Champagne, II et al v. Union Pacific Railroad Co et al

Filing 38

MEMORANDUM RULING denying 11 MOTION to Remand, terminating MOTION for Limited Discovery filed by Lewis Champagne, II, Helena Champagne. Signed by Magistrate Judge C Michael Hill on October 1, 2014. (crt,Dunford, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAFAYETTE DIVISION
LEWIS CHAMPAGNE, II, ET AL

CASE NO: 14-CV-0766

VERSUS

JUDGE HAIK

UNION PACIFIC RAILROAD CO., ET AL MAGISTRATE JUDGE HILL
MEMORANDUM RULING
Pending before the undersigned is the Motion to Remand with Request for Limited
Discovery filed by plaintiffs, Lewis and Helena Champagne, individually and on behalf
of their minor children, Lewis Champagne, III, Kobe Champagne, Teagan Champagne
and Marion Champagne (the “Champagnes”), on May 8, 2014. [rec. doc. 11]. On May
29, 2014, defendant, Union Pacific Railroad Company (“Union Pacific”), filed
opposition. [rec. doc. 13]. Defendant, United States Environment Services, LLC
(“USES”), filed a Response to Plaintiffs’ Motion to Remand on May 30, 2014. [rec. doc.
14]. The Champagnes filed a Reply Memorandum on June 5, 2014. [rec. doc. 15].
On June 24, 2014, the undersigned held a hearing in open court, in which I granted
the Motion for Limited Discovery and took the Motion to Remand under advisement.
[rec. doc. 20]. By Order dated July 9, 2014, I allowed plaintiffs to file a supplemental
brief by August 4, 2014, with a response due within five days of service. [rec. doc. 22].
On July 16, 2014, the Champagnes filed a Supplemental Memorandum in
Connection with their Motion to Remand, in which they withdrew their previous

argument that Union Pacific’s removal was untimely. [rec. doc. 25]. On July 22, 2014,
USES filed a Motion to Extend Briefing Deadline [rec. doc. 28], which the undersigned
granted by Order dated July 24, 2014. [rec. doc. 29].
On September 2, 2014, the Champagnes filed a Supplemental Memorandum in
Connection with the Motion to Remand. [rec. doc. 36]. In their brief, plaintiffs withdrew
their argument related to the citizenship of USES.
Accordingly, plaintiffs’ sole remaining argument on the Motion to Remand is
whether the parties mutually selected state court in St. Landry Parish, Louisiana, for
exclusive jurisdiction and venue. Union Pacific opposed this argument in its Response
filed on September 3, 2014. [rec. doc. 34].
Factual Background
On February 27, 2014, the Champagnes filed an action for damages allegedly
resulting from a train derailment, which occurred in the Town of Lawtell, Louisiana (the
“Lawtell train derailment”), on August 4, 2013. The suit was filed in the 27th Judicial
District Court, Parish of St. Landry, Louisiana. On April 8, 2014, Union Pacific removed
the suit to this Court on diversity grounds, pursuant to 28 U.S.C. §§ 1332, 1441 and
1446.1

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To date, 33 lawsuits arising out of the Lawtell train derailment have been removed to this
Court, most of which have been consolidated into a single action, Vallian v. Union Pacific
Railroad Co., Docket No. 13-2435, as well as Guillory v. Union Pacific, Docket No. 13-2531
and Carriere v. Union Pacific, Docket No. 13-2437.
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The Champagnes reside and crawfish (both commercially and recreationally) on
property adjacent to the train derailment location. After the accident, the Louisiana
Department of Environmental Quality (“LDEQ”) ordered Union Pacific to test and
remediate the Champagnes’ property. Union Pacific contracted with Conestoga-Rovers
& Associates, Inc. (“CRA”) to conduct the testing and remediation. USES was a
subcontractor of CRA.
In November, 2013, Union Pacific and the Champagnes entered into a Property
Access Agreement (the “Agreement”) giving Union Pacific, its contractors and
subcontractors, access to the Champagnes’ property to perform the required testing and
remediation made necessary by the release of lubricants from the train derailment onto
portions of the Champagne’s property. [rec. doc. 13, Exhibit A]. The Agreement defines
the “Purpose” of the contract as follows:
Landowner [the Champagnes] hereby grants Union Pacific, its contractors,
CRA, and sub-contractors access to the Property as requested in the
premises paragraphs above for purposes of soil and groundwater
investigations and testing, including the installation and maintenance of
temporary groundwater monitoring wells, the plugging and abandoning of
any environmental testing wells, and for any environmental activities
required by the Louisiana Department of Environmental Quality (“LDEQ”)
or other governmental agency, any remediation efforts, including but not
limited to remediation of soil and/or groundwater, excavation of soil, and
backfilling of excavated soil, and all uses necessary and incidental thereto
(the “Project Activities”).
[rec. doc. 13, Exhibit A, ¶ I].

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The Agreement provides a “Reservation of Rights” with regard to damages in
favor of the Champagnes as follows:
Landowner specifically reserves the right to claim any and all damages of
any kind or character whatsoever from Union Pacific, CRA and their
contractors and subcontractors arising or resulting from the Project
Activities, as well as from the derailment of August 4, 2013. Nothing
herein shall be construed to limit Landowner’s right to claim and receive
such damages.
[rec. doc. 13, Exhibit A, ¶ V].
The Agreement contains a “Forum Selection” clause which reads as follows:
Any controversy or dispute arising out of or relating to this Agreement shall
be resolved exclusively in a Court of competent jurisdiction in the Parish of
St. Landry, State of Louisiana.
[rec. doc. 13, Exhibit A, ¶IX].
It is this Forum Selection clause which provides the basis for the Champagnes’
Motion to Remand.
Analysis
The Champagnes argue that the parties consented to exclusive jurisdiction and
venue in state court in St. Landry Parish by virtue of the Forum Selection clause. Union
Pacific opposes on the grounds that the Forum Selection clause does not extend to many
of the Champagne’s major claims against Union Pacific.
The enforceability of a forum selection clause is determined by federal law.
Haynsworth v. The Corporation, 121 F.3d 956, 962 (5th Cir. 1997); Smith v. Swift
Transp. Co. of Arizona, LLC, 915 F.Supp.2d 766, 771 (W.D. La. 2013). Federal law
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controls whether a lawsuit falls within the scope of the forum selection clause, even in
diversity cases. Ondova Co. v. Manila Indus., Inc., 513 F. Supp. 2d 762, 772 (N.D. Tex.
2007) (citing Jones v. GNC Franchising, Inc., 211 F.3d 495, 497 (9th Cir. 2000)) (“In
diversity cases, federal law governs the analysis of the effect and scope of forum selection
clauses.”); Shale Consultants, L.L.C. v. Wilson, 2013 WL 4750066, *3 (W.D. La. Sept. 3,
2013).
Pursuant to federal law, forum selection clauses are “prima facie valid and should
be enforced unless enforcement is shown by the resisting party to be “unreasonable”
under the circumstances. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 10, 92 S.Ct.
1907, 1913, 32 L.Ed.2d 513 (1972). Unreasonableness potentially exists where (1) the
incorporation of the forum selection clause into the agreement was the product of fraud or
overreaching; (2) the party seeking to escape enforcement “will for all practical purposes
be deprived of his day in court” because of the grave inconvenience or unfairness of the
selected forum; (3) the fundamental unfairness of the chosen law will deprive the plaintiff
of a remedy; or (4) enforcement of the forum selection clause would contravene a strong
public policy of the forum state. Smith v. Lucent Technologies, Inc., 2004 WL 515769,
*7 (E.D. La. Mar. 16, 2004) (citing Haynsworth, 121 F.3d at 963).
In this case, Union Pacific does not contend that the Forum Selection clause is
unreasonable or otherwise invalid. Instead, it asserts that the forum selection clause does
not apply to the great majority of the Champagnes’ claims for relief and does not require

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the remand of this action to state court.
Before considering whether a forum selection clause is enforceable as urged by
plaintiffs, the court must first decide whether the clause applies to the pending action.
Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 222 (5th Cir. 1998). In making
that decision, the Court “must look to the language of the parties' contracts to determine
which causes of action are governed by the forum selection clause[ ].” Id. “[I]f the
substance of [the plaintiffs’ claims], stripped of their labels, does not fall within the scope
of the clause[ ], the clause [ ] cannot apply.” Smith, 2004 WL 515769 at *7 (quoting
Roby v. Corp. of Lloyd's, 996 F.2d 1353, 1361 (2d Cir.1993)).
Under federal law, the court must interpret the contract in such as way as to give
effect to the parties' mutual intentions. Shale Consultants, 2013 WL 4750066 at *3 (citing
Hanak v. Talon Ins. Agency, Ltd., 470 F.Supp.2d 695, 706 (E.D. Tex. 2006)). A contract
also must be interpreted to give effect to all of its provisions. Id. (citing Clark v. Zapata
Gulf Marine Corp., Inc., 1990 WL 84561 (E.D. La. June 11, 1990)).
Here, this action is for damages allegedly resulting from (1) the train derailment
which caused a chemical leak onto the Champagnes’ property and (2) the improper
remediation by Union Pacific and its contractor, USES, of their property. Specifically,
plaintiffs’ claims are as follows: (1) diminution of property value against Union Pacific
(¶¶ 12-13); (2) trespass against Union Pacific and USES (¶¶ 14-16); (3) failure to return
the property to its previous condition prior to contamination against Union Pacific and

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USES (¶¶ 17-22); (4) economic loss damages against Union Pacific (¶¶ 23-26), and (5)
fear, fright and inconvenience against Union Pacific (¶¶ 27-31).
The Fifth Circuit has expressly rejected a general distinction between tort and
contract claims with respect to an analysis of whether particular claims fall within the
scope of a forum selection clause. Smith, 2004 WL 515769 at *9 (citing Marinechance,
143 F.3d at 221-22 (“We find no persuasive support for such a general distinction.”).
Instead, the Court looks to the language to the parties’ contracts to determine which
causes of action are governed by the forum selection clause. Marinechance, 143 F.3d at
222. “Examination of the merits of any of the claims or defenses need not be made.”
Claimserviceprovider, Inc. v. St. Paul Travelers Companies Inc., 2006 WL 2989240, *4
(E.D. La. Oct. 18, 2006) (citing Lucent, 2004 WL 515769 at *9).
Union Pacific asserts that the Forum Selection clause does not apply to the great
majority of plaintiffs’ claims for relief. A review of the Agreement (quoted above)
shows that its “Purpose” was to allow access to the plaintiff’s property to assess physical
damage to the property caused by the spill and to remediate any such damage.
A review of the complaint, styled as “Petition for Damages,” makes it clear that
the Champagnes are asserting claims for damages relating to the Project Activities, as
well as from the train derailment. Furthermore, the Agreement specifically recognizes
that two different claims for damage to the Champagnes’ property are possible: one claim
for damages resulting directly from the spill and one claim for damages caused by the

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remediation, as indicated in the following provisions:
Project Activities on the Property
All Project Activities shall be conducted in a manner that does not interfere
with Landowner’s activities or use or enjoyment of the Property, provided
that if the Project Activities do deprive Landowner of the use or enjoyment
of his property, Landowner reserves the right to claim compensation and/or
damages for same.

Reservation of Rights
Landowner specifically reserves the right to claim any and all damages of
any kind or character whatsoever from Union Pacific, CRA and their
contractors and subcontractors arising or resulting from the Project
Activities, as well as from the derailment of August 4, 2013. Nothing
herein shall be construed to limit Landowner’s right to claim and receive
such damages.

(emphasis added). [rec. doc. 13, Exhibit A, ¶¶ II(c), V].
The Court’s review of these provisions along with the remaining provisions of the
Agreement make it clear that the Agreement (and thus the Forum Selection Clause) was
meant to apply only to damages caused by the remediation, not those caused by the spill.
When asked at oral argument, counsel for the Champagnes said that he did not want some
claims remanded and some claims to remain in this Court; he wanted all claims to be
heard in a single forum. That makes perfect sense to the Court. Therefore, since the
claims against Union Pacific for the spill are not subject to the Forum Selection Clause,
remand will be denied.

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Furthermore, the undersigned observes that a forum selection clause providing for
venue in a specific parish (county) permits venue in either federal or state court, because a
federal courthouse is located in that parish. Alliance Health Group, LLC v. Bridging
Health Options, LLC, 553 F.3d 397, 400 (5th Cir. 2008). In Alliance, the parties executed
an agreement containing the following forum-selection clause: “Governing Law: This
Agreement shall be governed by and construed in accordance with the laws of the state of
Mississippi and exclusive venue for any litigation related hereto shall occur in Harris
County, Mississippi.” (emphasis in original). After a contractual dispute arose between
the parties, plaintiff filed a diversity action in the United States District Court for the
Southern District of Mississippi, Southern Division. A federal courthouse for that
division is located in Harrison County, the county named in the forum-selection clause.
Defendant moved to dismiss the complaint for improper venue, asserting that
forum-selection clause limited filing to the state courts located in Harrison County. The
district court denied the motion, ruling that the clause could be interpreted to permit filing
the action in either federal or state court; and, because the clause permitted the action to
be filed in multiple fora, it was not mandatory, making filing in federal court appropriate
as well.
Initially, the Fifth Circuit noted that although the clause at issue referred to venue,
it had previously treated similar clauses as forum-selection clauses. Id. at 399. The Court
framed the issue as whether venue was proper when the federal district court was located

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in the specified county. The Court held that the clause at issue, providing for venue in a
specific county, permitted venue in either federal or state court, because a federal
courthouse was located in that county.2
In Alliance, the action was filed directly in federal court, as opposed to being
removed as in this case. However, that is of no moment. As stated by the Fifth Circuit in
City of New Orleans v. Mun. Admin. Servs., 376 F.3d 501 (5th Cir. 2004):
For a contractual clause to prevent a party from exercising its right to
removal, the clause must give a “clear and unequivocal” waiver of that
right. A party may waive its rights by explicitly stating that it is doing so, by
allowing the other party the right to choose venue, or by establishing an
exclusive venue within the contract.
A party's consent to jurisdiction in one forum does not necessarily waive its
right to have an action heard in another. For a forum selection clause to be
exclusive, it must go beyond establishing that a particular forum will have
jurisdiction and must clearly demonstrate the parties' intent to make that
jurisdiction exclusive. It is important to distinguish between jurisdiction and
venue when interpreting such clauses. Although it is not necessary for such
a clause to use the word “venue” or “forum,” it must do more than establish
that one forum will have jurisdiction.
Id. at 504 (internal citations omitted).
Here, the Forum Selection clause at issue does not contain an explicit waiver of
defendants’ right to remove to federal court. Further, the parties did not establish the state
court as the exclusive venue for all disputes. Accordingly, Union Pacific did not waive its
right to remove this action for damages to federal court.
2

See also, Eastern Fishing & Rental Tool Co. Inc. v. Blaney, 2012 WL 73234 (S.D. Miss.
Jan. 10, 2012) (forum selection clause placing jurisdiction in particular Mississippi state court
did not preclude removal to federal court).
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Conclusion
Based on the foregoing reasons, the Motion to Remand is DENIED.
Signed October 1, 2014, at Lafayette, Louisiana.

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