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Hunter v. Canadian Pacific Ry. Ltd.: US District Court : CIVIL PROCEEDURE | RAILROAD - pre-emption and railroads; remand to state court

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Rory Hunter and Karen Hunter, as
personal representatives of the estate
of Tabatha Hunter, deceased, and as
representatives/trustees of the
beneficiaries in the wrongful death action,
Plaintiffs,
Civ. No. 07-3314 (RHK/AJB)
MEMORANDUM OPINION
AND ORDER
v.
Canadian Pacific Railway Limited, and its
wholly owned subsidiary, Canadian Pacific
Railway Company, and Soo Line Railroad
Company,
Defendants.
Daniel E. Phillips, Stacey E. Tjon, Mike Miller, Solberg, Stewart, Miller & Tjon, Ltd.,
Fargo, North Dakota, Stacy K. Hauer, Zimmerman Reed, PLLP, Minneapolis, Minnesota,
for Plaintiffs.
Jacqueline S. Anderson, Stephen W. Plambeck, Nilles Law Firm, Fargo, North Dakota,
for Defendants.
INTRODUCTION
Plaintiffs Rory and Karen Hunter (the Hunters) commenced this wrongful-death
and survival action in Minnesota state court against Canadian Pacific Railway Limited,
Canadian Pacific Railway Company ( collectively CP), and Soo Line Railroad
Company (Soo Line), doing business as Canadian Pacific Railway. CP removed the
action to this Court asserting diversity and federal-question jurisdiction. The Hunters
2
now move to remand, arguing that this action was improperly removed because Soo Line
is an in-state Defendant and the doctrine of complete preemption1 does not apply in this
case. For the reasons set forth below, the Court will grant the Hunters Motion.
BACKGROUND
The Hunters are residents of North Dakota. (Am. Compl. 1.) Tabatha Hunter
was the daughter of Rory and Karen Hunter, and prior to her death on July 22, 2005, she
lived with her parents in North Dakota. (Id.) CP is a Canadian corporation with its
principal place of business in Alberta, Canada. (Notice of Removal at 3.) Soo Line is a
Minnesota corporation with its principal place of business in Minneapolis, Minnesota.
(Am. Compl. 4.)
On July 22, 2005, at a railroad crossing located in North Dakota, a train struck a
vehicle being driven by 18-year old Nicholas Sadek, killing Nicholas and his 16-year-old
passenger Tabatha Hunter. ( Id. 5.) The Hunters commenced a wrongful death and
survival action against CP in Hennepin County District Court. On July 11, 2007, the
Hunters served and filed an Amended Complaint, naming Soo Line as a defendant. In
their Amended Complaint, the Hunters alleged that Defendants were negligent in a
number of ways: (a) the train was operated at excessive speed, (b) the train operators
failed to keep a proper lookout, (c) the train operators failed to slow the train down when
they saw, or should have seen, a vehicle approaching the crossing, (d) the train operators
1 Complete preemption is rare, but occurs when the federal law is so dominant in a particular
area . . . that it converts an ordinary state common law complaint into one stating a federal claim
for purposes of the well-pleaded complaint rule. Hurt v. Dow Chem. Co., 963 F.2d 1142, 1144
(8th Cir. 1992).
3
failed to utilize a warning device properly, and (e) signs, markings, and warning devices
protecting the crossing were inadequate. ( Id. 6.) On July 12, 2007, CP removed the
action to this Court. On August 10, 2007, the Hunters filed the instant Motion to
Remand.
ANALYSIS
I. Removal of State-Court Action to Federal Court
Removal of an action from state court to federal court is authorized by 28 U.S.C.
1441 and its procedures are governed by 28 U.S.C. 1446.2 A state-court action may be
properly removed to federal court if the case falls within the original jurisdiction of the
federal courts. 28 U.S.C. 1441(a). Federal district courts have original jurisdiction
over all civil actions arising under the Constitution, laws, or treaties of the United
States, 28 U.S.C. 1331, also known as federal-question jurisdiction, and all civil
actions where the matter in controversy exceeds . . . ,000 . . . and is between citizens
of different states, 28 U.S.C. 1332(a)(1), also known as diversity jurisdiction. A
case may be removed without reference to the citizenship of the parties if the basis of
removal is federal-question jurisdiction. 28 U.S.C. 1441(b). However, where removal
2 Following oral argument on the Hunters Motion, CP informed the Court that it filed a copy of
its Notice of Removal with the state court. (See Doc. Nos. 26, 28.) The removal statute requires
a defendant to promptly file a copy of the notice of removal with the clerk of the state court
before removal is effected. 28 U.S.C. 1446(d). Whether CP was prompt in filing the notice of
removal with the state court, however, does not affect this Courts subject-matter jurisdiction.
See Koehnen v. Herald Fire Ins. Co., 89 F.3d 525, 528 (8th Cir. 1996) (A procedural defect in
removal, such as untimeliness, does not affect the federal courts subject- matter jurisdiction and
therefore may be waived.); see also Dukes v. S.C. Ins. Co., 770 F.2d 545, 547 (5th Cir. 1985).
4
is based upon diversity jurisdiction, the case is removable only if none of the defendants
is a citizen of the state in which the case is brought. Id.
Here, there is no dispute that CPs removal on the basis of diversity jurisdiction is
contravened by 28 U.S.C. 1441(b) because Soo Line is an in-state defendant. See Hurt
v. Dow Chem. Co., 963 F.2d 1142, 1145 (8th Cir. 1992) (A defendant may not remove
to federal court on the basis of diversity if any of the defendants is a citizen of the state
where the action was filed.).3 Accordingly, the Court will address whether it has
federal-question jurisdiction over the Hunters claims.
A. Well-Pleaded Complaint Rule
A plaintiff may avoid removal to federal court by alleging only state law claims.
Lundeen v. Canadian Pac. Ry. Co., 447 F.3d 606, 611 (8th Cir. 2006). Under the wellpleaded
complaint rule, federal-question jurisdiction only exists if a federal question is
presented on the face of the complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392
(1987). A case may not be removed on the basis of a federal defense, such as
preemption, even if the defense is anticipated in the complaint and both parties concede
3 Under the rule of unanimity, ordinarily all defendants must join in a notice of removal or the
case will be remanded. Marano Enters. of Kan. v. Z-Teca Rests., L.P., 254 F.3d 753, 755 n.2
(8th Cir. 2001). Although Soo Line answered the Amended Complaint after the Notice of
Removal was filed, it did not consent to the removal, which is generally required in actions
against multiple defendants. But, the lack of consent is not a jurisdictional defect. See
Wilkinson v. Ordway Group, LLC, Civil No. 07-2678, 2007 WL 3037319, at *1 n.1, (D. Minn.
Oct. 16, 2007) (Magnuson, J.) (citing Thorn v. Amalgamated Transit Union, 305 F.3d 826, 833
(8th Cir. 2002)); see also Miller v. Principal Life Ins. Co., 189 F. Supp. 2d 254, 258 n.4 (E.D.
Pa. 2002) (failure of all defendants to consent to removal is a waivable defect and does not in
any way deprive [the] court of subject matter jurisdiction). The Court concludes that the defect
in removal is waived because Soo Line answered the Amended Complaint in this Court and then
appeared at the Hunters Motion.
5
that it is the only question at issue. Id. at 392-93. However, an exception to the wellpleaded
complaint rule is the complete preemption doctrine. Id. at 393.
B. Complete-Preemption Doctrine
Under the complete-preemption doctrine, [o]nce an area of state law has been
completely pre-empted, any claim purportedly based on that pre-empted state law is
considered, from its inception, a federal claim, and therefore arises under federal law.
Magee v. Exxon Corp., 135 F.3d 599, 601 (8th Cir. 1998) (quoting Caterpillar, 482 U.S.
at 393). In other words, the federal law so occupies the field that any complaint alleging
facts that come within the statutes scope necessarily arises under federal law, even if
the plaintiff pleads a state-law claim only. It is not just that a preemption defense is
present: the claim is completely federal from the beginning. Hurt, 963 F.2d at 1144
(citing Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 65 (1987)). However, it is important
to note the distinction between complete preemption and the defense of preemption: 4
This jurisdictional issue of whether complete preemption exists is very
different from the substantive inquiry of whether a preemption defense
may be established. The jurisdictional question concerning complete
preemption centers on whether it was the intent of Congress to make the
cause of action a federal cause of action and removable despite the fact that
the plaintiffs complaint identifies only state claims. The latter inquiry,
concerning a preemption defense, is a substantive inquiry as to whether a
legal defense exists. This would be a matter for trial by a court having
jurisdiction.
Whitman v. Raleys Inc., 886 F.2d 1177, 1181 (9th Cir. 1989); accord Gaming Corp. of
Am. v. Dorsey & Whitney, 88 F.3d 536, 543 (8th Cir. 1996) (Complete preemption . . .
4 Indeed, it is not unusual for parties and even the federal judiciary to be confused about the
difference. Blaylock v. Hynes, 104 F. Supp. 2d 1184, 1186 (D. Minn. 2000).
6
has jurisdictional consequences that distinguish it from preemption asserted only as a
defense. The defense of preemption can prevent a claim from proceeding, but in contrast
to complete preemption it does not convert a state claim into a federal claim.); Visina v.
Wedge Cmty. Co-op, Inc., Civil No. 07-122, 2007 WL 2908043, at *7 (D. Minn. Oct. 1,
2007) (explaining that the affirmative defense of preemption operates to defeat a
plaintiffs claim, whereas removal under complete preemption operates as a
jurisdictional doctrine, permitting a defendant to remove a state-law claim to federal
court because federal law has replaced whatever state-law claim exists with an exclusive
federal cause of action). Thus, courts must determine whether Congress has clearly
manifested an intent to make a cause of action pleaded under state law removable to
federal court, mindful that in the ordinary case federal preemption is merely a defense to
a plaintiffs lawsuit. Magee, 135 F.3d at 602 (internal citations omitted) (emphasis
added).
In 1970, Congress enacted the Federal Railroad Safety Act (FRSA), to promote
railroad s afety and reduce railroad-related accidents. 49 U.S.C. 20101. The FRSA
gives the Secretary of Transportation broad powers to prescribe regulations and issue
orders for every area of railroad safety. CSX Transp., Inc. v. Easterwood, 507 U.S. 658,
662 (1993). The FRSA also includes an express preemption provision, which provides in
pertinent part that a state retains authority to regulate railroad safety, but only until the
Secretary of Transportation . . . prescribes a regulation or issues an order covering the
subject matter of the State requirement. 49 U.S.C. 20106 (a) (1)-(2). A state may
adopt a more stringent requirement as long as it: (A) is necessary to eliminate or reduce
7
an essentially local safety or security hazard; (B) is not incompatible with a law,
regulation, or order of the United States Government; and (C) does not unreasonably
burden interstate commerce. 49 U.S.C. 20106 (a)(2). However, on August 3, 2007,
Congress clarified its position on the FRSAs preemptive effect:
(b) Clarification regarding State law causes of action.--(1) Nothing in this
section shall be construed to preempt an action under State law seeking
damages for personal injury, death, or property damage alleging that a
party-
(A) has failed to comply with the Federal standard of care established by a
regulation or order issued by the Secretary of Transportation (with respect
to railroad safety matters), or the Secretary of Homeland Security (with
respect to railroad security matters), covering the subject matter as provided
in subsection (a) of this section;
(B) has failed to comply with its own plan, rule, or standard that it created
pursuant to a regulation or order issued by either of the Secretaries; or
(C) has failed to comply with a State law, regulation, or order that is not
incompatible with subsection (a)(2).
(2) This subsection shall apply to all pending State law causes of action
arising from events or activities occurring on or after January 18, 2002.
(c) Jurisdiction.--Nothing in this section creates a Federal cause of action
on behalf of an injured party or confers Federal question jurisdiction for
such State law causes of action.
49 U.S.C. 20106 (b)-(c).
Here, the Hunters have brought state-law negligence claims against Defendants,
alleging that: (a) the train was operated at excessive speed, (b) the train operators failed to
keep a proper lookout, (c) the train operators failed to slow the train down when they
saw, or should have seen, a vehicle approaching the crossing, (d) the train o perators
failed to utilize a warning device properly, and (e) signs, markings, and warning devices
8
protecting the crossing were inadequate. (Am. Compl. 6.) The Amended Complaint
does not disclose any federal issue or statute, much less plead any federal cause of action.
Nevertheless, Defendants argue that this Court has federal-question jurisdiction in this
case because the Hunters claims of excessive speed and inadequacy of signs, markings
and warning devices protecting the crossings are completely preempted by federal law
and regulations. (Defs. Mem. at 4.) Defendants assert that the United States Supreme
Court has held that such claims are preempted. See, e.g., Norfolk S. Ry. Co. v. Shanklin,
529 U.S. 344, 358-59 (2000) (holding that 49 C.F.R. 646.214(b)(3) and (4) covered
the subject matter of the adequacy of warning devices installed with the participation of
federal funds); Easterwood, 507 U.S. at 676 (holding that 49 C.F.R. 213.9 covered the
subject matter of claims alleging excessive speed).5 However, these cases were decided
before Congress clarified its position on the preemptive effect of the FRSA.
II. Congress has Clarified the Preemptive Effect of 49 U.S.C. 20106
[T]he touchstone of the federal district courts removal jurisdiction is not the
obviousness of the pre-emption defense but the intent of Congress. Metro. Life, 481
U.S. at 66. A review of the legislative history shows that Congress clarified its position
on the preemptive effect of 49 U.S.C. 20106 in response to a train derailment that took
place in Minot, North Dakota. 153 Cong. Rec. H8496-01, at *H8589 (daily ed. July 25,
2007). On January 18, 2002, a Canadian Pacific Railway freight train derailed in a
5 Defendants assert that federal funds were utilized to install the grade crossing warning devices
at the site where the accident allegedly occurred. (Plambeck Aff. Ex. D.) Defendants also assert
that the train was traveling at a rate of speed within the 60 mile per hour limit set by the federal
regulations. (Id. Ex. A.)
9
residential town near Minot. See Lundeen v. Canadian Pac. Ry. Co., __ F. Supp. 2d. __,
2007 WL 465703, at *1 (D. Minn. Feb. 2, 2007). As a result of the derailment, five
tanker cars released more than 220,000 gallons of anhydrous ammonia into the
environment. Id. Many of those exposed to the gas suffered major injuries and one
person died as a result of the vapor plume. Id. A number of lawsuits were filed as a
result of the accident and many of them were dismissed on the basis that federal law
preempted the state law claims. See, e.g., Mehl v. Canadian P ac. Ry., Ltd., 417 F. Supp.
2d 1104, 1120 (D.N.D. 2006).
Several federal district courts struggled with the harsh impact of the FRSAs
preemptive effect because it essentially left the plaintiffs without a remedy for this tragic
accident. See, e.g., id. at 1120. The federal district court in North Dakota summarized
this result:
The Federal Railroad Safety Act passed by Congress in 1970 has ensured
national uniformity of railroad safety regulations, but it has also absolved
railroads from any common law liability for failure to comply with the
safety regulations. It is clear that Congress determined that there was a
need for national uniformity and a need to adopt standard federal
regulations to protect the public rather than allow for varied and
inconsistent state law remedies. State law claims have been preempted by
federal law. While the Federal Railroad Safety Act does provide for civil
penalties to be imposed on non-compliant railroads, the legislation fails to
provide any method to make injured parties whole and, in fact, closes every
available door and remedy for injured parties. As a result, the judicial
system is left with a law that is inherently unfair to innocent bystanders and
property owners who may be injured by the negligent actions of railroad
companies . . . . Such an unfair and inequitable result should be addressed
through legislative action.
10
Id.; see also Norfolk, 529 U.S. at 360 (Ginsburg, J., dissenting) (the displacement of state
negligence law with no substantive federal standard of conduct to fill the void creates
an outcome that defies common sense and sound policy).
On August 3, 2007, Congress acted to address this issue by clarifying the
preemptive effect of the FRSA. First, Congress addressed the affirmative defense of
preemption by providing that the FRSA no longer preempts actions filed under state law
seeking damages for personal injury, death or property damages in cases where a plaintiff
alleges that a railroad has failed to comply with federal standards of care, its own safety
standards, or state laws that do not directly conflict with a federal regulation. 153 Cong.
Rec. H8496-01, at *H8590 (daily ed. July 25, 2007). Congress also included a
retroactivity provision, which clarifies that 49 U.S.C. 20106 applies to all pending
State law causes of action arising from events or activities occurring on or after January
18, 2002, the date of the Minot, North Dakota derailment. Id. Notably, the legislative
history shows that Congress specifically made reference to the jurisdictional issue of
complete preemption and explained that nothing in 49 U.S.C. 20106 creates a federal
cause of action on behalf of an injured party or confers Federal question jurisdiction for
such State law causes of action. Id. Thus, Congress has clearly answered the
jurisdictional question of complete preemption it does not apply here. However, the
railroad can still raise the affirmative defense of preemption to the trial court that has
jurisdiction over the case.
Despite Congresss clarification that complete preemption does not apply,
Defendants argue that the Hunters claims of excessive speed and inadequate warnings
11
are not the type of state law claims which were saved from preemption by the new federal
legislation and that the retroactive provision does not apply in this case.6 (Defs. Mem.
at 16-18.) Defendants also assert that there is no North Dakota state law reducing the
track speed at this location and no North Dakota state law obligating a railroad to provide
grade crossing protection in addition to or different than the federally funded crossbucks
that were installed at this location. (Id.) However, these arguments are misplaced for
two reasons. First, the case law relied upon by Defendants is inapplicable here because
the courts in those cases had construed the previous version of 49 U.S.C. 20106.
Second, Defendants confuse complete preemption with the defense of preemption. The
sole issue before the Court is the jurisdictional question of removal under the completepreemption
doctrine, rather than the defense of preemption. Here, Congress has made it
crystal clear that 49 U.S.C. 20106 does not create a federal cause of action on behalf of
an injured party or confer federal-question jurisdiction for such state law causes of action.
Defendants arguments address the affirmative defense of preemption, but not the
jurisdictional question under the complete-preemption doctrine. But even assuming that
the Hunters state law claims of excessive speed and inadequate warnings are preempted
by federal law, the Supreme Court (and now Congress with respect to this statute) has
made it perfectly clear that the defense of preemption does not suffice to provide federalquestion
jurisdiction so as to permit removal. See Metro. Life, 481 U.S. at 66 (even an
obvious preemption defense will not create removal jurisdiction).
6 The Court is not persuaded by the argument that the retroactive provision does not apply here,
as 49 U.S.C. 20106 expressly provides that it applies to all pending State law causes of action
arising from events or activities occurring on or after January 18, 2002.
12
Complete preemption is rare, and doubtful cases must be resolved in favor of
remand. Gaming Corp., 88 F.3d at 543. Here, the negligence claims asserted in the
Hunters Amended Complaint are state-law claims and Congress has expressly provided
that there is no exclusive federal cause of action that would encompass the Hunters
claims. Thus, Defendants may not remove this action to federal court under the doctrine
of complete preemption. Whether the affirmative defense of preemption applies in this
case is for the state court to decide. Visina, 2007 WL 2908043, at *12 (citing Caterpillar,
482 U.S. at 398 n.13); accord Lontz v. Tharp, 413 F.3d 435, 438 (4th Cir. 2005) (We
express no view as to whether such claims on the merits are preempted by federal law, as
this is a question for state courts to resolve.). Accordingly, the Court must remand this
case to state court for lack of subject-matter jurisdiction. See 28 U.S.C. 1447(c) (If at
any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.).
III. The Hunters are Not Entitled to Attorneys Fees and Costs
When an action is erroneously removed to Federal Court, and the removal results
in a remand to State Court, costs are properly assessed against the removing party.
Moline Mach., Ltd. v. Pillsbury Co., 259 F. Supp. 2d. 892, 905 (D. Minn. 2003) (citing In
re Iowa Mfg. Co., 747 F.2d 462, 463 n.2 (8th Cir. 1984)). The Hunters argue that they
are entitled to attorneys fees and costs incurred in connection with their Motion to
Remand because Defendants had no basis to remove this case. (Pls. Mem. at 10-11.)
Under 28 U.S.C. 1447(c), [a]n order remanding the case may require payment of just
costs and any actual expenses, including attorney fees, incurred as a result of the
13
removal. But, the standard for awarding fees should turn on the reasonableness of the
removal. Absent unusual circumstances, courts may award attorneys fees under
1447(c) only where the removing party lacked an objectively reasonable basis for
seeking removal. Conversely, when an objectively reasonable basis exists, fees should be
denied. Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005).
Here, CP had an objectively reasonable basis for seeking removal. CP sought
removal on the basis of federal-question jurisdiction, which occurred before Congress
clarified that complete preemption does not apply here. While the Court concludes that
remand is warranted here, it also finds that CP reasonably believed that there was federalquestion
jurisdiction at the time it filed its Notice of Removal. Accordingly, the Court
will deny the Hunters request for attorneys fees and costs.
CONCLUSION
Based on the foregoing, and all the files, records, and proceedings herein, IT IS
ORDERED that the Hunters Motion to Remand (Doc. No. 9) is GRANTED and this
action is REMANDED to the Hennepin County District Court pursuant to 28 U.S.C.
1447(c). The Clerk of the Court shall mail to the Clerk of the Hennepin County District
Court a certified copy of this Memorandum Opinion and Order.
Dated: November 16 , 2007
s/Richard H. Kyle
RICHARD H. KYLE
United States District Judge
 

 
 
 

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