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United States District Court, S.D. New York

November 10, 2004.


The opinion of the court was delivered by: GERARD E. LYNCH, District Judge


The Port Authority of New York and New Jersey ("the Port Authority"), a governmental agency, brought this action in the Civil Court of the City of New York for Kings County, seeking to evict defendant American Warehousing of New York, Inc. ("American"), from Pier 7, a marine terminal in Brooklyn owned by the Port Authority. On August 5, 2004, American removed the case to this Court. Shortly thereafter, American moved to dismiss, or in the alternative to stay the proceedings pending determination of a related complaint filed by American against the Port Authority before the Federal Maritime Commission ("FMC"), which American filed simultaneously with its removal petition. The Port Authority cross-moved to remand the case to the state courts, challenging this Court's jurisdiction. Because the Court has no jurisdiction, the case will be remanded. This resolution makes it unnecessary, and indeed improper, for the Court to address the merits of American's motion.

As a preliminary matter, the Court notes that the defendant removed the case to the wrong court. Cases within federal jurisdiction may be removed "to the district court . . . for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Kings County — where the Port Authority originally filed the case — is in the Eastern District of New York, not the Southern. The removal was thus procedurally improper. However, the Port Authority has neither objected to the removal on this ground nor sought a change of venue. Since objections to venue are waived if not timely raised, Fed.R. Civ. P. 12(h)(1), it has been held that "removal to the wrong district is a procedural defect, like improper venue, which [is] waived by the failure to object to it timely." Cook v. Shell Chemical Co., 730 F. Supp. 1381, 1382 (M.D. La. 1990). Although the Court may have discretion to transfer such a case to the proper district, see Mortensen v. Wheel Horse Prods., Inc., 772 F. Supp. 85 (N.D.N.Y. 1991); cf. Addison v. North Carolina Dep't of Crime & Public Safety, 851 F. Supp. 214 (M.D.N.C. 1994), here a fundamental jurisdictional defect requires that the case be remanded to state court.

  A state court action may be removed to the federal courts if it is a "civil action . . . of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). American claims that this Court has such original jurisdiction because this case is "founded on a claim or right arising under the Constitution, treaties or laws of the United States." 28 U.S.C. § 1441(b). This is manifestly incorrect. The Port Authority's action lacks foundation in any federal claim or right. Its complaint straightforwardly pleads an ordinary landlord's claim to premises against a tenant whose lease has expired, pursuant to New York Real Property Actions and Proceedings Law § 731(3). As the Port Authority's claim is based entirely on New York real property law, this Court thus does not have original jurisdiction over the suit.

  American argues that this Court has jurisdiction because the Port Authority's claim is preempted by federal law. (D. Mem. 7-9.) Assuming arguendo that this is so, it does not provide a basis for jurisdiction. Preemption is a defense, and "a case may not be removed to federal court on the basis of a federal defense, . . . even if both parties admit that the defense is the only question truly at issue in the case." Franchise Tax Bd. v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 14 (1983). Rather, "[t]he 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." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). A defense, however, "is not part of a plaintiff's properly pleaded statement of his or her claim." Rivet v. Regions Bank, 522 U.S. 470, 475 (1998). Accordingly, "[t]he mere existence or invocation of a federal defense does not furnish a sufficient basis for jurisdiction to attach." City of Rome v. Verizon Communications Inc., 362 F.3d 168, 174-75 (2d Cir. 2004).

  American relies on an exception to this rule, noting that the Supreme Court acknowledged in Rivet that a plaintiff "may not defeat removal by omitting to plead necessary federal questions" by "artful pleading." 522 U.S. at 475 (internal quotation marks and citation omitted). (D. Mem. 8-9.) This exception applies, primarily, in cases of "complete preemption," where an area of law has been so thoroughly occupied by federal regulation that state law has been entirely displaced, so much so that "any claim purportedly based on that preempted state-law claim is considered, from its inception, a federal claim, and therefore arises under state law." Id. at 475-76 (internal quotation marks and citation omitted). But this circumstance is quite rare. The Supreme Court recently had occasion to explain the doctrine, noting that it applies only where Congress has expressly so provided (which is not the case here), or in limited cases where "the federal statutes at issue provide? the exclusive cause of action for the claim asserted and also set forth procedures and remedies governing that cause of action." Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 8 (2003).

  Outside the unique context of certain tribal claims, Oneida Indian Nation v. County of Oneida, 414 U.S. 661 (1974), the Supreme Court has only found "complete preemption" to apply with respect to three statutes: the Labor Management Relations Act, Avco Corp. v. Aero Lodge No. 735, 390 U.S. 557 (1968); the Employee Retirement Income Security Act, Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58 (1987), and the National Bank Act, Beneficial Nat'l Bank, 539 U.S. 1. Even while expanding this doctrine to apply to an additional statute in Beneficial National Bank, the Court re-emphasized that complete preemption is a rarity, and reaffirmed the general applicability of the well-pleaded complaint rule. 539 U.S. at 6-8.

  Complete preemption presents a question of congressional intent. As one treatise explains it, "complete preemption does not just represent a difference in the scope of the preemption of a state cause of action by federal law; rather it is a difference in kind. In complete preemption a federal court finds that Congress desired to control the adjudication of the federal cause of action to such an extent that it did not just provide a federal defense to the application of state law; rather, it replaced the state law with federal law and made it clear that the defendant has the ability to seek adjudication of the federal claim in a federal forum." 14B Wright, Miller and Cooper, Federal Practice and Procedure, § 3722.1 at 512 (3d ed. 1998). "We must therefore look at whether Congress intended [the federal statutory regime] to provide an exclusive cause of action." City of Rome, 362 F.3d at 178 (emphasis added), citing Beneficial Nat'l Bank, 539 U.S. at 9. But American provides no evidence whatsoever of a congressional intent that the Federal Shipping Act provide an exclusive remedy for breaches of leases in maritime terminals.

  Rather than analyze the congressional purpose behind the federal Shipping Act, American argues that it will suffer irreparable harm if the Port Authority's remand motion is granted, while the Port Authority will suffer no comparable harm if the action is not remanded. (D. Mem. 12-13.) This argument is both incorrect and irrelevant. It is incorrect because the injury American argues it will suffer does not turn on the court in which the case will be heard, but on the outcome of the case. If American has legitimate federal defenses that would prevail in this Court, those defenses are equally applicable in state court under the Supremacy Clause of the Constitution. It is irrelevant because subject matter jurisdiction is conferred on the federal courts by statute and not by a party's necessity; however grievous a harm a party faces, this Court has no power to prevent or remedy that harm absent proper jurisdiction.

  Finally, American argues that the Court has jurisdiction, once a complaint with the FMC has been filed, to enjoin conduct in violation of the federal Shipping Act. 46 U.S.C. § 1710(h)(2). (D. Mem. 10 n. 4.) However, neither party has filed an action seeking such a remedy. That a party to a dispute could file a proper federal action of its own does not authorize it to remove an action brought against it in state court, based entirely on state law, merely because it grows out of the same dispute. To the extent American argues that a court should defer to the expertise of a federal regulatory agency, that argument can and should be presented to the state court which has jurisdiction over the case.

  For the reasons stated above, this Court lacks jurisdiction over this matter. Accordingly, the Port Authority's motion is granted, and the case is remanded to the Civil Court for Kings County.



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