E-Alert Case Updates
Federal District Court’s Decision to Abstain from Exercising Jurisdiction under the Colorado River doctrine is Upheld on Appeal.
Kenneth Ackerman v. ExxonMobil Corp.
Residents of Fallston, Maryland in Harford County filed a putative class action against ExxonMobil and John R. Hicks in State court in 2004, alleging state law causes of action for contamination of their properties by gasoline and a gasoline additive (MTBE) from an Exxon station operated by Hicks. Exxon removed the case to Federal court under 28 U.S.C. § 1442(a). The case was transferred to the Multidistrict Litigation Panel and assigned to the Southern District of New York. In 2007, the Second Circuit decided, in an unrelated case, that the history of MTBE’s production did not support removal under 28 U.S.C. § 1442(a). Accordingly, the case was remanded to the Harford County Circuit Court. The State court judge asked the Plaintiffs to file a new action with former members of the class to enable him to consolidate the cases and adjudicate the claims together. The Plaintiffs then filed the “Ackerman” action in State court.
Exxon removed the “Ackerman” case to federal court under the Energy Policy Act of 2005, which permits removal of claims involving MTBE. Exxon, however, did not remove the prior action to Federal court. Plaintiffs in the “Ackerman” action filed a motion in Federal court to remand the case to State court, as removal was time-barred and the Defendants had litigated for several years in State court. In the alternative, the “Ackerman” Plaintiffs argued that the Federal court should abstain from exercising jurisdiction under the Colorado River doctrine, which allows Federal courts to abstain from exercising jurisdiction while parallel State court actions are pending. The Federal court granted the Motion to Abstain, focusing on the length of time the prior action had been in State court. Written discovery began in 2006 and numerous depositions had occurred at the State court level. Accordingly, the Court concluded that abstention was in the best interests of the parties and stayed the “Ackerman” action pending the resolution of the prior action in State court.
Exxon appealed to the Fourth Circuit. Exxon argued that the State court action and the “Ackerman” action were not parallel. Its main contention was that the amendment of the State court action, which resulted in the inclusion of all of the “Ackerman” Plaintiffs, was void under 28 U.S.C. § 1446(d). 28 U.S.C. § 1446(d) provides that a State court no longer has jurisdiction once a case is removed, unless the case is remanded. Accordingly, Exxon argued that the amendment to the prior State court action was void, and that the cases were not parallel.
The Fourth Circuit decided “whether the pending State and Federal suits are parallel.” The Court indicated that the district court must balance several factors with the balance tipped in favor of an exercise of federal jurisdiction. The factors include “the relative inconvenience of the federal forum, the relative order of the two suits, the source of law in the cases, and the relative progress of the two proceedings.” The Court further noted that Colorado River abstention applies only when exceptional circumstances justify the Federal court’s “surrender” of jurisdiction. The Fourth Circuit declared that the test for whether actions are parallel is whether the same parties litigate the same issues in separate fora. Analyzing Exxon’s contentions, the Court concluded that 28 U.S.C. § 1446(d) only applied to the removed case and had no effect on the case proceeding in State court. Consequently, that provision did not apply to the State court case or the amendment to that action.
Furthermore, the Court noted that the Anti-Injunction Act (28 U.S.C. § 2283) did not change its conclusion. The Anti-Injunction Act prohibits a Federal court from enjoining State court proceedings, unless “expressly authorized” by an Act of Congress. Exxon argued that 28 U.S.C. § 1446(d) was an Act of Congress that allowed the district court to enjoin the amendment of the State court complaint. The Court reiterated its conclusion that 28 U.S.C. § 1446(d) applies only to the removed case. In response to Exxon’s argument that the “Ackerman” Plaintiff attempted to subvert federal jurisdiction, the Court recognized the difficulty that the State court Plaintiffs had in attempting to consolidate the cases and attain class certification. Ultimately, the Fourth Circuit did not think it was essential to decide whether the district court erred in deciding that the “Ackerman” Plaintiffs did not intend to undermine federal jurisdiction. The Court did not find any errors pertinent to the district court’s decision to abstain and held that district court did not abuse its discretion in declining to exercise jurisdiction.
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