In Re: Orange County Water District

Court of Appeals for the Second Circuit·Decided October 1, 2009·No. 07-5724-op·Published

Opinion

07-5724-op In re: Orange County Water District

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

August Term 2008

(Submitted: April 14, 2009 Decided: October 1, 2009)

Docket No. 07-5724-op

ORANGE COUNTY WATER DISTRICT, Petitioner,

V.

UNOCAL CORPORATION , formerly known as COSTAL OIL NEW YORK , INC ., formerly known as UNION OIL COMPANY OF CALIFORNIA , CONOCOPHILLIPS COMPANY , CHEVRON U.S.A., INC ., individually doing business as CHEVRON PRODUCTS COMPANY , doing business as CHEVRON CHEMICAL COMPANY , CHEVRONTEXACO CORPORATION , TEXACO REFINING AND MARKETING , INC ., now known as TMR COMPANY , EQUILON ENTERPRISES LLC, SHELL OIL COMPANY , INC ., individually doing business as SHELL OIL PRODUCTS US, UNION OIL COMPANY OF CALIFORNIA , individually doing business as UNOCAL, TOSCO CORPORATION , EXXON MOBIL CORPORATION , individually formerly known as EXXON CORPORATION doing business as EXXONMOBIL REFINING AND SUPPLY COMPANY , EXXON CHEMICAL U.S.A., EXXONMOBIL CHEMICAL CORPORATION , MOBIL CORPORATION , ULTRAMAR , INC ., VALERO REFINING , VALERO REFINING COMPANY -CALIFORNIA , VALERO MARKETING AND SUPPLY COMPANY , ATLANTIC RICHFIELD COMPANY , INC ., individually formerly known as ARCO PETROLEUM COMPANY doing business as ARCO PRODUCTS COMPANY also known as ARCO , BP PRODUCTS NORTH AMERICA , INC ., BP WEST COAST LLC, TESORO PETROLEUM CORPORATION , TESORO REFINING AND MARKETING COMPANY , INC ., PETRO -DIAMOND , INC ., SOUTHERN COUNTRIES OIL CO ., CITGO PETROLEUM CORPORATION , ARCO CHEMICAL COMPANY , LYONDELL CHEMICAL COMPANY , individually formerly known as ARCO CHEMICAL COMPANY , G & M OIL COMPANY , INC ., 7-ELEVEN , INC ., USA GASOLINE CORPORATION , DOES 9-200, and DOES 202-1000, inclusive,

Defendants.*

*

The Clerk of Court is directed to amend the official caption in this case to conform to the listing of the parties above.

Before: WINTER and CABRANES Circuit Judges.**

Orange County Water District petitions for a writ of mandamus challenging a November 7, 2007 order of the United States District Court for the Southern District of New York (Shira A. Scheindlin, Judge), which denied a motion to remand to state court. We hold that our prior opinion in this multi-district litigation did not preclude the District Court’s conclusion that petitioners failed to file a timely motion for remand, as required by 28 U.S.C. § 1447(c), because the purportedly erroneous removal under 28 U.S.C. § 1452(a) did not implicate the District Court’s subject matter jurisdiction. Furthermore, we conclude that any challenge to the District Court’s subject matter jurisdiction is best addressed on direct appeal, rather than by a writ of mandamus.

Petition for writ of mandamus denied.

Michael Axline, Tracey O’Reilly, Miller, Axline & Sawyer, Sacramento, CA, for Petitioner.

Thomas Marcelle, Albany, NY, Amicus Curiae in Opposition to Petitioner.

PER CURIAM :

The question presented is whether a district court may retain jurisdiction when a case was improperly removed to federal court. Specifically, we consider whether improper removal under the bankruptcy removal statute requires subsequent remand to state court.

**

The Honorable Sonia Sotomayor, originally a member of the panel, was elevated to the Supreme Court on August 8, 2009. The two remaining members of the panel, who are in agreement, have determined the matter. See 28 U.S.C. § 46(d); 2d Cir. R. § 0.14(2); United States v. DeSimone, 140 F.3d 457 (2d Cir. 1998).

The Orange County Water District (“OCWD”) petitions for a writ of mandamus challenging a November 7, 2007 order of the United States District Court for the Southern District of New York (Shira A. Scheindlin, Judge), denying OCWD’s motion to remand the case from the Southern District of New York to California state court. OCWD argues that this Court’s decision in In re MTBE Prods. Liab. Litig., 488 F.3d 112 (2d Cir. 2007) (“MTBE”)—which involved other parties in this multi-district litigation—required the District Court to remand OCWD’s action. Specifically, OCWD contends as follows: (1) this Court’s opinion in MTBE requires that the District Court find that OCWD asserted a timely objection under 28 U.S.C. § 1447(c) to the improper application of the bankruptcy removal statute, 28 U.S.C. § 1452(a); and, alternatively, (2) the District Court was required to abstain pursuant to 28 U.S.C. § 1334(c)(2) because it lacked “core” bankruptcy jurisdiction. We deny OCWD’s petition for a writ of mandamus because we conclude that: (1) our opinion in MTBE did not require the District Court to remand OCWD’s action, and (2) OCWD’s alternative jurisdictional arguments can be reviewed in the regular course of appeal.

BACKGROUND

The facts of this case are set forth in detail in the District Court’s opinion. See In re MBTE Prods. Liab. Litig., 522 F. Supp. 2d 557 (S.D.N.Y. 2007). We review here only those facts relevant to the issues presented in this petition for mandamus.

In the spring of 2003, OCWD filed state-law claims in the Superior Court of California, Orange County, against various oil companies alleging contamination, or threatened contamination, of groundwater in Orange County, California with methyl tertiary butyl ether (“MTBE”), an additive that many refiners added to gasoline beginning in the late 1970s to increase its octane content. MTBE is known to discolor water, impart a foul odor, and endanger human health when it enters

the water supply.1 This suit was one of over one-hundred actions brought by public and private entities that provide public drinking water throughout the United States against corporations that manufactured, refined, marketed, or distributed gasoline containing MTBE. On December 5, 2003, defendants removed the action to the United States District Court for the Central District of California. Although OCWD filed a motion to remand on January 6, 2004, that Court stayed the proceeding pending transfer of the case to the United States District Court for the Southern District of New York, pursuant to an order of the Panel on Multidistrict Litigation, 28 U.S.C. § 1407.2 Shortly after the final transfer order was issued by the District Court for the Central District of California on June 16, 2004, OCWD and other plaintiffs moved on July 15, 2004, in the Southern District of New York to remand the case to the California state court where it was originally filed. In a series of opinions, Judge Scheindlin denied the motions of OCWD and several other California plaintiffs. She concluded that the actions had been properly removed under (1) the federal officer removal statute, 28 U.S.C. § 1442, because defendants alleged that they had acted at the direction of a federal agency in adding MTBE to gasoline, In re MTBE Prods. Liab. Litig., 342 F. Supp. 2d 147, 156-58 (S.D.N.Y. 2004),3 and (2) the bankruptcy removal statute, 28 U.S.C. § 1452, because

1 Defendants allege that they added MTBE to gasoline to comply with the requirements of the Clean Air Act and the regulations promulgated thereunder.

2 The District Court for the Central District of California did not rule on OCWD’s motion to remand; instead, it vacated the motion, “to be re-noticed upon final ruling by the MDL Panel as to the transfer” of OCWD’s action. Orange County Water Dist. v. Unocal Corp., No. 03-01742- JVS(ANx) (C.D. Cal. Sept. 9, 2004).

3 The federal officer removal statute provides, in relevant part, as follows:

A civil action or criminal prosecution commenced in a State court against any of the following may be removed by them to the district court of the United States for the district and division embracing the place wherein it is pending:

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