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United States District Court, S.D. New York

September 16, 2005.

John R. Hicks, et al., 05 Civ. 5745 (SAS).

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



This case is one of dozens in a multi-district litigation ("MDL"), in which numerous plaintiffs are seeking relief from contamination or threatened contamination of groundwater from various defendants' use of the gasoline additive methyl tertiary butyl ether ("MTBE").*fn1 This opinion relates only to Hope Koch, et al. v. John R. Hicks, et al., 05 Civ. 5745.

  On June 30, 2004, Hope and Frank Koch ("Koch plaintiffs") filed a class action complaint in Circuit Court for Harford County, Maryland claiming that John R. Hicks, operator of the Crossroads Exxon located at 2800 Fallston Road, in Fallston Maryland ("Crossroads Exxon"), and Exxon Mobil Corporation ("ExxonMobil") caused substantial property damage and materially increased the health risks to homeowners and/or residents of properties in the vicinity of the Crossroads Exxon through "unlawful and wrongful storage of MTBE."*fn2 The Koch plaintiffs asserted causes of action for: (1) public nuisance, (2) private nuisance, (3) trespass to property, (4) a violation of section 4-409 of Maryland's Environment Article, (5) negligence, and (6) "medical monitoring."*fn3 On September 1, 2004, Stephen and Traci A. Wagner, William and Joann Bellington, and Ernesto and Phyllis Ercolano ("Wagner plaintiffs") filed their second class action complaint against ExxonMobil and Hicks.*fn4 Plaintiffs had dismissed their first complaint when it was removed to federal court by ExxonMobil.*fn5 In this second complaint, plaintiffs dropped their strict liability claim and asserted causes of action for: (1) negligence, (2) private nuisance, (3) trespass, and (4) violation of section 4-409 of Maryland's Environment Article.*fn6 They alleged that defendants had "threatened and/or recklessly contaminated and poisoned the individual wells that supply water in the Fallston/Baldwin area of Harford County, Maryland."*fn7 On September 22, 2004, Judge Emory A. Plitt of the Circuit Court for Harford County, on his own initiative, consolidated the two Complaints, Koch and Wagner II, pursuant to Maryland Rule 2-503.*fn8 The Consolidation Order stated that the two cases, "involving common questions of law, fact, and subject matter, are . . . consolidated for all future purposes."*fn9 The court assigned a new consolidated docket number to the cases: Docket No. 12-C-04-1834 (the original docket number for Koch).

  On September 24, 2004, the Koch plaintiffs wrote to Judge Plitt stating they were concerned about the effect of consolidation on removal and requesting that he vacate his order. They proposed the order be re-issued with the following language: "The above-captioned case and the case of Wagner v. Hicks, Case No. 12-C-04-2448, involving common questions of law, fact, and subject matter, are, pursuant to Maryland Rule 2-503, consolidated for all pre-trial discovery, pre-trial motions practice, and for trial; but both cases are not consolidated as a single action."*fn10 Judge Plitt denied the Koch plaintiffs' request by letter stating "The Order of Consolidation that I issued shall stand as is. If as the matter progresses there is some need to separate any claims, Rule 2-503 provides appropriate mechanisms to do that."*fn11 That same day, he sent a separate letter to both sets of plaintiffs regarding pending motions and their requests for class certification.*fn12 In that letter, he made clear that each stage was to occur jointly for the consolidated cases and explained that if he decided class certification was appropriate he would determine what attorneys would be counsel for the class.*fn13

  On October 15, 2004, ExxonMobil removed the consolidated action to the District Court of the District of Maryland claiming that the district court had jurisdiction "with respect to claims asserted in one of two actions recently consolidated by court order."*fn14 ExxonMobil relied on MTBE III, holding that this Court has federal agent jurisdiction over the MTBE cases under 28 U.S.C. § 1442(a).*fn15 ExxonMobil claimed that the Wagner plaintiffs essentially admitted Wagner I was removable when they dismissed their Complaint after removal.*fn16 It then claimed that Wagner II was removable just as Wagner I was and that Koch became removable once it was consolidated with Wagner II.*fn17

  The Koch plaintiffs twice moved to remand their action to state court. First, they claimed that the removal notice as to the Koch action was untimely.*fn18 Second, they claimed that ExxonMobil failed to comply with Local Rule 103.5.a of the United States District Court for the District of Maryland at the time of removal.*fn19 In a later filing, the Koch plaintiffs also claimed that ExxonMobil's Notice of Removal violated 28 U.S.C. § 1446(a).*fn20

  On June 17, 2005, the Judicial Panel on Multidistrict Litigation transferred this case to this Court for inclusion in In re Methyl Tertiary Butyl Ether ("MTBE") Products Liability Litigation, pursuant to Rule 7.4 of the Rules of the Judicial Panel on Multidistrict Litigation and 28 U.S.C. § 1407.


  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 an action from state court, the burden falls on the removing party "to establish its right to a federal forum by `competent proof.'"*fn21 "In 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."*fn22 If the removing party cannot establish its right to removal by "competent proof," the removal is improper, and the district court must remand the case to the court in which it was filed.*fn23

  A defendant may remove a civil action filed in state court to federal court if the claims "arise under" federal law.*fn24 A case "arises under" federal law when federal law provides for the cause of action,*fn25 or where "the vindication of a right turns on some construction of federal law."*fn26 The complaint must affirmatively allege a federal claim.*fn27 In determining if this federal claim exists, courts will "examine the `well-pleaded' allegations of the complaint and ignore potential defenses."*fn28 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."*fn29

  "A case is removable when the initial pleading enables the defendant to `intelligently ascertain' removability from the face of such pleading."*fn30 This standard "does not require a defendant to look beyond the initial pleading for facts giving rise to removability."*fn31 Nor does it require a defendant to "guess" whether the action is removable.*fn32 A court must thus consider the complaint at the time of removal to determine if removal was appropriate in the first place.*fn33 If the basis for federal subject matter jurisdiction later falls away, "[t]he modern rule . . . is that a federal court [has] the power to hear claims that would not be independently removable even after the basis for removal jurisdiction is dropped from the proceedings."*fn34 There is "a judicial reluctance to make jurisdiction hinge on fortuities or ex parte tactical moves."*fn35

  B. Federal Agent Jurisdiction The federal officer removal statute, 28 U.S.C. § 1442(a), can override the well-pleaded complaint rule.*fn36 The action must still raise an issue of federal law, but it may be in the federal officer's defense. Thus, persons acting under color of any federal office or agency may remove a case to federal court despite the absence of a federal cause of action when their removal petition alleges a colorable federal defense and there is a causal nexus between the federal direction and the conduct at issue.*fn37

  C. Procedural Requirements for Removal

  In addition to demonstrating the presence of federal jurisdiction, a defendant must comply with the removal procedures in 28 U.S.C. § 1446.*fn38 Specifically, section 1446(b) requires a defendant to file a notice of removal thirty days after receiving the initial pleading.*fn39

  The thirty-day period is strictly construed.*fn40 It is "triggered by formal service" of the summons and complaint.*fn41 However, section 1446(b) also states: If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

 Thus, section 1446(b) provides that where an initial pleading is not removable as originally filed, a notice of removal may be filed if a later event makes it subject to removal.*fn42 Likewise, when a case is removable, but the grounds in the initial complaint are "obscured, omitted, or misstated," a defendant "has thirty days from the revelation of grounds for removal to file a notice of removal."*fn43 The purpose of the thirty-day rule is:

"to deprive the defendant of the undeserved tactical advantage that [it] would have if [it] could wait and see how [it] was faring in state court before deciding whether to remove . . .; and to prevent the delay and waste of resources involved in starting a case over in a second court after significant proceedings . . . in the first court."*fn44
Conversely, the second sentence of section 1446(b) preserves the defendant's right to remove a case to federal court upon receiving notice that the case is removable.*fn45

  In order to satisfy section 1446(b), a defendant must show (1) that the original complaint was not removable on its face at the time it was filed*fn46 and (2) that another "paper" changed the status of the case, making it clear that the complaint was removable.*fn47 In addition, "the `amended pleading, motion, order or other paper' must emanate from either the voluntary act of the plaintiff in the state court, or other acts or events not the product of the removing defendant's activity."*fn48

  Defendants wishing to remove a case to federal court must also comply with the filing requirements in 28 U.S.C. § 1446(a), which states in relevant part:

A defendant or defendants desiring to remove any civil action . . . from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal . . . together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.
Procedural rules such as the directions found in section 1446(a) are not jurisdictional and "the failure to file all the state court papers . . . [is] curable in the federal court if there is a motion to remand."*fn49 Further complicating the procedural landscape, courts often issue local rules governing removal. For example, Local Rule 103.5.a of the United States District Court for the District of Maryland states that "[a]ny party effecting removal shall file with the notice true and legible copies of all process, pleadings, documents and orders which have been served upon that party." District courts generally have the inherent power to decide when a departure from their local rules should be excused or overlooked. As the Second Circuit has held, the district court can ask whether the application of the letter of local rules to a particular case would cause an unjust result.*fn50 Because Second Circuit precedent controls this Court's interpretation of federal law in this multi-district litigation, if faced with potential unfairness, this Court may tailor the local rules to best achieve a just outcome.*fn51 D. Supplemental Jurisdiction

  Finally, a district court may exercise "supplemental jurisdiction" over non-federal causes of action in a validly removed case, if they arise from the same case or controversy as the federal claims in the case.*fn52 "Supplemental jurisdiction is not mandatory."*fn53 A district court may decline to exercise supplemental jurisdiction if:

1) the claim raises a novel or complex issue of State law,
2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction,
3) the district court has dismissed all claims over which it has original jurisdiction, or
4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.*fn54
On the other hand, a district court may retain jurisdiction over the action even if the federal law claims are deleted. In these circumstances, a court must consider "economy, convenience, fairness, and comity" in deciding whether to retain jurisdiction over state law claims.*fn55


  ExxonMobil claims that this Court has jurisdiction over Wagner II and "by extension" over the consolidated action.*fn56 ExxonMobil claims the causes of action asserted in Wagner II were based on the presence of MTBE in fuel and that it has been acting under federal direction "in connection with the conduct that was the gravamen of the Wagner II Complaint."*fn57 In contrast, the causes of action in the original Koch Complaint were not based on the content of fuel but solely on the unsafe storage of gasoline containing a contaminant. When the two cases were consolidated for all purposes, the Consolidation Order was the first paper from which it could be ascertained that the Koch action was removable under section 1446(b). As a result, ExxonMobil claims that the Koch Complaint was timely removed within thirty days of the consolidation.

  A. The Original Koch Complaint Was Not Removable on Its Face at the Time It Was Filed

  The gravamen of the original Koch Complaint was that defendants failed "to safely store MTBE."*fn58 The Complaint alleged that "[d]efendants' storage of MTBE at the upper Crossroads Exxon . . . produced an underground `plume' or other leakage of MTBE that . . . contaminated nearby properties."*fn59 As early as 1980, defendants were aware of groundwater contamination by MTBE.*fn60 Throughout the 1980s and 1990s, defendants were aware of studies that found MTBE posed a danger to groundwater, including a study that "recommended that MTBE be stored in double-contained facilities."*fn61 The Koch Complaint alleged that ExxonMobil was liable for this contamination as the owner of the property and the entity that exercised "legal authority" over the Crossroads Exxon and that Hicks was liable as the owner and operator of the Crossroads Exxon.*fn62 While the Koch Complaint made limited claims about MTBE leakage that contaminated plaintiffs' property, the Complaint did not allege that ExxonMobil was liable for manufacturing, distributing, or selling MTBE with gasoline. The Complaint provided detail concerning the dangerousness of MTBE and the threat it poses to drinking water, but each allegation was tied to "MTBE leakage" at the Crossroads Exxon.*fn63 The Koch plaintiffs did not allege that the decision to use MTBE was the cause of their injuries.*fn64 Because of this, ExxonMobil claims it could not discern a basis for federal jurisdiction from the face of the Complaint.

  A comparison of the Koch Complaint with the contemporaneously filed Wagner I Complaint lends credence to ExxonMobil's claim. In stark contrast to the Koch Complaint, the gravamen of the Wagner I Complaint, filed only one day after the Koch Complaint, was ExxonMobil's decision to use MTBE and increase the concentration of MTBE in gasoline, despite specific knowledge that even low concentrations of MTBE in gasoline could cause serious groundwater contamination.*fn65 The Complaint alleged that ExxonMobil was liable for these decisions in its capacity as a manufacturer, distributor, and seller of petroleum products.*fn66 It also alleged that ExxonMobil participated in a widespread industry campaign to rush production of MTBE without testing its safety and to convince the Environmental Protection Agency ("EPA") that important environmental testing was not necessary for determining the risks posed by MTBE.*fn67 Throughout the 1980s and 1990s, both defendants misrepresented the risks posed by MTBE to the public thus "forestalling public scrutiny into their decision to increase the concentration of MTBE in their products without further safety research."*fn68 They took these actions in order "to establish the fuel as an industry standard, to gain favor with the public, and to increase markets and profits,"*fn69 despite knowledge of the "terrible downside of the proliferating use of the compound: widespread contamination of water."*fn70 The Wagner I Complaint alleged that defendants were strictly liable for using and storing MTBE, ultra-hazardous and abnormally dangerous activities, and for "plac[ing] MTBE, a defective product, in the stream of commerce."*fn71 In addition, the Complaint alleged a negligence cause of action stating that "[d]espite Defendants' past and current knowledge of MTBE's harmful characteristics, Defendants have placed and continue to place gasoline containing MTBE into the Maryland stream of commerce without taking any special precautions to prevent MTBE contamination of Plaintiffs' drinking water."*fn72 The Complaint alleged that defendants were liable for storing and selling MTBE-containing gasoline because they "knew or should have known that when MTBE was placed into gasoline systems, there was a strong probability that it would escape into the surrounding environment and contaminate the Plaintiffs water supply."*fn73

  The Wagner I Complaint was clearly modeled after multiple other MTBE actions brought around the country and subsequently removed to federal court by numerous defendants.*fn74 The Koch Complaint made markedly different allegations.*fn75 ExxonMobil was not required to "guess" that the Koch Complaint may have asserted allegations concerning the decision to use MTBE.*fn76 The Koch Complaint, on its face, did not put ExxonMobil on notice that the federal officer defense was available to them.

  B. Jurisdiction over Wagner II Pursuant to Section 1446(b)

  ExxonMobil claims that, despite the fact the strict liability claims were excised from the Wagner II Complaint, "the presence of MTBE in gasoline and the alleged hazard that MTBE represents as a constituent of gasoline" lay at the heart of the claims in Wagner II, just as they lay at the heart of the claims in Wagner I.*fn77 ExxonMobil further claims that Wagner II was removable pursuant to section 1442(a)(1) because "the petroleum refining industry was required to use oxygenates in gasoline" in areas that were subject to certain congressional programs, namely the Oxy-Fuel Program and the Reformulated Gas Program, and "both Congress and [the] EPA fully understood, expected and knew MTBE had to be used in oxygenated gasoline sold in the United States."*fn78

  The Wagner II Complaint reads as a carefully edited version of the Wagner I Complaint. In Wagner II, the plaintiffs deleted allegations regarding the manufacture, sale, and distribution of MTBE,*fn79 defendants' knowledge that MTBE posed a unique and significant threat to groundwater,*fn80 and that defendants engaged in a widespread industry campaign to misrepresent the risks posed by MTBE to the public and EPA.*fn81 Finally, plaintiffs eliminated their strict liability claim.

  Nonetheless, plaintiffs maintained their allegations concerning the dangers of MTBE. For example, plaintiffs alleged that "the greater the MTBE content of gasoline the higher the risk to water" and "even small concentrations of MTBE create an enhanced threat to groundwater."*fn82 Plaintiffs also alleged that defendants knew that "high levels of MTBE contamination could result from gasoline containing low concentrations of MTBE" and that it "posed an unusual threat to groundwater."*fn83 In addition, while plaintiffs deleted allegations that both defendants were liable for selling MTBE-containing gasoline and that ExxonMobil was liable for mixing and transporting MTBE-containing gasoline, they continued to allege that defendants were liable for storing gasoline-containing MTBE, presumably asserting that mere storage posed a special risk to groundwater.*fn84

  The Wagner plaintiffs' effort to avoid federal jurisdiction was unavailing. ExxonMobil was on notice of the Wagner plaintiffs' claims concerning its decision to use MTBE and the deletions could not hide the fact that the Wagner II Complaint was a "challenge to MTBE-in-gasoline and by extension the decision to include MTBE in gasoline."*fn85 ExxonMobil believed that the Wagner II Complaint asserted it was liable under Maryland product liability law for using the gasoline additive MTBE, that MTBE is a hazard, that it should not have been used, and/or that appropriate warnings should have been given.*fn86 This is not surprising given the history of the two Complaints. Indeed, the Wagner II plaintiffs did not respond or otherwise object to these jurisdictional allegations.*fn87

  ExxonMobil timely removed Wagner II, as part of the consolidated action, on the basis of federal officer jurisdiction.*fn88 This Court previously held that it has federal agent jurisdiction over some, and bankruptcy jurisdiction over all, of the MTBE cases pending before it.*fn89 There is no question that removal was proper as to Wagner II.

  C. Jurisdiction over the Consolidated Action Pursuant to Section 1446(b)

  In order to show that it fulfilled the requirements of section 1446(b), ExxonMobil must also show that the consolidation of Koch with Wagner II was the first moment it was able to ascertain that the Koch Complaint, as part of the consolidated action, was removable. An essential premise of this claim is that Judge Plitt's Consolidation Order combined the two actions into one action, thus making removal of the Koch Complaint, as part of the consolidated action, appropriate.*fn90 In opposition to this claim, plaintiffs cite to cases interpreting Rule 42 of the Federal Rules of Civil Procedure, which stand for the proposition that consolidation does not effect a merger of the cases for purposes of removal to federal court.*fn91 This cases are inapposite. They address federal consolidation rather than consolidation under state rules.

  Examples of cases that have addressed state consolidations are instructive. The few federal courts that have considered the effect of state consolidation on jurisdiction have found that, under certain circumstances, where two actions are consolidated into a single action, state-ordered consolidation may affect jurisdiction and removability.*fn92 For example, a federal court in Alabama distinguished a state consolidation order from federal consolidations and found that the state consolidation destroyed the identity of each suit and merged them into one, "making a notice of removal within 30 days of consolidation timely."*fn93 Federal courts in Pennsylvania, Michigan, and Texas have also found that a removal notice that occurred thirty days after a state consolidation order combined two actions into one, thus allowing the defendant to meet the jurisdictional threshold requirements for removal under 28 U.S.C. § 1332, was timely.*fn94 Similarly, a federal court in Illinois noted that removal under section 1446(b) of a wrongful death case would have been possible thirty days from its consolidation with a "new" civil rights claim, if removal would have been timely as to that civil rights claim itself.*fn95

  The precise effect consolidation may have on jurisdiction, however, has not been addressed by the Maryland courts. Thus, this Court must carefully predict how the highest court in Maryland would interpret the scope of the Consolidation Order.*fn96 ExxonMobil notes that "the leading commentator on . . . Maryland Rules . . . has explained that consolidation under Maryland Rule 2-503(a) allows a Maryland Circuit Court `sufficient flexibility, in the interest of judicial economy, to combine issues, counts or actions in any combination that is practical and fair.'"*fn97 The effect of consolidation under Rule 2-503 has been considered most often in the context of appeals. The question has been whether consolidated actions should be treated as a single action for purposes of entry of judgment under Maryland Rule 2-602 when a judgment has only been reached in one case. Rule 2-602 states that an order "that adjudicates fewer than all the claims in an action . . . is not a final judgment." Under those circumstances, the Maryland Court of Appeals has found that "unless the trial court clearly intends that a joint judgment be entered disposing of all cases simultaneously," cases that were consolidated under Rule 2-503 "are not to be treated as a single action for purposes of Rule 2-602."*fn98 Maryland's highest court has implicitly acknowledged that cases may be consolidated into a single action where the intent of the judge to do so is clear.*fn99 The question arises whether this analysis applies equally to questions of jurisdiction.

  A comparison of the Maryland Rules with those of Pennsylvania may also be instructive. Rule 341 of Pennsylvania's Rules of Appellate Procedure states that the judge "may order a joint hearing or trial of any matter in issue in the actions, may order the actions consolidated, and may make orders that avoid unnecessary cost or delay." The Superior Court of Pennsylvania interpreted this to mean that when the actions were "consolidated," as opposed to joined for trial, they were consolidated into a single action.*fn100 Rule 2-503 is quite similar. It allows for "a joint hearing or trial" or "consolidation of any or all of the claims, issues, or actions." The second option, consolidation, must mean something other than a "joint hearing or trial."

  Plaintiffs' claim that Judge Plitt's "subjective" intent to combine these actions was not clear.*fn101 To the contrary, the Judge's intent to create a single action for "all future purposes" could not be more obvious. The Judge went so far as to deny plaintiffs' request to issue a new order stating that the cases were not consolidated as a single action.*fn102 He made it clear that he would eventually decide whether a class should be certified for both sets of plaintiffs.*fn103 Judge Plitt intended to consolidate these cases into a single action.

  Finally, finding that ExxonMobil's removal notice was timely under section 1446(b) does not frustrate the intent of the thirty-day time limit, but instead serves the purpose of the statute. There were no significant proceedings in the Koch action before it was consolidated with Wagner II and then promptly removed. ExxonMobil did not wait to see how it would fare in state court prior to removing the case. Instead, ExxonMobil promptly removed the consolidated action upon receiving notice that the action was removable.

  D. Supplemental Jurisdiction over Koch Pursuant to Section 1367(a)

  ExxonMobil finally claims, in the alternative, that even if the consolidation order did not broaden the Koch Complaint, the Court can exercise supplemental jurisdiction over it under 28 U.S.C. § 1367(a).*fn104 ExxonMobil claims that the Consolidation Order found that the Koch and Wagner II claims involved "common questions of law, fact, and subject matter" and that the claims were so related that they formed part of "the same case or controversy" for purposes of section 1367.*fn105

  While I am not required to exercise supplemental jurisdiction, I find that it is appropriate to do so here. First, this case does not raise especially novel or complex issues of state law. Indeed, the claims are typical of the claims in the rest of the consolidated MTBE cases pending before this court.*fn106 Second, retaining jurisdiction will promote judicial economy, and prevent duplication of effort and inconsistent judgments.*fn107 Third, there are no compelling reasons to decline jurisdiction. Indeed, exercising jurisdiction here will avoid the waste and inconsistency that multi-district litigation is designed to eliminate.*fn108

  E. Violation of Local Rule 103.5.a and Section 1446(a)

  As noted above, plaintiffs claim that ExxonMobil's Notice of Removal violated section 1446(a) and Local Rule 103.5.a of the District Court of Maryland.*fn109 ExxonMobil responded that "[t]he failure to attach papers to a notice of removal is a `minor irregularity' that is curable and does not preclude removal."*fn110 In addition, ExxonMobil claims that plaintiffs' argument that it violated section 1446(a) was untimely*fn111 and that any defect may be cured by a later filing.*fn112 Because the statute explicitly allows for cure of such procedural defects, ExxonMobil's failure to file the papers either under Local Rule 103.5.a or under section 1446(a) does not defeat this court's jurisdiction.


  For the reasons set forth above, the motions of the Koch plaintiffs are hereby denied. The Clerk of the Court is directed to close these motions (docket #742, 748). A conference is scheduled for November 18, 2005, at 10:00 a.m. in Courtroom 15C.



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