State of Vermont v. Exxon Mobil Corporation et al
Filing
90
OPINION AND ORDER granting 36 Motion to Remand and denies the State's request for fees and costs. Signed by Judge William K. Sessions III on 2/6/2024. (law)
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF VERMONT
STATE OF VERMONT,
)
)
Plaintiff,
)
)
v.
)
)
EXXON MOBIL CORPORATION,
)
EXXONMOBIL OIL CORPORATION,
)
ROYAL DUTCH SHELL PLC, SHELL )
OIL COMPANY, SHELL OIL
)
PRODUCTS COMPANY LLC, MOTIVA )
ENTERPRISES LLC, SUNOCO LP,
)
SUNOCO LLC, ETC SUNOCO
)
HOLDINGS LLC, ENERGY TRANSFER )
(R&M) LLC, ENERGY TRANSFER
)
LP, and CITGO PETROLEUM
)
CORPORATION,
)
)
Defendants.
)
Case No. 2:21-cv-260
OPINION AND ORDER
The State of Vermont (the “State”) brings this action
against Exxon Mobil Corporation and other fossil fuel companies
(“Defendants”) claiming Defendants violated the Vermont Consumer
Protection Act (“VCPA”) by, among other things, failing to
inform consumers about the impacts of fossil fuel products on
climate change.
The case was originally filed in state court,
and Defendants removed it here.
The State now moves to remand.
Defendants oppose the motion, arguing that this Court has both
federal subject matter and diversity jurisdiction.
For reasons set forth below, the Court finds that the State
is not asserting any federal causes of action, that the
Complaint instead invokes only Vermont’s consumer protection
law, and that there is no diversity of citizenship.
The motion
to remand is therefore granted.
Factual Background
The State commenced this action by filing a Complaint in
Vermont Superior Court.
The Complaint alleges Defendants
violated the VCPA by engaging in deceptive acts and unfair
practices in the marketing, distribution, and sale of fossil
fuel products to consumers in Vermont.
The State claims
Defendants knew for decades that use of their products would be
a major cause of harmful climate change, yet actively
misrepresented and concealed that information in marketing their
products to Vermont consumers.
Defendants also allegedly
engaged in false advertising and deceptive efforts to portray
their products as climate-friendly without also disclosing known
climate impacts, and to sow false doubts about climate change.
This conduct allegedly had a material impact on consumers and
the choices they made about the purchase and use of fossil
fuels.
The State brings two causes of action, one alleging
deceptive acts or practices and the other alleging unfair
business practices.
VCPA.
Both causes of action are brought under the
For relief, the State seeks an injunction requiring
Defendants to refrain from further deception and to take
2
affirmative steps to rectify their prior allegedly-deceptive
acts.
The State also asks for disgorgement of amounts
Defendants obtained as a result of their actions, civil
penalties under the VCPA, and costs of litigation and
investigation.
The State is not seeking monetary relief or
compensation for environmental harm.
Defendants removed the case to this Court.
Their notice of
removal cites several bases on which the Court may allegedly
assert jurisdiction.
Those include: (1) that the State’s claims
arise under federal common law because they implicate
transboundary pollution, foreign affairs, and greenhouse gas
emissions; (2) that the Complaint raises disputed federal
questions about compliance with fuel economy and environmental
standards; (3) that the action allegedly falls under the federal
officer removal statute, 28 U.S.C. § 1442, as Defendants have
engaged in fossil fuel production under federal direction for
many years; (4) that the Complaint raises issues which
necessarily arise out of, or in connection with, operations
governed by the Outer Continental Shelf Lands Act (“OCSLA”); (5)
that Defendants’ fossil fuel production and promotional
activities occurred on “federal enclaves”; and (6) diversity of
citizenship.
ECF No. 1.
The State moves to remand, arguing that none of these
arguments have merit and that the case belongs in state court.
3
The motion is opposed.
In light of a recent Second Circuit
ruling in a similar action, discussed below, the Court ordered
supplemental briefing.
That briefing has now been submitted.
Discussion
I.
Removal and Federal Court Jurisdiction
“[A]ny civil action brought in a State court of which the
district courts of the United States have original jurisdiction,
may be removed by the defendant or the defendants, to the
district court of the United States for the district and
division embracing the place where such action is pending.”
U.S.C. § 1441(a).
28
Accordingly, a defendant may remove a state
court action to federal court if the plaintiff could have
originally filed suit in federal court, based on either federalquestion or diversity jurisdiction.
1332.
See 28 U.S.C. §§ 1331,
“The presence or absence of federal-question jurisdiction
is governed by the ‘well-pleaded complaint rule,’ which provides
that federal jurisdiction exists only when a federal question is
presented on the face of the plaintiff’s properly pleaded
complaint.”
(1987).
Caterpillar Inc. v. Williams, 482 U.S. 386, 392
A plaintiff may therefore “avoid federal jurisdiction
by pleading only state law claims, even where federal claims are
also available, and even if there is a federal defense.”
4
Fax
Telecommunicaciones Inc. v. AT&T, 138 F.3d 479, 486 (2d Cir.
1998). 1
“[I]n light of the congressional intent to restrict federal
court jurisdiction, as well as the importance of preserving the
independence of state governments, federal courts construe the
removal statute narrowly, resolving any doubts against
removability.”
Purdue Pharma L.P. v. Kentucky, 704 F.3d 208,
213 (2d Cir. 2013) (citation omitted); see also Shamrock Oil &
Gas Corp. v. Sheets, 313 U.S. 100, 109 (1941).
Nonetheless, “a
plaintiff cannot avoid removal by artful pleading, i.e., by
framing in terms of state law a complaint the real nature of
which is federal, regardless of plaintiff’s characterization,
... or by omitting to plead necessary federal questions in a
complaint.”
Derrico v. Sheehan Emergency Hosp., 844 F.2d 22,
27–28 (2d Cir. 1988) (internal citations and quotation marks
omitted).
“Necessary federal questions” are present when a
well-pleaded complaint appears “as if it arises under state law
where the plaintiff’s suit is, in essence, based on federal
Defendants submit that they have “colorable” federal defenses
that must be heard in federal court. Their cited defenses do
not, however, provide grounds for federal jurisdiction. See,
e.g., City of Hoboken v. Chevron Corp., 45 F.4th 699, 709 (3d
Cir. 2022), cert. denied sub nom. Chevron Corp. v. City of
Hoboken, New Jersey, 143 S. Ct. 2483 (2023) (declining
jurisdiction on the basis of First Amendment arguments).
1
5
law.”
Sullivan v. Am. Airlines, Inc., 424 F.3d 267, 271 (2d
Cir. 2005).
The Second Circuit has held that there are only three
situations in which a complaint that does not allege a federal
cause of action may nonetheless “arise under” federal law for
purposes of subject matter jurisdiction: first, if Congress
expressly provides, by statute, for removal of state law claims;
second, if the state law claims are completely preempted by
federal law; and third, if the vindication of a state law right
necessarily turns on a question of federal law.
Fracasse v.
People’s United Bank, 747 F.3d 141, 144 (2d Cir. 2014)
(citations omitted).
On a motion to remand, “the defendant
bears the burden of demonstrating the propriety of removal.”
Cal. Pub. Emps.’ Ret. Sys. v. WorldCom, Inc., 368 F.3d 86, 100
(2d Cir. 2004) (citation omitted).
II.
Recent Second Circuit Law
The Second Circuit’s recent decision in State of
Connecticut v. Exxon Mobil Corp., 83 F.4th 122 (2d Cir. 2023)
(hereinafter “Connecticut”) addressed several of the
jurisdictional questions raised here.
Much like the State’s
action in this case, the State of Connecticut sued a fossil fuel
company claiming violations of Connecticut’s unfair trade
practices statute.
The company removed the case to federal
court, and the federal district court ordered it remanded.
6
On
appeal, the Second Circuit directly addressed the following
issues: (1) whether the State pled a federal question on the
face of the Complaint, and whether an exception to the wellpleaded complaint rule applied; (2) whether the State’s unfair
trade practices claim raised a federal common law claim because
it concerned transboundary pollution; (3) whether Defendants
were acting under an officer of the United States and the color
of such office; and (4) whether there was federal question
jurisdiction because the case involved defendants’ extraction of
oil and gas on land leased from the United States on the outer
continental shelf.
Connecticut, 83 F.4th at 129.
The Second
Circuit answered each of these questions in favor of the State
of Connecticut, found no basis for federal subject matter
jurisdiction, and affirmed the district court’s remand.
138-47.
Id. at
This Court’s review of the parties’ arguments is guided
by the Connecticut decision, and by recent decisions from other
federal courts on essentially this same subject.
III. The Grable Doctrine
Defendants contend that the State’s claims, though
presented as purely state law causes of action, “arise under”
federal law and therefore warrant federal court jurisdiction
pursuant to the Grable doctrine.
See Grable & Sons Metal Prods.
Inc. v. Darue Eng’g & Mfg, 545 U.S. 308, 313 (2005).
Grable
presents an exception to the well-pleaded complaint rule,
7
allowing federal jurisdiction if “vindication of the state-law
right asserted necessarily turns on a question of federal law.”
Connecticut, 83 F.4th at 138 (quoting Fracasse, 747 F.3d at 144
(internal alterations omitted)).
Jurisdiction will lie under
Grable “if a federal issue is: (1) necessarily raised, (2)
actually disputed, (3) substantial, and (4) capable of
resolution in federal court without disrupting the federal-state
balance approved by Congress.”
Connecticut, 83 F.4th at 139-40.
In Connecticut, the Second Circuit reviewed the claims in the
complaint and found the Grable exception did not apply.
140-42.
Id. at
This Court reaches the same conclusion with respect to
the VCPA claims asserted here.
Defendants argue that the State’s claims necessarily raise
federal issues because of certain advertising practices cited in
the Complaint.
Specifically, the State alleges that Defendants’
advertisements claimed their products met or exceeded federal
fuel economy and environmental standards without also telling
consumers that those same products contributed to climate
change.
Defendants submit that those allegations will require
the Court to determine whether their products did, in fact, meet
or surpass federal standards, and therefore raise questions of
federal law.
The crux of the State’s Complaint is that Defendants failed
to provide consumers in Vermont with information that would have
8
necessarily informed their decisions about buying and using
fossil fuels.
While the Complaint cites certain advertisements
in which Defendants claimed their products met or exceeded
federal standards, those factual allegations merely provide
context for the State’s claims of factual omissions.
The State
does not claim that Defendants’ advertisements were untrue.
See
ECF No. 85 at 10 (State’s supplemental brief explaining that
“the Complaint does not allege a violation of EPA standards, or
that Defendants’ products do not surpass those standards, or
that Defendants have violated any federally prescribed duty”).
The State is instead claiming that those advertisements did not
tell the whole story, and misled consumers by failing to mention
the alleged environmental harm that would result from the use of
fossil fuels.
Accordingly, the cited allegations do not satisfy any of
the Grable criteria.
See Connecticut, 83 F.4th at 139-40.
The
allegations do not “necessarily raise” a federal issue since
compliance with federal standards is not in question.
Indeed,
there is no “actual dispute” about the accuracy of the alleged
advertisements.
The allegations are not significant, since the
focus of the State’s claim is the omission, not the inclusion,
of certain facts.
And finally, with no necessarily-raised
federal issue, the assertion of subject matter jurisdiction
9
would plainly “disrupt[] the federal-state balance approved by
Congress.”
Connecticut, 83 F.4th at 140.
Defendants also argue that Grable applies because the
Complaint necessarily raises federal policy questions regarding
government promotion of fossil fuels, including natural gas.
Defendants cite the Clean Air Act as an example, claiming that
the Act strikes a balance between energy production and
environmental protection.
Their argument is that requiring
fossil fuel companies to provide information about climate
change, thereby “tilt[ing] the balance away from the production
of energy through fossil fuels,” implicates federal energy and
environmental policy.
ECF No. 87 at 11.
In Connecticut, the Second Circuit rejected a similar
argument when defendant Exxon Mobil argued that Connecticut’s
complaint necessarily raised issues of transboundary pollution.
The court explained that for purposes of the Grable exception,
the federal issue must be “necessarily” raised, and the mere
presence of a federal issue is “insufficient.”
Connecticut, 83
F.4th at 140; see also New York ex rel. Jacobson v. Wells Fargo
Nat’l Bank, N.A., 824 F.3d 308, 315 (2d Cir. 2016) (holding that
a “state-law claim ‘necessarily’ raises federal questions where
the claim is affirmatively ‘premised’ on a violation of federal
law”) (quoting Grable, 545 U.S. at 314).
The Connecticut court
observed that “Exxon Mobil cannot establish Grable jurisdiction
10
simply by gesturing toward ways in which this case loosely
implicates” a question of federal law.
83 F.4th at 140.
“[I]f
a ‘court could ... resolve[ ] the case without reaching the
federal issues,’ then ‘the claims do not necessarily raise a
federal issue.’”
Id. (quoting New York v. Shinnecock Indian
Nation, 686 F.3d 133, 140–41 (2d Cir. 2012)).
Here, the State brings two claims under the VCPA, one
alleging deception and the other alleging unfairness.
The
deception cause of action has the following elements: (1) the
representation or omission at issue must have been likely to
mislead a consumer; (2) the consumer’s interpretation of the
representation was reasonable under the circumstances; and (3)
the misleading representation was material in that it was likely
to affect the consumer’s purchasing decision.
Nissan N. Am., Inc., 2004 VT 27, ¶ 5.
See Jordan v.
For the unfairness claim,
this Court has previously noted that, in Vermont, “whether an
act is unfair is guided by consideration of several factors,
including (1) whether the act offends public policy, (2) whether
it is immoral, unethical, oppressive or unscrupulous, and (3)
whether it causes substantial injury to consumers.”
Drake v.
Allergan, Inc., 63 F. Supp. 3d 382, 393 (D. Vt. 2014) (cleaned
up); see also Christie v. Dalmig, Inc., 396 A.2d 1385, 1388 (Vt.
1979) (adopting factors considered by the Federal Trade
Commission (“FTC”) in addressing whether an act or practice is
11
unfair).
A plaintiff does not need to satisfy all three criteria
to support a finding of unfairness, though in this case the
allegations suffice for each. 2
As the Second Circuit explained in Connecticut, the
fundamental question is whether a court can resolve these causes
of action without reaching a question of federal law.
at 140.
83 F.4th
With respect to deception under the VCPA, the elements
focus on misleading representations.
That those
misrepresentations might touch upon broad questions of federal
energy policy does not render them subject to federal subject
matter jurisdiction.
See, e.g., id. at 142 (“We entirely agree
with the district court’s analysis of this point: ‘Connecticut
alleges that ExxonMobil lied to Connecticut consumers, and that
these lies affected the behavior of those consumers.
The fact
The Vermont Supreme Court, citing FTC guidance from 1964,
stated in Christie that “[w]hether one or all of these factors
must be present in the circumstances is a question the
Commission has not answered.” 396 A.2d at 1388 (citing
Statement of Basis and Purpose of Trade Regulation Rule 408,
Unfair or Deceptive Advertising and Labeling of Cigarettes in
Relation to the Health Hazards of Smoking. 29 Fed. Reg. 8355
(1964)). However, more recent FTC guidance states that “[a]ll
three criteria do not need to be satisfied to support a finding
of unfairness. A practice may be unfair because of the degree
to which it meets one of the criteria or because to a lesser
extent it meets all three.” See McLaughlin Ford, Inc. v. Ford
Motor Co., 473 A.2d 1185, 1192 n.15 (Conn. 1984) (citing
Statement of Basis and Purpose, Disclosure Requirements and
Prohibitions Concerning Franchising and Business Opportunity
Ventures, 43 Fed. Reg. 59,614, 59,635 (1978)).
2
12
that the alleged lies were about the impacts of fossil fuels on
the Earth’s climate’ is immaterial.”).
The unfairness claim is similarly straightforward.
(“Analyzing the unfairness claim is not much harder.”).
See id.
The
Complaint alleges that Defendants’ conduct offended Vermont’s
public policy against deception as reflected in the VCPA.
Nothing in that allegation pertains in any way to federal energy
policy, or to any other federal issue.
See id. (concluding that
an alleged violation of a state’s public policy against
deception had “absolutely nothing to do with” the federal common
law of transboundary pollution).
Defendants’ actions are
claimed to have been unscrupulous, misleading consumers about
the impact of their purchases on climate change, and the
injuries to consumers are alleged to have been substantial.
Because the State’s claims under the VCPA can be resolved
without addressing a federal issue, and because no federal issue
is necessarily raised, the Grable exception to the well-pleaded
complaint rule does not apply.
IV.
Federal Common Law and Complete Preemption
Defendants also ask the Court to “hold that the federal
common law of transboundary pollution and foreign affairs
completely preempts state law in this case.”
ECF No. 87 at 14.
As noted previously, the Second Circuit’s Grable analysis found
that Connecticut’s claim of unfair acts or practices had
13
“absolutely nothing to do with” the federal common law of
transboundary pollution.
Connecticut, 83 F.4th at 142.
The
same may be said of Vermont’s VCPA claims with respect to both
transboundary pollution and foreign affairs.
See, e.g., id.;
see also Massachusetts v. Exxon Mobil Corp., 462 F. Supp. 3d 31,
44 (D. Mass. 2020) (“Contrary to ExxonMobil’s caricature of the
complaint, the Commonwealth’s allegations do not require any
forays into foreign relations or national energy policy.
alleges only corporate fraud.
It
Whether ExxonMobil was honest or
deceitful in its marketing campaigns and financial disclosures
does not necessarily raise any federal issue whatsoever.”).
Nonetheless, the Connecticut decision did not address
complete preemption, and Defendants raise it here. 3
The State’s
first response is that Defendants have waived this argument.
Defendants previously stated that their opposition to remand
does “not assert[] a preemption defense as the basis for federal
jurisdiction.”
ECF No. 51 at 21.
They now contend that their
concession was limited to “ordinary” preemption and did not
touch upon “complete” preemption.
ECF No. 76 at 2 n.3.
The
Connecticut decision noted the distinction between ordinary and
The Connecticut decision noted that the question of whether
the state law claims were completely preempted by federal law
would have been “squarely present” but for the defendant’s
explicit concession that it was not raising the issue. 83 F.4th
at 138 n.4.
3
14
complete preemption, and that the Second Circuit has not yet
resolved whether federal common law will completely preempt
state law in a case brought against fossil fuel companies.
83
F.4th at 138 n.4 (“A little over two years ago, in City of New
York v. Chevron Corp., 993 F.3d 81 (2d Cir. 2021), we
acknowledged that the question remains open to at least some
extent in our Circuit.”).
Although Defendants’ concessions
suggest a waiver of the preemption issue, 4 their filings were
arguably ambiguous with respect to the application of complete
preemption.
The Court is therefore compelled to address that
issue.
Defendants argue for complete preemption on the basis of
federal common law.
As a general matter, “[f]ederal common law
applies only in those limited situations where a uniform
national rule is necessary to further the interest of the
federal government, such as claims involving the obligations and
rights of the United States and its officials or in those few
areas involving ‘uniquely federal interests.’”
Marcus v. AT&T
Corp., 138 F.3d 46, 53 (2d Cir. 1998) (quoting Boyle v. United
Techs. Corp., 487 U.S. 500, 504 (1988)).
“In a nutshell,
Defendants’ concessions appear to have been in response to the
State’s argument that “federal common law would not provide a
basis for removal absent complete preemption of state law,” and
that Defendants had failed to allege “any recognized basis for
invoking the artful pleading doctrine,” including “complete
preemption.” ECF No. 49 at 21, 29-30.
4
15
federal common law exists only in the few and restricted
enclaves where a federal court is compelled to consider federal
questions that cannot be answered from federal statutes alone.”
City of New York, 993 F.3d at 89 (cleaned up).
“The Supreme
Court has cautioned against the broad use of federal common
law.”
Marcus, 138 F.3d at 53 (citing Miree v. DeKalb Cnty., 433
U.S. 25, 31–32 (1977)).
Similarly, complete preemption typically “applies only in
the very narrow range of cases where ‘Congress has clearly
manifested an intent’ to make a specific action within a
particular area removable.”
Id. (quoting Metro. Life Ins. Co.
v. Taylor, 481 U.S. 58, 67-68 (1987)).
In Marcus, for example,
the Second Circuit concluded that “absent some express statement
or other clear manifestation from Congress that it intends the
complete preemption doctrine to apply, we believe that federal
common law does not completely preempt state law claims in the
area of interstate telecommunications.”
138 F.3d at 54.
As the
United States Court of Appeals for the District of Columbia
Circuit recently noted, “it is unclear whether federal common
law could serve as the basis for removal under the artful
pleading doctrine.”
Dist. of Columbia v. Exxon Mobil Corp., 89
F.4th 144, 151 (D.C. Cir. 2023).
Defendants premise their federal common law preemption
argument upon the assertion that, although pled as a state-law
16
consumer protection action, this case is about air pollution.
See ECF No. 87 at 15 (Defendants’ supplemental brief asserting
that “Vermont’s goal is to reduce transboundary pollution.”).
Defendants also submit that this case implicates aspects of
certain international treaties, and that such treaties are
managed exclusively through federal law.
ECF No. 87 at 15
(citing Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 425
(1964)).
In both instances, Defendants argue that federal
common law necessarily applies, and that such law has complete
preemptive effect.
The Complaint makes clear, however, that this case is not
about air pollution.
Nor is it about matters involving
international treaties.
It is about deception and unfair
business practices that allegedly occurred in the State of
Vermont.
As a result, there is no federal cause of action that
would substitute for the VCPA.
“Because Congress has not acted
to displace the state-law claims, and federal common law does
not supply a substitute cause of action, the state-law claims
are not completely preempted.”
Minnesota v. Am. Petroleum
Inst., 63 F.4th 703, 710 (8th Cir. 2023), cert. denied sub nom.
Am. Petroleum Inst. v. Minnesota, No. 23-168, 2024 WL 72389
(U.S. Jan. 8, 2024).
For support of their preemption claim, Defendants rely in
part upon the Second Circuit’s reasoning in City of New York.
17
ECF No. 51 at 12, 14, 21, 22-24; 87 at 17.
misplaced.
That reliance is
City of New York was a nuisance action seeking
damages for harm allegedly caused by greenhouse gas emissions.
993 F.3d at 88.
While the City portrayed its claim as limited
to local shoreline erosion, id. at 91, the Second Circuit
interpreted the claim as far broader:
To state the obvious, the City does not seek to hold
the Producers liable for the effects of emissions
released in New York, or even in New York’s
neighboring states. Instead, the City intends to hold
the Producers liable, under New York law, for the
effects of emissions made around the globe over the
past several hundred years. In other words, the City
requests damages for the cumulative impact of conduct
occurring simultaneously across just about every
jurisdiction on the planet.
Such a sprawling case is simply beyond the limits of
state law.
Id. at 92.
City of New York also observed that “[i]f the
Producers want to avoid all liability, then their only solution
would be to cease global production altogether.” Id. at 93.
Consequently, the Second Circuit concluded that “the City’s
lawsuit would regulate cross-border emissions in an indirect and
roundabout manner” and risk “subjecting the Producers’ global
operations to a welter of different state’ laws [that] could
undermine important federal policy choices.”
This case is much narrower.
Id.
Here, the State brings a two-
count consumer protection action claiming deceptive and unfair
practices that took place exclusively within the State of
18
Vermont.
The requested relief relates to the dissemination of
information, and compliance would require nothing of Defendants
with respect to their continued energy production.
Moreover,
City of New York made clear that it was reviewing a claim
brought originally in federal court and was therefore “free to
consider the Producers’ preemption defense on its own terms, not
under the heightened standard unique to the removability
inquiry.”
Id. at 94 (emphasis supplied).
City of New York thus
does not support Defendants’ claim of removability. 5
Even if the Court were to accept Defendants’ argument that
this case is essentially about air pollution, the Court would
not apply federal common law.
Instead, following City of New
York and other circuit court decisions across the country, the
Court would consider the preemptive impact of the Clean Air Act.
Id. at 95; see also, e.g., Dist. of Columbia, 89 F.4th at 151
(“Whether the District’s suit may go forward thus depends on the
preemptive effect of the Clean Air Act, not on the preemptive
effect of federal common law.”); Rhode Island v. Shell Oil Prod.
Co., 35 F.4th 44, 55-56 (1st Cir. 2022) (concluding that
“Congress displaced the federal common law of interstate
pollution”), cert. denied, 143 S. Ct. 1796 (2023).
“In the
After determining that federal common law could apply, City of
New York concluded that the federal common law claims “concerned
with domestic greenhouse gas emissions” were displaced by the
Clean Air Act. Id. at 95.
5
19
Clean Air Act, Congress displaced federal common law through
comprehensive regulation, but it did not completely preempt
state law, nor did it provide an independent basis for removal,
as it has done in many other statutes.”
Dist. of Columbia, 89
F.4th at 152.
Defendants argue that the D.C. Circuit’s recent ruling in
District of Columbia is not persuasive because it “cannot be
reconciled with City of New York.”
ECF No. 87 at 17 n.6.
In
City of New York, the Second Circuit first found that “the
City’s claims must be brought under federal common law,” then
proceeded to find that federal common law had been displaced by
the Clean Air Act.
993 F.3d at 95.
That displacement, the
court held, did not revive the viability of a state law nuisance
claim brought in federal court.
Id. at 98.
“[S]tate law does
not suddenly become presumptively competent to address issues
that demand a unified federal standard simply because Congress
saw fit to displace a federal court-made standard with a
legislative one.”
Id.
The claims in this case, however, do not
“demand a unified federal standard.”
Id.
As explained
previously, the claims here concern actions that were limited in
scope to the State of Vermont and to information provided within
the State.
No federal law, whether court-made or legislative,
completely preempts such claims.
20
Defendants further contend that this case is preempted by
federal common law not because of any sort of pronouncement by
Congress, but instead by virtue of the design of the
Constitution itself.
They claim support in part from City of
Milwaukee v. Illinois & Michigan, 451 U.S. 304 (1981), in which
the Supreme Court noted that when Congress is silent and “there
exists a significant conflict between some federal policy or
interest and the use of state law, the Court has found it
necessary, in a few and restricted instances to develop federal
common law.”
Id. at 313 (cleaned up).
Such a general statement
does not support Defendants’ position, since this is not one of
the “few and restricted instances” in which federal common law
comes into play.
Here, the State brings claims for
Id.
deception and unfair business practices under Vermont law.
Such
claims do not give rise to any sort of interstate conflict or
other Constitutional concern, and the Court finds no sound basis
for complete federal preemption.
This is one of a host of cases brought across the country
in which a state or local government claims “that energy
companies have promoted fossil fuels while concealing their
impacts on climate change.
In each of these cases, the
companies have removed to federal court, only to have the suits
remanded to state court.”
n.1 (collecting cases).
Dist. of Columbia, 89 F.4th at 149
Where defendants have asserted federal
21
common law as a basis for removal, that argument has been
uniformly rejected.
See Minnesota, 63 F.4th at 710-11; City of
Hoboken, 45 F.4th at 707-08; Rhode Island, 35 F.4th at 55-56;
Mayor of Baltimore v. BP P.L.C., 31 F.4th 178, 206 (4th Cir.
2022), cert. denied, 143 S. Ct. 1795; Bd. of Cnty. Comm’rs of
Boulder Cnty. v. Suncor Energy (U.S.A.) Inc., 25 F.4th 1238,
1262 (10th Cir. 2022), cert. denied, 143 S. Ct. 1795 (2023).
Defendants offer no persuasive reason why this case should be
the exception, and the Court finds that complete preemption does
not support removal.
V.
Federal Officer Removal Statute
Defendants have argued that removal is proper under the
federal officer removal statute, as the State is allegedly
“tak[ing] aim at Defendants’ production and supply of oil and
gas under the guidance, supervision, and control of the federal
government.
See 28 U.S.C. § 1442(a)(1).”
also ECF No. 51 at 39.
ECF No. 87 at 18; see
In their supplemental briefing,
Defendants concede that this argument is “presently foreclosed
by Connecticut” and that they raise it only to preserve it for
“further appellate review.”
ECF No. 87 at 6 n.1; see id. at 18-
19 (“Defendants acknowledge that the Second Circuit in
Connecticut interpreted the federal officer removal statute to
impose a strict causal-nexus requirement that would foreclose
the statute’s application to this suit on the current record.”).
22
“It is well-settled law that litigants are bound by the
concessions of freely retained counsel.”
Connecticut, 83 F.4th
at 138 (internal quotations marks and citation omitted).
The
Court therefore applies the Connecticut holding to the facts of
this case and concludes that removal is not proper on this
basis.
Id. at 145.
The Court also notes that while Defendants
criticize the Second Circuit for applying a causal-nexus
standard, that court also found,
[e]ven more fundamentally, [that] this case presents a
total mismatch between the business practices that
Exxon Mobil asserts were subject to federal control
and supervision (its actual production of fossil
fuels) and the business practices of which Connecticut
complains (its marketing and public-relations
campaigns to assuage consumers’ fears about the
environmental impacts of those fossil fuels).
Id.
For each of the reasons stated in the Connecticut decision,
the Court finds that Defendants “cannot invoke federal-officer
removal jurisdiction over [Vermont’s VCPA] claims in this
action.”
VI.
Id.
Removal Under OCSLA
The Connecticut decision also rejected the argument for
removal under OCSLA, which provides for federal jurisdiction
over actions arising out of operations on the outer continental
shelf.
Id. at 145-47; see 43 U.S.C. § 1349(b)(1)(A).
The
Second Circuit found no federal jurisdiction because
Connecticut’s claims were “too many steps removed from [the
23
defendant’s] operations on the [s]helf.”
(citation omitted).
83 F.4th at 146-47
“Connecticut’s claims ... ultimately
concern neither extracting oil and gas nor burning them, but
talking about what happens to the environment when they are
burned.
Thus, under any standard we might apply, it is plain
that Connecticut’s suit does not arise in connection with Exxon
Mobil’s operations extracting oil and gas on the outer
continental shelf and cannot trigger federal jurisdiction under
OCSLA.”
Id. at 147 (cleaned up).
That same reasoning applies
here, and OCSLA does not provide a basis for remand.
VII. Federal Enclave Jurisdiction
While the issue was not pursued on appeal in Connecticut,
Defendants argue here for federal jurisdiction on the basis of
federal enclaves.
Section 8, Article I, clause 17 of the United
States Constitution authorizes Congress “[t]o exercise exclusive
Legislation in all Cases whatsoever ... over all Places
purchased by the Consent of the Legislature of the State in
which the Same shall be, for the Erection of Forts, Magazines,
Arsenals, dock-yards, and other needful Buildings.”
art. I, § 8.
U.S. Const.
Defendants contend that jurisdiction under the
Enclave Clause is appropriate because the Complaint alleges
statewide harm, which necessarily includes such “enclaves” as
the Green Mountain National Forest, Marsh-Billings-Rockefeller
National Park, and ports of entry on the Canadian Border.
24
ECF
No. 51 at 52.
Paragraph 6 of the Complaint, however, expressly
states that it is not seeking to establish liability “in
connection with any marketing or sales of [Defendants’] fossil
fuel products that may have occurred on federal lands.”
Such
disclaimers have been held sufficient to deny federal enclave
jurisdiction.
See, e.g., Bd. of Cnty. Comm’rs of Boulder Cnty.
v. Suncor Energy (U.S.A.) Inc., 405 F. Supp. 3d 947, 974 (D.
Colo. 2019) (“Federal enclave jurisdiction thus does not exist
here because Plaintiffs’ claims and injuries are alleged to have
arisen exclusively on non-federal land.”); Washington v.
Monsanto Co., 274 F. Supp. 3d 1125, 1132 (W.D. Wash. 2017)
(because plaintiff “assert[ed] that it does not seek damages for
contamination to waters and land within federal territory,...
none of its claims arise on federal enclaves”).
Furthermore, “[t]he doctrine of federal enclave
jurisdiction generally requires that all pertinent events take
place on a federal enclave.”
Bd. of Cnty. Comm’rs of Boulder
Cnty. v. Suncor Energy (U.S.A.) Inc., 25 F.4th 1238, 1271–72
(10th Cir. 2022), cert. denied, 143 S. Ct. 1795 (2023); see also
Mayor & City Council of Balt. v. BP, P.L.C. 388 F. Supp. 3d 538,
565 (D. Md. 2019) (“[C]ourts have only found that claims arise
on federal enclaves, and thus fall within federal question
jurisdiction, when all or most of the pertinent events occurred
there.”).
Accordingly, even with the Complaint’s disclaimer,
25
Defendants’ argument for jurisdiction based upon a few isolated
federal enclaves within Vermont is insufficient.
Finally, as the district court observed in Connecticut,
given that national parks, federal prisons, and
military installations are located throughout the
country, [Defendants’] interpretation of federal
enclave jurisdiction would appear to give rise to
federal jurisdiction in any case involving injuries
that occur throughout a state, no matter how minor the
injuries occurring on federal enclaves are in relation
to the claims at issue. ExxonMobil cites no authority
in support of what would amount to a sweeping change
to the balance between the jurisdiction of state and
federal courts.
Connecticut v. Exxon Mobil Corp., No. 3:20-CV-1555 (JCH), 2021
WL 2389739, at *13 (D. Conn. June 2, 2021).
This Court agrees,
and concludes that Defendants may not remove the case on the
basis of federal enclaves.
VIII. Diversity Jurisdiction
Defendants further argue that, even if there is no federal
subject matter jurisdiction, the Court may nonetheless exercise
jurisdiction by virtue of diversity of citizenship.
The Second
Circuit’s Connecticut decision did not address the question of
diversity jurisdiction.
It is undisputed that no Defendant is a citizen of Vermont.
It is also undisputed that the State is not considered a citizen
for the purpose of diversity jurisdiction.
Alameda, 411 U.S. 693, 717 (1973).
Moor v. Cnty. of
Therefore, there can only be
diversity of citizenship if the State is not a real party in
26
interest.
The Court notes that “[t]he presumption against
federal jurisdiction is especially strong in cases of this sort,
involving States seeking to vindicate quasi-sovereign interests
in enforcing state laws and protecting their own citizens from
deceptive trade practices and the like.”
In re Standard &
Poor’s Rating Agency Litig., 23 F. Supp. 3d 378, 385 (S.D.N.Y.
2014).
Defendants argue that the State is not a real party in
interest because it is a not pursing a “quasi-sovereign
interest.”
See Purdue Pharma L.P. v. Kentucky, 704 F.3d 208,
218 (2d Cir. 2013) (explaining that courts must disregard
“nominal or formal parties” and rest jurisdiction only upon the
citizenship of “real parties”).
In the Connecticut litigation,
the district court concluded that the State of Connecticut was a
real party in interest because it was seeking “redress not
simply for the deception allegedly caused by each of
ExxonMobil’s statements but rather for a decades-long campaign
of alleged disinformation that resulted in ‘the stifling of an
open marketplace for renewable energy.’”
2021 WL 2389739, at
*14 (citing the State of Connecticut’s complaint).
Here, too,
the State is seeking redress for acts or practices that
“influence[d] economic decision-making and interfere[d] with a
fair and honest marketplace.”
Complaint at 67, ¶ 190.
request for that sort of statewide remedy, including
27
A
disgorgement, renders the State itself a real party in interest.
See, e.g., Hood ex rel. Miss. v. MicrosoftCorp., 428 F. Supp. 2d
537, 546 (S.D. Miss. 2005) (holding that Mississippi was a real
party in interest because it sought injunctive relief that was
“aimed at securing an honest marketplace”); Wisconsin v. Abbott
Labs., 341 F. Supp. 2d 1057, 1063 (W.D. Wisc. 2004) (holding
that Wisconsin was a real party in interest because it sought
injunctive relief that was “aimed at securing an honest
marketplace, promoting proper business practices, protecting
Wisconsin consumers and advancing plaintiff’s interest in the
economic well-being of its residents”); New York by James v.
Amazon.com, Inc., 550 F. Supp. 3d 122, 130 (S.D.N.Y. 2021)
(“When the Attorney General seeks disgorgement of profits, the
beneficiary is the State treasury.”).
Defendants also assert that the State cannot show injury to
a substantial segment of its population, and is instead
advocating on behalf of an “unknown” number of citizens who
would have changed their purchasing behavior had they known the
true harm of fossil fuels.
ECF No. 51 at 57.
That argument
runs against the well-established principle that “[t]he private
consumers in each state ... constitute a substantial portion of
the state’s population.”
Commonwealth of Pennsylvania v. W.
Va., 262 U.S. 553, 591-92 (1923) (holding that the state had “an
interest apart from that of the individuals affected” in
28
ensuring the continued flow of natural gas to its citizens); see
also Dist. of Columbia v. Exxon Mobil Corp., 640 F. Supp. 3d 95,
111 (D.D.C. 2022), aff’d, 89 F.4th 144 (D.C. Cir. 2023) (“There
is also little doubt that the District’s alleged injuries affect
both the District itself and a sufficiently substantial segment
of its population.”) (citation and internal quotation marks
omitted).
The Court therefore finds that diversity jurisdiction
is lacking, and that remand is not warranted on that basis.
IX.
Costs and Fees
The State seeks costs and attorneys’ fees pursuant to
section 28 U.S.C. § 1447(c), which provides that “[a]n order
remanding the case may require payment of just costs and any
actual expenses, including attorney fees, incurred as a result
of the removal.”
28 U.S.C. § 1447(c).
“Absent unusual
circumstances, courts may award attorney’s fees under [section]
1447(c) only where the removing party lacked an objectively
reasonable basis for seeking removal.”
Corp., 546 U.S. 132, 141 (2005).
Martin v. Franklin Cap.
The Supreme Court has
instructed that, “[i]n applying this rule, district courts
retain discretion to consider whether unusual circumstances
warrant a departure from the rule in a given case.”
Id.
The Court finds that Defendants did not lack an objectively
reasonable basis for seeking removal, and that this case
presents no unusual circumstances.
29
Prior to the Connecticut
decision, removal raised several novel questions within the
Second Circuit.
See Connecticut, 2021 WL 2389739, at *15
(district court finding that Exxon Mobil “did not lack an
objectively reasonable basis for removal” because several of the
issues presented “are novel within the Second Circuit”).
Other
courts have noted that cases such as this encompass evolving
areas of law and present pleadings that are reasonably subject
to varying interpretations.
See, e.g., Minnesota v. Am.
Petroleum Inst., No. 20-1636, 2021 WL 3711072, at *5 (noting
“rapidly evolving areas of law”); Delaware v. BP Am. Inc., No
20-1429-LPS, 2022 WL 58484, at *15 (D. Del. Jan. 5, 2022)
(finding that complaint was “fairly susceptible to different
interpretations”).
The State’s request for fees and costs is
therefore denied.
Conclusion
For the reasons set forth above, the Court grants the
State’s motion to remand (ECF No. 36) and denies the State’s
request for fees and costs.
This case is remanded to the
Vermont Superior Court.
DATED at Burlington, in the District of Vermont, this 6th
day of February, 2024.
/s/ William K. Sessions III
William K. Sessions III
U.S. District Court Judge
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