Village Improvement Ass'n of Doylestown v. Dow Chemical Co.

655 F. Supp. 311
CourtDistrict Court, E.D. Pennsylvania
DecidedMarch 6, 1987
DocketCiv. A. 86-7582
StatusPublished
Cited by17 cases

This text of 655 F. Supp. 311 (Village Improvement Ass'n of Doylestown v. Dow Chemical Co.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Village Improvement Ass'n of Doylestown v. Dow Chemical Co., 655 F. Supp. 311 (E.D. Pa. 1987).

Opinion

MEMORANDUM AND ORDER

TROUTMAN, Senior District Judge.

The plaintiff instituted this action in the Court of Common Pleas of Bucks County of the Commonwealth of Pennsylvania. It alleged in its original complaint against the above named defendants filed on January 14, 1986, various state law claims relating to alleged defects in a high bond mortar additive known as “Sarabond”, which was manufactured by defendant Dow and utilized in the construction of a hospital owned by the plaintiff. On March 81,1986, the plaintiff filed an amended complaint against the defendants which, in addition to the state law claims, stated a cause of action against Dow pursuant to the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C.A. §§ 1961-1968 (West 1984 & Supp.1986). Dow, on April 18, 1986, filed “Preliminary Objections” to the plaintiffs RICO claim with the state court contending that the state court lacked subject matter jurisdiction to entertain the “federal” RICO claim.

Dow thereafter filed a petition for removal of the aforementioned state court action to this Court on December 30, 1986, approximately eight (8) months after it was served with the plaintiff’s amended complaint on 'April 1, 1986. Presently before us are plaintiff’s: (1) motion to remand this action to the state court; (2) motion to impose Rule 11 sanctions upon Dow; and (3) motion for an award of costs and attorney’s fees pursuant to 28 U.S.C.A. § 1447(c) (West 1973).

I. The State Court’s Jurisdiction Over The Rico Claim.

Dow removed the state court action to this Court pursuant to 28 U.S.C.A. .§ 1441(c) (West 1973), averring that the RICO claim against it constituted a separate and independent claim or cause of action over which this Court possesses original jurisdiction. Prior to removal of this action, however, Dow filed, as stated above, preliminary objections to the plaintiff’s amended complaint in the form of a motion to dismiss the plaintiff’s RICO claim for lack of subject matter jurisdic *313 tion. Under the doctrine of “derivative jurisdiction”, an action could not be removed from state court to federal court where the state court lacked subject matter jurisdiction over the matter since the federal court “derived” its removal jurisdiction from the state court. See Recchion, Westinghouse Electric Corp. v. Kirby, 637 F.Supp. 290 (W.D.Pa.1986); Essington Metal Works, Inc. v. Retirement Plans of America, 609 F.Supp. 1546 (E.D.Pa.1985); and cases cited therein. Congress, by statute, expressly repealed the derivative jurisdiction doctrine in 1986. See Judicial Improvements Act of 1985, Pub.L. No. 99-336, § 3, 100 Stat. 633, 637 (1986) (adding new subsection (e) to 28 U.S.C.A. § 1441(e) (West Supp. III 1986)). Congress provided, however, in § 3(b) of the Judicial Improvements Act of 1985 that the amendment made by § 3(a) only applied to civil actions commenced in state courts on or after June 19, 1986. Despite Dow’s arguments to the contrary, clear precedent of the Third Circuit Court of Appeals dictates, without exception, dismissal of an action commenced in state court prior to June 19, 1986, and removed to federal court, where the state court lacked subject matter jurisdiction over the matter. See Bradshaw v. General Motors Corp., Fisher Body Division, 805 F.2d 110 (3d Cir.1986); but see, Federated Department Stores, Inc. v. Moitie, 452 U.S. 394,101 S.Ct. 2424, 69 L.Ed.2d 103 (1981); Nordlicht v. New York Telephone Co., 799 F.2d 859 (2d Cir.1986); and Salveson v. Western States Bankcard Association, 731 F.2d 1423 (9th Cir.1984). Further, even if we were to conclude that the precedent of this Circuit would allow recognition of an exception to the doctrine of derivative jurisdiction, we do not believe this case presents the circumstances in which the fashioning of such an exception would be justified. Thus, if the state court lacked jurisdiction to entertain the plaintiff’s RICO claim, as Dow asserts it did not, we must dismiss the plaintiff’s RICO claim for lack of subject matter jurisdiction.

The question of whether the state court possessed subject matter jurisdiction over the RICO action is one which we are by necessity empowered to answer in this context. We need not concern ourselves with whatever collateral effect our determination might have upon any possible future inquiry by the state court into this issue. Of the courts which have addressed this issue, both state and federal, it appears that an approximately equal number have come down on opposite sides of the question. Interestingly, it seems that state courts have been more prone than federal courts to conclude that RICO vests jurisdiction to entertain civil actions pursuant to the statute exclusively in the federal courts. Our research has failed to disclose a single instance in which the Supreme Court or our own Circuit Court have addressed this precise question. Our own court has stated on at least two occasions that the RICO statute vests concurrent jurisdiction in both the state and federal courts. See Vincent v. Metropolitan Hospital, No. 86-0948, slip op. (E.D.Pa. June 30, 1986) (Ludwig, J.) [Available on WEST-LAW, DCTU database] and Chas. Kurz Co. v. Lombardi, 595 F.Supp. 373, 381 n. 11 (E.D.Pa.1984) (VanArtsdalen, J.). We also find highly enlightening the opinion of the district court in Karel v. Kroner, 635 F.Supp. 725 (N.D.Ill.1986), and for the reasons stated therein, we similarly conclude that both the state and federal courts possess concurrent jurisdiction to entertain civil actions brought pursuant to the RICO statute. The plaintiff's RICO claim, therefore, is not subject to dismissal under the doctrine of derivative jurisdiction.

II. The Motion to Remand.

The plaintiff, as well as certain of the defendants who have joined in the plaintiff’s motion, moves this Court to remand this action to state court on two grounds. The first is that Dow filed its petition for removal beyond the thirty-day limit specified in 28 U.S.C.A. § 1446(b) (West 1973). The second is that Dow improvidently removed this ease pursuant to 28 U.S.C.A. § 1441(c) (West 1973).

A. Section lW(b)

Section 1446(b) of Title 28 provides as follows:

*314 The petition for removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief ...
If the case stated by the initial pleading is not removable, a petition for 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.

28 U.S.C.A.

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Bluebook (online)
655 F. Supp. 311, Counsel Stack Legal Research, https://law.counselstack.com/opinion/village-improvement-assn-of-doylestown-v-dow-chemical-co-paed-1987.