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IN RE METHYL TERTIARY BUTYL ETHER PRODUCTS LIAB. LITIGATION

November 3, 2004.

IN RE: METHYL TERTIARY BUTYL ETHER ("MTBE") PRODUCTS LIABILITY LITIGATION. This document relates to: Orange County Water District
v.
Unocal Corp., et al., No. 04 Civ. 4968 (SAS). City of Riverside v. Atlantic Richfield Co., et al., No. 04 Civ. 4969 (SAS). Quincy Community Services District v. Atlantic Richfield Co., et al., No. 04 Civ. 4970 (SAS). City of Roseville v. Atlantic Richfield Co., et al., No. 04 Civ. 4971 (SAS). The People of the State of California, et al. v. Atlantic Richfield Co., et al., No. 04 Civ. 4972 (SAS). City of Fresno v. Chevron USA, Inc., et al., No. 04 Civ. 4973 (SAS). California-American Water Co. v. Atlantic Richfield Co., et al., No. 04 Civ. 4974 (SAS). Silver, et al. v. Alon USA Energy, Inc., et al., No. 04 Civ. 4975 (SAS).



The opinion of the court was delivered by: SHIRA SCHEINDLIN, District Judge

OPINION AND ORDER

I. INTRODUCTION

In this consolidated multi-district litigation, plaintiffs allege that defendants have caused the contamination or threatened contamination of groundwater through their use of the gasoline additive methyl tertiary butyl ether ("MTBE"). Although MTBE is supposed to reduce air pollution by making fuel cleaner burning, plaintiffs assert that it pollutes the water supply whenever gasoline is released into the environment.*fn1 Defendants removed the actions from various state courts, asserting four grounds of subject matter jurisdiction: (1) federal agent jurisdiction; (2) substantial federal question; (3) complete preemption; and (4) bankruptcy jurisdiction. In a series of jurisdictional challenges, I held that this Court has federal agent jurisdiction over some, and bankruptcy jurisdiction over all, of the MTBE cases pending before it.*fn2 With respect to the former, I found that preemption constitutes a colorable federal defense, which is a prerequisite for federal agent jurisdiction.*fn3 At the time I considered the issue, the California plaintiffs were not yet before this Court.

  After these cases were transferred to me, plaintiffs moved to remand based on the argument that defendants had not properly alleged a colorable "federal" defense.*fn4 Specifically, they argue that preemption defenses are not "federal" for purposes of the federal officer removal statute, and that only immunity defenses can be asserted. I now consider whether preemption is a sufficient "federal" defense for removal under section 1442(a) of Title 28, the federal officer removal statute.

  II. APPLICABLE LAW

  A. Removal and Remand

  Section 1447(c) of Title 28 provides: "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." When a party challenges the removal of the action from state court, the burden falls on the removing party "to establish its right to a federal forum by `competent proof.'"*fn5 "Out of respect for the independence of state courts, and in order to control the federal docket, `federal courts construe the removal statute narrowly, resolving any doubts against removability.'"*fn6 If the removing party cannot establish its right to removal by "competent proof," the removal was improper, and the district court must remand the case to the court in which it was filed.*fn7

  In the absence of diversity jurisdiction, a case is generally not removable if the complaint does not affirmatively allege a federal claim.*fn8 District courts have federal question jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States."*fn9 A case "arises under" federal law when federal law provides for the cause of action,*fn10 or where the vindication of a right turns on some construction of federal law.*fn11

  "To determine whether a claim arises under federal law, we examine the `well-pleaded' allegations of the complaint and ignore potential defenses."*fn12 The presence of a federal defense does not raise a federal question, even if the "defense is anticipated in the plaintiff's complaint, and even if . . . the federal defense is the only question truly at issue."*fn13

  Two exceptions to the well-pleaded complaint rule permit removal of state law actions. First, a case arises under federal law, and is thus removable, when a federal statute wholly displaces the state law cause of action through complete preemption.*fn14 Second, a state law case may be removed where Congress specifically gives federal courts jurisdiction over a particular subject matter.*fn15

  B. Federal Agent Jurisdiction

  The federal officer removal statute is a jurisdictional enactment that overcomes the well-pleaded complaint rule.*fn16 Thus, persons acting under color of any federal officer or agency may remove a case to federal court despite the absence of a federal cause of action.*fn17 Although section 1442(a) permits removal where a federal claim has not been stated, the action must nevertheless raise an issue of federal law because the statute does not independently support Article III "arising under" jurisdiction. "Rather, it is the raising of a federal question in the officer's removal petition that constitutes the federal law under which the action against the federal officer arises for Art. III purposes."*fn18

  Therefore, to remove a case under section 1442(a), a party must sufficiently allege that (1) it acted under the direction of a federal officer or agency; (2) it has a colorable federal defense; and (3) there is a causal nexus between the federal direction and the conduct at issue.*fn19 The second requirement is broadly construed; a defense need only be colorable, not clearly sustainable.*fn20 Some courts have also said that the removing party must be a "person" within ...


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