 1442(a)(1).”38
Although the Fifth Circuit has not specifically
addressed whether an LLC is a “person” for the purposes of the
federal officer removal statute, numerous courts have permitted
LLCs to remove on that basis.
See, e.g., Takacs v. American
Eurocopter, LLC, 656 F. Supp. 2d 640, 645 (W.D. Tex. 2009)
(finding that an LLC was a person under section 1442(a)(1));
38
(R. Doc. 13-1 at 7 & n.23.)
13
McGillick v. World Trade Center Properties, LLC, 2004 WL 2049260,
*2 (S.D.N.Y. 2004) (same) (citing Winters, 149 F.3d at 398); see
also Dennis v. Allis-Chalmers Corp. Product Liability Trust, 2009
WL 1874017, *1 (N.D. Cal. 2009) (granting plaintiffs’ motion to
remand after the party asserting federal officer removal, an LLC,
was dismissed from the suit).
As St. Bernard Port has not cited
any authority to the contrary, and the Court is aware of none,
the Court finds that Violet is a “person” within the meaning of
the statute.
2.
Causal Nexus between Violet’s “Actions” and St. Bernard
Port’s Claim
The plain language of section 1442(a)(1) permits removal
only when “[t]he United States or any agency thereof or any
officer (or any person acting under that officer) of the United
States or of any agency thereof” is “sued in an official or
individual capacity for any act under color of such office.”
U.S.C. § 1442(a)(1).
28
The main thrust of St. Bernard Port’s
argument is that Violet has failed to show that the expropriation
suit is “for” an “act” under color of federal law.
Put
differently, St. Bernard Port contends that it is not Violet’s
performance of the MSC contract that forms the basis of its
expropriation suit.
Rather, it is the expansion of its port
14
services and the construction of a bulk cargo storage facility on
the property.
Therefore, it argues, there is no causal
connection between the expropriation and Violet’s federal
activity.
For its part, Violet argues that the causal nexus is
satisfied because St. Bernard Port is primarily expropriating the
property to take over its contract with MSC.
Violet contends
that “it was the millions of dollars poured into the property
. . . the years of work undertaken by it to comply with the MSC
Contract specifications, and the improvements, permits and other
acquisitions . . . that made this property desirable to” St.
Bernard Port.39
The Court finds that Violet has failed to establish a causal
nexus between the expropriation and any act under color of
federal office.
St. Bernard Port’s statement of purpose in the
resolution authorizing expropriation provides that the property
was expropriated in order to promote economic development through
expansion of its port services and construction of a cargo
storage facility.40
St. Bernard Port also submits the affidavit
of Robert Schafidel, who attests that the purpose of the
expropriation is for the construction of a bulk terminal
39
(R. Doc. 31-3 at 18-19.)
40
(R. Doc. 2-9 at 11.)
15
facility, which will proceed in stages over the next eight to ten
years.41
Although Violet asserts that St. Bernard Port is, in
fact, expropriating the property primarily to take over
performance of its contract with the MSC, that argument does not
explain St. Bernard Port’s expropriation of the entirety of
Violet’s property, as Violet’s contract with MSC implicates only
one of Violet’s five berths and only a fraction of the 70 acres
St. Bernard Port seeks to expropriate.42
Nor has Violet
submitted anything, other than its own characterization, to
suggest that acquisition of the MSC property was the primary
motivating cause of this 70 acre expropriation.
The Supreme
Court’s dicta in Jefferson County, Alabama v. Acker, 527 U.S. 423
(1999), in which the Court credited the defendant’s theory of
case for the purposes of the jurisdictional inquiry, does not
compel a different result.
Contrary to Violet’s suggestion,
Acker did not set out a categorical rule that courts may not look
to the reality of the transaction underlying the alleged basis
for removal.
A review of the relevant case law reveals that the federal
officer removal statute cannot serve as the basis for
41
(R. Doc. 15-1 at 2.)
42
(Transcript of Oral Argument on St. Bernard Port’s
Motion to Dismiss at 13.)
16
jurisdiction in an expropriation action such as this one.
In
Murray v. Murray, 621 F.2d 103 (5th Cir. 1980), the Fifth Circuit
distilled the situations in which federal officer removal
jurisdiction applies.
The court explained that section
1442(a)(1) permits removal of those actions in state court “that
expose a federal [officer] to potential civil liability or
criminal penalty for an act performed in the past under color of
office” or “civil actions that seek to enjoin a federal officer
from performing such acts in the future.”
Id. at 107.
A number
of other cases illustrate the scope of federal officer removal
jurisdiction as set forth in Murray.
For instance, in State of
Florida v. Cohen, 887 F.2d 1451 (11th Cir. 1989), the Eleventh
Circuit found removal proper in a case involving a contempt
proceeding against federal agents.
Id. at 1454.
In doing so,
the court explained that section 1442(a)(1) permits removal of
actions commenced in state court that either (1) potentially
expose a federal official to civil liability or criminal penalty
for an act performed in the past under color of office, or (2)
seek to either prohibit or require certain actions by a federal
official in the future.
Id. at 1453-54; see also Sheda v. U.S.
Dept. of the Treasury, 196 F. Supp. 2d 743, 746 (N.D. Ill. 2002)
(finding that, because “[t]here is no allegation of wrongdoing,”
the action could not be classified as an action “for any act
17
under color of such office” and that removal was thus improper);
Brand v. Robins Federal Credit Union, 969 F. Supp. 779, 780 (M.D.
Ga. 1997) (“[T]he removal of a case to federal court must
presuppose the availability of an underlying right of action for
the wrongs sought to be redressed, for without such right of
action there is no federal interest in the matter as it concerns
federal courts.”); Fountain Park Cooperative, Inc. v. Bank of
America National Trust, 289 F. Supp. 150, 154 (C.D. Cal. 1968)
(“[Section 1442(a)(1)’s] purpose is to permit the removal of
cases where federal officers are threatened with personal civil
or criminal liability because of actions taken in pursuance of
their federal duties.”); State of New Jersey v. Moriarity, 268 F.
Supp. 546, 555-56 (D.N.J. 1967) (explaining that section
1442(a)’s “traditional emphasis has been on cases where a Federal
officer was threatened with monetary judgment or criminal
prosecution” but that the statute has been “successfully invoked
in a few instances where the only relief sought was an injunction
against proposed actions”).
The Court also finds telling the Sixth Circuit’s discussion
of section 1442(a)(1) in City of Cookeville, TN v. Upper
Cumberland Electric Membership Corporation, 484 F.3d 380 (6th
Cir. 2007).
In that case, the city brought a state court
condemnation action against a number of defendants, including the
18
Rural Utilities Service (RUS), a federal agency.
RUS removed the
action under section 1442(a)(1), and the district court denied
the city’s motion to remand.
On appeal, the Sixth Circuit upheld
the district court’s finding of jurisdiction, explaining that
jurisdiction was proper “because a federal agency was a party.”
Id. at 384.
Based on a textual interpretation of the removal
statute, the court indicated that, even though federal officers
must establish that the suit is “‘for’ an act under color of
office” in order to remove, that requirement does not apply when
a federal agency is a party to the litigation.
90.
See id. at 389-
The clear implication of the court’s reasoning is that, if
RUS had not been a party, removal under section 1442(a)(1) would
have been inappropriate.
Violet’s reliance on Acker to suggest that removal under
section 1442(a)(1) is appropriate in a broader range of
situations is misplaced.43
There, the county attempted to impose
civil liability on a group of federal judges for the act of
engaging in their occupation.
Acker, 527 U.S. at 424.
Acker
therefore fits squarely within the universe of cases identified
in Murray.
The Court has found no authority – and Violet
provides none – suggesting that the holder of a government
43
(R. Doc. 31-3 at 10 n.3.)
19
contract may remove an expropriation action pursuant to section
1442(a)(1) when it is not exposed to liability.
When government
contractors have successfully invoked federal officer removal
jurisdiction, it has been in circumstances where they were
exposed to liability in tort or contract for acts done in the
performance of their government contracts.
See, e.g., Winters,
149 F.3d at 399-400 (affirming the district court’s finding that
Agent Orange manufacturer could remove state-filed tort action
under section 1442(a)(1)); C.R. Pittman Constr. Co., Inc. v.
Parson and Sanderson, Inc., 2010 WL 3418240, at *2 (E.D. La.
2010) (finding removal proper under section 1442(a)(1) in a
breach of contract action against a defense contractor); Regional
Medical Transport, Inc. v. Highmark, Inc., 541 F. Supp. 2d 718,
724 (E.D. Pa. 2008) (finding removal appropriate given
plaintiffs’ claims of tortious interference with contractual
relations, misfeasance, and negligent supervision against a
Medicare contractor).
In this case, as in Murray, the plaintiff has not exposed a
federal officer or a person acting under that officer to
liability for performing acts under color of office or sought to
enjoin such acts in the future.
Violet is being sued in its
capacity as a landowner, not for any sort of wrongdoing.
In
expropriations, the state is required to compensate landowners
20
such as Violet to the full extent of their losses.
See La. Rev.
Stat. § 19:9; State, Dept. of Transp. & Dev. v. Pipes, 489 So.2d
293, 294-95 (La. Ct. App. 1986) (affirming jury award for loss of
contractual profits resulting from expropriation).
And although
the practical effect of the expropriation may be that Violet
could no longer perform its contract with MSC because it would no
longer have access to the property, that result is not an
“injunction” as that term is properly understood.
See Black’s
Law Dictionary 855 (9th ed. 2009) (defining “injunction” as “[a]
court order commanding or preventing an action”) (emphasis
added); Merriam-Webster’s Collegiate Dictionary 644 (11th ed.
2009) (defining “injunction” as “a writ granted by a court of
equity whereby one is required to do or to refrain from doing a
specified act).
St. Bernard Port has maintained throughout the
pendency of this litigation that it stands ready to provide
layberthing services to MSC and does not intend to interfere with
its operations.
The effect of the expropriation would not
therefore be to prevent governmental activity, only to prevent
Violet, as opposed to St. Bernard Port from carrying it out.
Further, MSC appears indifferent as to whether it is St.
Bernard Port or Violet that performs the contract.
The
facilities necessary for performance are already in place, and,
according to Violet’s counsel, Violet maintains only a small
21
staff of fewer than ten employees.44
Unlike, for example, a
contract to build ships or submarines, or to maintain a nuclear
facility, fulfillment of Violet’s contract with MSC does not
require special skills.
In terms of service requirements,
performance of the contract requires mundane tasks such as
providing shore power, sewage, and garbage collection,45 all of
which could be performed by St. Bernard Port.
Indeed, when MSC
learned of the pending expropriation, MSC made no effort to
dissuade St. Bernard Port from proceeding.
Instead, MSC wrote to
Robert Schafidel, St. Bernard Port’s executive director, seeking
confirmation that it would accept the same terms as set forth in
Violet’s contract.46
Then, in order to determine the effect of
the expropriation on military preparedness, the Court ordered MSC
to communicate its position regarding the expropriation and
whether the expropriation would interrupt or otherwise adversely
affect the services for which it has contracted.
In response,
MSC acknowledged that “there is some uncertainty regarding future
contract performance,” but stated that, “since the Navy has no
real property interest affected by the [ ] expropriation, it
44
(Transcript of Oral Argument on St. Bernard Port’s
Motion to Dismiss at 9.)
45
(R. Doc. 2-2 at 19-21.)
46
(R. Doc. 15-8.)
22
currently believes that the expropriation does not affect the
Government’s contractual rights and remedies.”47
Notably, MSC
did not suggest that the expropriation would adversely affect the
Navy, given the availability of contractual remedies, which
include termination of Violet’s contract for convenience, or that
it would in any way interfere with national security.
If MSC
were, in fact, concerned that this expropriation would have a
detrimental affect on national security, it could have easily
raised those issues when invited to do so or at any point
afterward.
Or, MSC could have intervened as a party, thereby
making the case removable under the reasoning in City of
Cookeville.
See 484 F.3d at 389-90.
That it did neither
suggests indifference on the part of the Navy as to who actually
provides the layberthing services.
Further, the Court does not
find significant MSC’s recent indication that it intends to
exercise the third option period of the contract.
If anything,
that MSC has expressed an intention to continue berthing its
vessels at one of Violet’s berths, despite the ongoing
litigation, suggests a lack of concern about the effects of
expropriation.
Clearly, MSC does not perceive the expropriation
as an effort to enjoin its operations.
47
(R. Doc. 44-1.)
23
It is apparent that Violet’s understandable wish is to
protect its own economic interest in the property and the MSC
contract.
Yet, that interest is not the stuff of federal officer
removal jurisdiction.
Because Violet has not established that
St. Bernard Port seeks to impose a civil or criminal penalty on
Violet for acts performed in the past under color of office or to
enjoin the performance of such acts in the future, federal
officer removal is inappropriate.
B.
28 U.S.C. § 1442(a)(2)
Violet also asserts that removal is proper under 28 U.S.C.
§ 1442(a)(2).
This “rarely invoked” federal title dispute
statute provides in relevant part:
(a) A civil action or criminal prosecution commenced in a
State court against any of the following may be removed by
them to the district court of the United States for the
district and division embracing the place wherein it is
pending:
. . . .
(2) A property holder whose title is derived from any
such officer, where such action or prosecution affects
the validity of any law of the United States.
28 U.S.C. § 1442(a); Vanouwerker v. Owens-Corning Fiberglass
Corp., 1999 WL 335960, *13 (E.D. Tex. 1999) (“[I]t appears that
28 U.S.C. § 1442(a)(2), the federal title dispute statute, is a
24
rarely invoked statute.”).
satisfaction of two prongs.
Reliance upon this statute requires
First, the title to the property in
controversy must derive from an officer of the United States.
Benitez-Bithorn v. Rossello-Gonzalez, 200 F. Supp. 2d 26, 31
(D.P.R. 2002).
Second, the controversy regarding the property
must affect the validity of any law of the United States.
Id.
Violet concedes that it did not derive the title to its
property from an officer of the United States.48
It argues,
however, that, because it has a “property right” in its contract
with MSC, and because it derived that property right from MSC, a
federal officer, this Court has jurisdiction under section
1442(a)(2).
Violet cites no authority in support of its
argument, and the Court finds that it is foreclosed by the plain
language of the statute, which states that a property holder’s
“title” must be derived from an officer of the United States.
Use of the term “title” implies that the statute applies only to
real property and not a contractual “property right.”
See
Black’s Law Dictionary 968 (9th ed. 2009) (“Though employed in
various ways, title is generally used to describe either the
manner in which a right to real property is acquired, or the
right itself.”) (emphasis added) (quoting Kent McNeil, Common Law
48
(R. Doc. 31-3 at 32.)
25
Aboriginal Title 10 (1989)); see also, e.g., Town of Davis v.
West Virginia Power & Transmission Co., 647 F. Supp. 2d 622, 624
(N.D. W.Va. 2007) (analyzing the applicability of section
1442(a)(2) for removal of an action seeking to condemn a tract of
land); Bithorn, 200 F. Supp. 2d at 28-29, 31 (analyzing section
1442(a)(2) in a dispute over real property).
Because Violet did
not derive its title to the real property in question from a
federal officer, jurisdiction over this expropriation action is
not proper under section 1442(a)(2).
C.
28 U.S.C. § 1441(b)
Finally, the Court rejects Violet’s contention that removal
jurisdiction over this action is proper under 28 U.S.C.
§ 1441(b).
Section 1441(b) provides: “[a]ny civil action of
which the district courts have original jurisdiction founded on a
claim or right arising under the Constitution, treaties or laws
of the United States shall be removable without regard to the
citizenship of the parties.”
District courts have jurisdiction
over civil cases arising under the Constitution, laws and
treaties of the United States pursuant to 28 U.S.C. § 1331.
Unlike federal officer removal jurisdiction under section
1441(a), whether a claim “arises under” federal law must
typically be determined by referring to the “well-pleaded
26
complaint.”
Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804,
808 (1986) (citing Franchise Tax Bd. v. Constr. Laborers Vacation
Trust, 463 U.S. 1, 9-10 (1983)).
This means that the federal
question must appear on the face of the complaint.
See Torres v.
Southern Peru Copper Corp., 113 F.3d 540, 542 (5th Cir. 1997).
Because defendants may remove a case to federal court based on a
federal question only if the plaintiff could have brought the
action in federal court from the outset, “the question for
removal jurisdiction must also be determined by reference to the
well-pleaded complaint.”
Merrell Dow, 478 U.S. at 808.
As St. Bernard Port does not assert any claims under federal
law, federal question jurisdiction exists only if an exception to
the well-pleaded complaint rule applies.
Relying on Grable &
Sons Metal Products, Inc. v. Darue Engineering & Manufacturing,
545 U.S. 308 (2005), Violet argues that removal was proper
because this case “presents substantial federal issues regarding
[St. Bernard Port’s] interference with federal military and
national defense interests.”49
In Grable, the plaintiff filed a
quiet title action in Michigan state court alleging that the
defendant’s title to certain property was invalid, and defendant
removed.
49
Id. at 310.
A Michigan court rule required the
(R. Doc. 31-3 at 27-30.)
27
plaintiff to specify the facts establishing the superiority of
its claims, and plaintiff “premised its superior title claim on a
failure by the IRS to give it adequate notice, as defined by
federal law.”
Id. at 314.
Whether the plaintiff “was given
notice within the meaning of the federal statute,” the Court
recognized, was “thus an essential element of its quiet title
claim, and the meaning of the federal statute [was] actually in
dispute . . . .”
Id.
In finding federal question jurisdiction,
the Court observed that the meaning of the federal tax provision
was an important issue of federal law that belonged in federal
court, especially in light of the Government’s interest in the
“prompt and certain collection of delinquent taxes,” and the
“IRS’ need for certainty in notice requirements to provide buyers
of seized property assurance that the IRS has taken all steps
required to convey good title.”
Id. (quoting United States v.
Rodgers, 461 U.S. 677, 709 (1983)).
The Supreme Court has since stated that only a “slim
category” of cases will satisfy the Grable paradigm.
Empire
Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 701 (2006).
The mere presence of a federal issue “does not automatically
confer federal-question jurisdiction.”
Merrell Dow, 478 U.S. at
813; see also Florida Marine Transporters, Inc. v. Trinity Marine
Products, Inc., 2002 WL 31246765 (E.D. La. 2002) (“It is well28
established that the mere fact that a court necessarily must
interpret federal law . . . to determine the merits of a claim is
insufficient to confer federal jurisdiction.”).
Under Grable,
federal question jurisdiction exists only when (1) resolving a
federal issue is necessary to resolution of the state-law claim;
(2) the federal issue is actually disputed; (3) the federal issue
is substantial; and (4) federal jurisdiction will not disturb the
balance of federal and state judicial responsibilities.
See
Singh v. Duane Morris LLP, 538 F.3d 334, 338 (5th Cir. 2008)
(citing Grable, 545 U.S. at 314).
The Court finds that Violet has not met the requirements set
forth in Grable to establish jurisdiction based on a substantial
federal question.
Violet relies heavily on the possibility that
St. Bernard Port’s expropriation is preempted by the Defense
Production Act (DPA), 50 U.S.C. App. § 2061, and that assignment
of the contract to St. Bernard Port would violate the Competition
in Contracting Act, 41 U.S.C. § 253.
Yet, unlike Grable, these
federal issues are defenses to St. Bernard Port’s expropriation,
not essential elements to the cause of action.
Put differently,
whereas the basis for Grable’s quiet title action was an alleged
failure to receive the notice required by federal law, St.
Bernard Port’s expropriation action itself does not depend on the
interpretation of a federal statute or regulation.
29
Federal law
is only implicated by the defenses that Violet asserts.
Most
courts addressing this scenario have found that federal
jurisdiction is not appropriate.
See Williston Basin Interstate
Pipeline Co. v. An Exclusive Gas Storage Leasehold, 524 F.3d
1090, 1102 (9th Cir. 2008) (declining to exercise jurisdiction
because federal law was not an “essential element” of the
plaintiff’s state law claim); Herrera v. Guajardo, 2001 WL 62432,
at *3 (N.D. Cal. 2011) (explaining that a state-law claim can
provide federal jurisdiction if it “rests on a federal question
in the claim itself (rather than as a defense)”); District of
Columbia v. All of the Parcel of Land Identified in the District
of Columbia as 2626 Naylor Road, --- F. Supp. 2d -—–, 2011 WL
182045, at *2 (D.D.C. 2011) (discussing jurisdiction under Grable
and noting that “it is settled law that a case may not be removed
to federal court on the basis of a federal defense even if the
defense is anticipated in the plaintiff’s complaint”); City of
Patterson v. Shannon G., LLC, 2008 WL 1995146, at *2-3 (D.N.J.
2008) (declining to exercise jurisdiction because federal
preemption under the Interstate Commerce Commission Termination
Act was raised as a defense, “not a necessary element of
Plaintiff’s eminent domain claim”).
Violet, however, cites two cases in which courts have found
jurisdiction under Grable based on the “uniquely federal
30
interest” of national security, even though federal law was not
an essential element of the plaintiff’s state-law claims: Scrogin
v. Rolls-Royce Corporation, 2010 WL 3547706 (D. Conn. 2010), and
McMahon v. Presidential Airways, Inc., 410 F. Supp. 2d 1189 (M.D.
Fla. 2006).
Both cases involved state-law tort claims for
allegedly defective equipment provided by government contractors
to the military.
See McMahon, 410 F. Supp. 2d at 1201 (reasoning
that imposing civil liability implicated the interests of the
United States because, later, “either the contractor will decline
to manufacture the design specified by the Government, or it will
raise the price”); see also Boyle v. United Technologies Corp.,
487 U.S. 500, 506 (1988) (identifying a “uniquely federal
interest” in “civil liabilities arising out of the performance of
federal procurement contracts”) (emphasis added).
In this case,
by contrast, Violet will not be exposed to civil liability, and
it will be compensated for any losses resulting from the
expropriation, including those related to its contract with MSC.
See La. Rev. Stat. § 19:9 (providing that, in an expropriation
action, the “owner shall be compensated to the full extent of his
loss”).
The reasoning underlying Scrogin and McMahon is thus
inapplicable to St. Bernard Port’s expropriation action.
Further, the Court finds it significant that MSC has not
intervened in this action.
As discussed above, when given the
31
opportunity to weigh in on the effect of the expropriation, MSC’s
response was equivocal, acknowledging that “there is some
uncertainty regarding future contract performance,” but stating
that “it currently believes that the expropriation does not
affect the Government’s contractual rights and remedies.”50
Notably, MSC has at no point encouraged this Court to exercise
jurisdiction.
See R. Fallon, J. Manning, D. Meltzer, & D.
Shapiro, Hart and Wechsler’s The Federal Courts and The Federal
System 139-40 (5th ed. Supp. 2008) (highlighting that, in Grable,
the Solicitor General filed an amicus brief urging the Court to
uphold jurisdiction).
With regard to state interests, which must
also be considered when conducting a Grable analysis, Louisiana
has an “inherent right . . . to acquire private property for
public purposes without the consent of the owner, provided just
compensation is paid,” Town of Vidalia v. Unopened Succession of
Ruffin, 663 So.2d 315, 319 (La. Ct. App. 1995), and federal
courts are hesitant to intervene in areas that have traditionally
been the domain of state law, see Singh, 538 F.3d at 339
(declining to exercise jurisdiction in a legal malpractice
action, in part, because legal malpractice has traditionally been
the domain of state law).
50
To the degree that Violet can assert
(R. Doc. 44-1.)
32
defenses under federal law to the expropriation, those defenses
can be evaluated by the state court.
Finally, Violet is
asserting a novel issue of Louisiana constitutional law on
expropriation, which is best resolved by state courts in the
first instance.51
Under these circumstances, the Court concludes
that Violet has not met its burden to establish jurisdiction
based on section 1441(b).
D.
Attorneys’ Fees and Costs
In its motion to remand, St. Bernard Port asks the court for
an award of just costs and actual expenses, including attorneys’
fees, incurred as a result of Violet’s improper removal under 28
U.S.C. § 1447(c).52
According to the Supreme Court, “[t]he
appropriate test for awarding fees under § 1447(c) should
recognize Congress’ desire to deter removals intended to prolong
litigation and impose costs on the opposing party, while not
51
Violet argues that expropriation of the subject
property violates article I, section (4)(B)(6) of the Louisiana
Constitution, which provides that “[n]o business enterprise or
any of its assets shall be taken for the purpose of operating
that enterprise or halting competition with a government
enterprise.” La. Const. art I, § 4(B)(6). As far as the Court
is aware, no Louisiana court has yet interpreted the language
of that section.
52
(R. Doc. 13-1 at 22.)
33
undermining Congress’ basic decision to afford defendants a right
to remove as a general matter, when the statutory criteria are
satisfied.”
(2005).
Martin v. Franklin Capital Corp., 546 U.S. 132, 133
The standard thus turns on the reasonableness of
removal, and fees should be awarded if the removing defendant
lacked objectively reasonable grounds to believe the removal was
legally proper.
Hornbuckle v. State Farm Lloyds, 385 F.3d 538,
541 (5th Cir. 2004).
Although the Court finds that removal is
not proper in this case, Violet did not lack objectively
reasonable grounds to believe removal was proper.
As such, an
award of attorneys’ fees and costs would be improper.
III. CONCLUSION
For the foregoing reasons, St. Bernard Port’s motion to
remand is GRANTED.
St. Bernard Port’s request for attorneys’
fees and cost is DENIED.
New Orleans, Louisiana, this 25th day of August, 2011.
__
_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE
34
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