Opinion
CV No: 01-1790-PA
February 1, 2002
Plaintiff brings this products liability action against manufacturers and suppliers of asbestos-containing materials. Among the defendants are corporations and successors in interest to corporations that manufactured, distributed, or used automobile brake parts containing asbestos (the automaker defendants). These defendants removed what they refer to as friction product claims from Multnomah County Circuit Court to this court.
Plaintiff moves to remand. I grant plaintiff's motion.
BACKGROUND
Plaintiff filed this products liability action in late 2000. At the time of filing, there was no basis for federal jurisdiction.
Federal-Mogul Global Inc. (Federal Mogul) is allegedly a successor in interest to several businesses that manufactured or distributed brake parts containing asbestos. Federal Mogul is not named as a defendant in this action.
On October 1, 2001, Federal Mogul filed a Chapter 11 petition for bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. The automaker defendants, which are also named as defendants in friction product claims across the United States, filed a motion in the Delaware bankruptcy court to transfer the friction product claims to the U.S. District Court for the District of Delaware. The automaker defendants contend that the friction product claims are "related to" the Federal-Mogul bankruptcy proceeding because the automaker defendants may have indemnity or contribution claims against Federal-Mogul. See 28 U.S.C. § 1334 (district courts have "original but not exclusive jurisdiction of all civil proceedings . . . related to cases under title 11") Defendants argue that consolidating the friction product claims would allow one court to determine the admissibility of causation evidence.
On December 10, 2001, U.S. District Judge Alfred M. Wolin provisionally granted the automakers' motion to transfer friction product claims to the U.S. District Court for the District of Delaware "subject to further Order of the Court." Judge Wolin withdrew the reference to the Bankruptcy Court "with respect to the Transfer Motion and the provisional transfer motion, and with respect to matters involving subject matter jurisdiction, abstention and remand regarding the Friction Product Claims." Judge Wolin also ordered that clerks of U.S. District Courts with friction product claims "retain physical possession of their files of each transferred matter pending a final determination of the Transfer Motion and further Order of this Court."
Defendants here filed their notice of removal in mid-December 2001. In the notice of removal, defendants assert that the case should be transferred to the District of Delaware for resolution with other friction product claims.
On January 3, 2002, Judge Wolin issued an order clarifying the provisional transfer order. The January order provided that cases removed by defendants after entry of the provisional transfer order were also subject to transfer.
STANDARDS
The court should construe the removal statute strictly against removal. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The defendant has the burden of showing that removal is proper. See Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996).
DISCUSSION
I. This Court Has an Independent Duty to Determine Whether Removal to the District of Oregon Is Valid
Defendants contend that this court lacks jurisdiction to decide the motions to remand. Defendants cite an order issued by Judge Charles R. Breyer, U.S. District Judge for the Northern District of California, which states:
Before the Court could decide [the plaintiffs'] motion to remand, . . . the United States District Court for the District of Delaware provisionally transferred all friction claims against the removing defendants — including the claims removed to this Court — to the District of Delaware. See 28 U.S.C. § 157(b)(5); see also In re Dow Corning Corp., 1995 WL 95978 (Bkrtcy. E.D. Mich. Aug. 9, 1995) (discussing provisional transfer pursuant to section 157(b)(5)). As the only claims that were removed to this Court have been transferred to the District of Delaware, there are no claims pending in this Court for the Court to remand. Accordingly, plaintiffs' motion to remand is DENIED without prejudice to plaintiffs renewing their motion should the District of Delaware rescind its provisional transfer order and return the friction claims to this Court.Edmiston v. General Motors Corp., No. C-01-4397 CRB, slip op. at 2 (N.D. Cal. Dec. 17, 2001)
The order in Edmiston is distinguishable because it does not address the validity of the removal from the California state court to the U.S. District Court for the Northern District of California. Instead, the court apparently assumed that the defendants had properly removed the friction product claims from the California state court.
Despite my great respect for Judge Breyer, I conclude that this court must address the merits of plaintiff's motion to remand rather than treating the friction product claims as having already been transferred to the District of Delaware. Before the provisional transfer order can be effective, this court must have jurisdiction over the removed claims. The provisional transfer order does not relieve this court of its primary and independent duty to determine its own subject matter jurisdiction. See California ex rel. Sacramento Metro. Air Ouality Mgmt. Dist. v. United States, 215 F.3d 1005, 1009 (9th Cir. 2000). That duty should not be delegated to another court. See In re Claims Removed by Honeywell Int'l, Inc., No. 2:01-MC-0104, 2002 WL 13277, at 2 (S.D. W. Va. Jan. 4, 2002) (rejecting argument that the federal district court was "a mere pass-through forum" between the state court and the District of Delaware).
II. Defendants' Notice of Removal Is Not Timely
Plaintiff contends that defendants' notice of removal is not timely because they filed it more than thirty days after receiving notice of Federal Mogul's bankruptcy petition. I agree with plaintiffs that the thirty-day deadline in 28 U.S.C. § 1446(b) governs rather than the ninety-day deadline in Bankruptcy Rule 9027(a). See Thomas B. Bennett, Removal, Remand and Abstention Related to Bankruptcies: Yet Another Litigation Quagmire!, 27 Cumb. L. Rev. 1037, 1057-62 (1997). Compare Textron Inv. Mgmt. Co. v. Struthers Thermo-Flood Corp., 169 B.R. 206, 210 (D. Kan. 1994) (Rule 9027's deadlines apply to bankruptcy removals)with State Bank of Lombard v. Chart House, Inc., 46 B.R. 468, 472-73 (N.D. Ill. 1985) (§ 1446's deadlines apply).
Under Bankruptcy Rule 9027, if a claim is pending when a case under the Bankruptcy Code is commenced, the party may file a notice of removal "90 days after the order for relief in the case under the [Bankruptcy] Code." Under § 1446(b), a defendant has thirty days to file a notice of removal after receiving, 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 removeable." Here, Federal Mogul sought bankruptcy protection on October 1, 2001, but defendants did not file the notice of removal until mid-December 2001.
Removals based on bankruptcy jurisdiction are governed by 28 U.S.C. § 1452(a), which provides that "[a] party may remove any claim or cause of action in a civil action . . . to the district court for the district where such civil action is pending, if such district court has jurisdiction of such claim or cause of action under section 1334 of this title." Section 1452 contains no deadlines for seeking removal.
The Supreme Court has not addressed this precise issue, but in an analogous situation it ruled that the procedural requirements of § 1447(d) applied to bankruptcy removals under § 1452. See Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 128-29 (1995). The Court stated:
There is no express indication in § 1452 that Congress intended that statute to be the exclusive provision governing removals and remands in bankruptcy. Nor is there any reason to infer from § 1447(d) that Congress intended to exclude bankruptcy cases from its coverage. The fact that § 1452 contains its own provision governing certain types of remand in bankruptcy, see § 1452(b) (authorizing remand on "any equitable ground" and precluding appellate review of any decision to remand or not to remand on this basis), does not change our conclusion. There is no reason §§ 1447(d) and 1452 cannot comfortably coexist in the bankruptcy context. We must, therefore, give effect to both.Id. at 129 (citation omitted). The same logic applies here. Just as the procedural requirements of § 1447 apply to bankruptcy removals under § 1452, so also do the deadlines set in § 1446(b). There is no conflict between § 1446 and § 1452.
Given the reasoning of Things Remembered, the court is left with a conflict only between § 1446 and Bankruptcy Rule 9027. When a statute and a rule directly conflict, the statute wins. See Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45 (1984).See also Bennett, Removal, Remand, and Abstention, 27 Cumb. L. Rev, at 1059-60 (explaining why Rule 9027 cannot supersede § 1446).
Defendants' notice of removal was not timely. I grant plaintiff's motion for remand.
III. No "Related To" Bankruptcy jurisdiction Over Friction Product Claims
Defendants' notice of removal is not only untimely, but is also fatally flawed in another way. Defendants have failed to show that subject matter jurisdiction exists based on Federal Mogul's bankruptcy proceedings.
Under 28 U.S.C. § 1334, district courts have "original but not exclusive jurisdiction of all civil proceedings . . . related to cases under title 11." (Emphasis added.) The test for "related to" jurisdiction is worded broadly: whether "'the outcome of the proceeding could conceivably have any effect on the estate being administered in bankruptcy.'" Fietz v. Great W. Sav. (In re Fietz), 852 F.2d 455, 457 (9th Cir. 1988) (quoting Pacor, Inc. v. Higgins, 743 F.2d 984, 994 (3d Cir. 1984) (omitting emphasis). However, "related to" jurisdiction "cannot be limitless." Celotex Corp. v. Edwards, 514 U.S. 300, 308 (1995). The leading appellate opinion on "related to" jurisdiction,Pacor, stated that
the mere fact that there may be common issues of fact between a civil proceeding and a controversy involving the bankruptcy estate does not bring the matter within the scope of section 1471(b). Judicial economy itself does not justify federal jurisdiction. "[J]urisdiction over nonbankruptcy controversies with third parties who are otherwise strangers to the civil proceeding and to the parent bankruptcy does not exist." In re Haug, 19 B.R. 223, 224-25 (Bankr. D. Ore. 1982). See also In re McConaghy, 15 B.R. 480, 481 (Bankr. E.D. Va. 1981) (Bankruptcy court lacks jurisdiction to decide disputes between third parties in which the estate of the debtor has no interest).
743 F.2d at 994 (citation omitted)
I conclude that defendants have not shown that this action would affect the Federal Mogul bankruptcy proceedings. Defendants, who have the burden of establishing jurisdiction, assert hypothetical indemnity and contribution claims against Federal Mogul with almost no factual support. Such speculative, theoretical claims are not sufficient to show "related to" bankruptcy jurisdiction. See In re Asbestos Litigation, 271 B.R. 118, 123-25 (S.D. W. Va. 2001) (rejecting "related to" jurisdiction because the automaker defendants had not made sufficient factual showing that they had potential contribution or indemnity claims against Federal Mogul); Skylark v. Honeywell Int, Inc., No. 01-5069-CIV Graham/Turnoff, slip op. at 7-8 (S.D. Fla. Jan. 25, 2002) (alleged cross-claims asserted by asbestos defendant were "simply too speculative and premature to support removal") Defendants were unable to cite a single example of a contribution or indemnity claim brought against Federal Mogul. Cf. Arnold v. Garlock, Inc., 2001 WL 1669714, at 11 (5th Cir. Dec. 28, 2001) (asbestos defendant Garlock "has never litigated a contribution claim to collection in any of approximately 250, 000 previous asbestos lawsuits in which Garlock was a co-defendant")
IV. Attorney's Fees
Plaintiff seeks costs and attorney's fees under § 1447(c), which provides that "[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 removal." This court has "wide discretion" in deciding whether to award costs and fees under § 1447(c). Moore v. Permanente Med. Group, Inc., 981 F.2d 443, 447 (9th Cir. 1992). Bad faith is not a prerequisite for an award of fees under § 1447(c). Id.
Here, I decline to award plaintiff costs and fees. There is a split of authority over the propriety of removal under these facts.
CONCLUSION
Plaintiff's motion for remand (#7) is granted. The Clerk of the Court shall mail a certified copy of this order to the clerk of the state court.