Opinion
Case No. 3:22-cv-00041-SMR-SBJ
2022-10-24
MUSCATINE-LOUISA DRAINAGE DISTRICT NO. 13, Plaintiff, v. DAKOTA, MINNESOTA & EASTERN RAILROAD CORPORATION, d/b/a/ Canadian Pacific, Defendant.
Patrick L. Woodward, Nicholas James Huffmon, McDonald Woodward & Carlson PC, Davenport, IA, for Plaintiff. Brett Richard Marshall, Richard A. Davidson, Lane & Waterman LLP, Davenport, IA, Joshua Poertner, Pro Hac Vice, Timothy M. Kelley, Pro Hac Vice, Stinson LLP, Minneapolis, MN, for Defendant.
Patrick L. Woodward, Nicholas James Huffmon, McDonald Woodward & Carlson PC, Davenport, IA, for Plaintiff. Brett Richard Marshall, Richard A. Davidson, Lane & Waterman LLP, Davenport, IA, Joshua Poertner, Pro Hac Vice, Timothy M. Kelley, Pro Hac Vice, Stinson LLP, Minneapolis, MN, for Defendant. ORDER ON MOTION TO REMAND STEPHANIE M. ROSE, CHIEF JUDGE
Before the Court is a Motion to Remand by Plaintiff Muscatine-Louisa Drainage District No. 13. Plaintiff seeks to remand this case back to state court, asserting that the notice of removal filed by Defendant Dakota, Minnesota & Eastern Railroad Corporation ("DM&E") was untimely and the amount in controversy for diversity jurisdiction is not satisfied. The parties requested oral argument, but the Court finds it can resolve the Motion without the benefit of one. See LR 7(c). For the reasons discussed below, the Motion to Remand is DENIED. [ECF No. 4].
I. BACKGROUND
The facts in this Section are drawn from Defendant's Notice of Removal and accompanying documents, which include Plaintiff's amended state court petition and its responses to Defendant's interrogatories during that proceeding. [ECF No. 1-1-3]. The factual background is supplemented by the Iowa Supreme Court's description in Dakota, Minn. & E. R.R. v. Iowa Dist. Ct. for Louisa Cnty., 898 N.W.2d 127 (Iowa 2017), overruled by TSB Holdings, L.L.C. v. Bd. of Adjustment for City of Iowa City, 913 N.W.2d 1 (Iowa 2018) and Chi., Rock Island & Pac. R.R. v. Lynch, 163 Iowa 283, 143 N.W. 1083, 1084 (1913). This recitation is for illustrative purposes and do not implicate the Court's disposition of the merits or Motion. It should not be considered binding in any way as this litigation proceeds.
A. Factual Background
The dispute at issue in this case stretches back more than a century. DM&E owns a railroad right-of-way and a bridge ("Bridge 110"). The right-of-way generally runs east to west, passing through Muscatine County and Louisa County in eastern Iowa. Bridge 110 was constructed in Louisa County by a previous railroad company to allow railroad tracks to cross over Whiskey Creek. Whiskey Creek is an east-flowing watercourse which runs along the north side of the right-of-way, under Bridge 110, and then south into the Muscatine Slough.
The Iowa Supreme Court described the Muscatine Slough as "a closed drainage system maintained" by Plaintiff. It is fourteen miles long, stretching from the City of Muscatine to a Louisa County pumping station. "It is fed by subditches and by creeks such as Whiskey Creek carrying runoff from nearby farm and timberland." DM&E, 898 N.W.2d at 130 n.3.
Whiskey Creek has a "steep grade" as it flows out of the Mississippi River bluffs. Because of this, the creek—particularly during heavy rainfall—carries a lot of sediment and debris that plugs the channel under Bridge 110, resulting in flooding and damage to fields north of the bridge. A dike constructed to reroute water under Bridge 110 has failed several times, causing water and debris to bypass the bridge until it drained into the Slough. The silt and debris that flows through Whiskey Creek ends up in the Muscatine Slough, inhibiting the flow of water into and through the waterway. This plugs the Muscatine Slough, which causes flooding and damage to crops north of the obstructions in the Slough. Plaintiff alleges it is required to clear the obstructions to allow water to empty into the Slough.
B. Procedural Background
This case was originally filed by Plaintiff in the Iowa District Court for Louisa County on June 29, 2021. [ECF No. 1-3 at 3] (Original State Court Petition). In its initial state court petition, Plaintiff asserted that Defendant is liable for nuisance, failure to maintain a watercourse, and obstruction of the free flow of waters. Id. at 5-7. It requested injunctive relief, along with compensatory and punitive damages, but monetary damages were not specified in the initial petition. Id. at 8.
Defendant then served interrogatories on Plaintiff, requesting production of documents concerning the calculation of alleged damages. [ECF No. 11-3 at 10-21]. On May 17, 2022, Plaintiff requested a 33-day extension to respond to the interrogatories. [ECF No. 1-3 at 62]. Defendant agreed to the extension but conditioned its consent on Plaintiff responding to the specific interrogatories pertaining to damages by May 27, 2022, and that it disclose its damages as required by the Iowa Rules of Civil Procedure. Id. at 63-64; see Iowa R. Civ. P. 1.500(1)(a)(3). Defendant represents that Plaintiff did not respond to its letter conditioning an extension on Plaintiff's response to the identified interrogatories. [ECF No. 11-1 ¶ 7] (Poertner Decl.). On June 1, 2022, Defendant filed a motion to compel in state court. [ECF No. 1-3 at 59-61]. Plaintiff served its answers to Defendant's interrogatories on June 9, 2022. [ECF No. 11-1 ¶ 3]. Plaintiff's responses to the interrogatories disclaimed that it was seeking to recoup past damages but only sought relief requiring "that DM&E open the area under Bridge 110 . . . [and] bear the costs of opening the channel of Whiskey Creek and all costs associated with the flow of Whiskey Creek south of Bridge 110." [ECF No. 11-3 at 21, 23].
Plaintiff filed an amended state court petition on June 17, 2022, maintaining substantially the same claims as the initial petition. [ECF No. 1-3 at 92-94]. The amended petition does not include a prayer for monetary damages but only seeks injunctive relief. Id. at 94-95. It contains the same injunctive language as the initial state court petition, specifically requesting an injunction "requiring the Defendant to return watercourse drainage system to the condition in which it existed prior to the Defendant's actions; a Permanent Injunctive Order, enjoining the Defendant from future behavior that will result in the altering of the ordinary watercourse drainage system . . . [.]" See id. at 7-8, 95. On June 28, 2022, Defendant filed a Notice of Removal. [ECF No. 1]. Plaintiff moved to remand the case back to state court on June 30, 2022. [ECF No. 4].
II. ANALYSIS
Plaintiff sets forth two reasons why the Court does not have subject matter jurisdiction to hear this case, thus making removal improper. First, it argues that the amount in controversy is not satisfied. More specifically, Plaintiff contends Defendant has not proven the amount in controversy by a preponderance of the evidence. Second, even if the amount in controversy has been established by Defendant, Plaintiff claims that removal is untimely because it did not occur within the 30-day deadline set by 28 U.S.C. § 1446(b)(1).
A. Was Removal Proper?
1. Removal and Diversity Jurisdiction Generally
A civil lawsuit may be removed from state to federal court if it could have been originally filed in federal court. Bell v. Hershey Co., 557 F.3d 953, 956 (8th Cir. 2009). To have original jurisdiction over a case, a federal court must have subject matter jurisdiction. Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 764 (8th Cir. 2001) ("It is axiomatic that a court may not proceed at all in a case unless it has jurisdiction."). Because Plaintiff brings claims pursuant to state law, the Court can only exercise jurisdiction known as "diversity jurisdiction." 28 U.S.C. § 1332.
Diversity jurisdiction requires that the parties be "citizens of different States" and the amount in controversy exceed $75,000. Id. § 1332(a). The citizenship requirement is undisputedly met here. Plaintiff is a drainage district organized under Iowa law and is a political subdivision of the State of Iowa. [ECF No. 1-3 at 90]. Defendant is a Delaware corporation with its principal place of business located in Minneapolis, Minnesota. Id. It is the second element of diversity jurisdiction, the amount in controversy, which is at issue in this case.
Under the diversity jurisdiction statute, "the amount in controversy must exceed [$75,000.00]." Larkin v. Brown, 41 F.3d 387, 389 (8th Cir. 1994) (emphasis in original). "The party invoking federal jurisdiction must prove the requisite amount by a preponderance of the evidence" which, in this case, is Defendant. State of Mo. ex rel. Pemiscot Cnty. v. W. Sur. Co., 51 F.3d 170, 173 (8th Cir. 1995).
2. Measuring the Amount in Controversy
In an action seeking injunctive relief, "it is well established that the amount in controversy is measured by the value of the object of the litigation." James Neff Kramper Fam. Farm P'ship v. IBP, Inc., 393 F.3d 828, 833 (8th Cir. 2005) (quoting Hunt v. Wash. State Apple Advert. Comm'n, 432 U.S. 333, 347, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)). When a plaintiff does not seek monetary damages, courts are to measure the amount in controversy by the "value to the plaintiff of the right that is in issue." Usery v. Anadarko Petroleum Corp., 606 F.3d 1017, 1018 (8th Cir. 2010). This is known as the "plaintiff's viewpoint rule." Id. at 1019. Defendant must satisfy its burden to prove the amount in controversy by a preponderance of the evidence. Bell, 557 F.3d at 958. This can be accomplished through specific factual allegations together with "reasonable deductions, reasonable inferences, or other reasonable extrapolations." Waters v. Ferrara Candy Co., 873 F.3d 633, 636 (8th Cir. 2017) (citation omitted).
In support of its notice of removal, Defendant submitted an affidavit by Scott Paradise. [ECF No. 1-2] (Paradise Decl.). Paradise is an engineer for DM&E. Id. ¶ 1. He opined that "the expense of opening the channel of Whiskey Creek, and creating a channel for and maintaining the flow of Whiskey Creek south of Bridge 110 . . . is far greater than $75,000." Id. ¶ 6. Defendant argues that "presumably" Plaintiff will need to reroute Whiskey Creek itself if it does not obtain the requested injunction. [ECF No. 11 at 16].
Plaintiff correctly contends this evidence is insufficient to carry Defendant's burden. Paradise's declaration refers only to the cost of complying with the requested injunction, rather than the value of such injunction from the perspective of Plaintiff. The United States Court of Appeals for the Eighth Circuit has steadfastly maintained that the "plaintiff's viewpoint" is the proper rule to assess the amount in controversy for non-monetary claims. See Usery, 606 F.3d at 1018 ("We have held repeatedly that in a suit for declaratory or injunctive relief the amount in controversy is the value to the plaintiff of the right that is in issue."); Smith v. Am. States Preferred Ins. Co., 249 F.3d 812, 813 (8th Cir. 2001) (holding that "circuit precedent requires the district court to rely solely on the plaintiff's viewpoint in meeting the requisite amount."); Burns v. Mass. Mut. Life Ins. Co., 820 F.2d 246, 248 (8th Cir. 1987) ("[T]he amount in controversy in a suit for injunctive relief is measured by the value to the plaintiff of the right sought to be enforced."). It is also not at all obvious that Plaintiff would undertake the costs of construction to reroute Whiskey Creek in absence of an injunction. The legal dispute over this issue has persisted for over 100 years. [ECF No. 4 ¶ 1] ("The underlying facts of the present dispute stretch back well over a century, and the matter has been litigated in Iowa courts multiple times."). Defendant's presumption that Plaintiff would undertake the same construction project if it did not obtain an injunction is speculative. Waters, 873 F.3d at 636 (holding "the amount in controversy is not established by a preponderance of the evidence if a court must resort to conjecture, speculation, or star gazing." (citation and internal quotations omitted)).
Defendant also argues that the value of the injunction can be established by the avoidance of costs on Plaintiff if an injunction were granted. Plaintiff wrote in response to an interrogatory that one of its employees must engage in "continuous" cleaning of the ditch and Slough to remove the silt and dirt from the channel. According to Plaintiff, this undertaking amounts to "near full time work" by the employee. [ECF No. 11-3 at 11].
In a previous case pertaining to this dispute, an employee tasked with the duty of clearing the Whiskey Creek channel was deposed. He stated his annual salary was approximately $42,000.00. [ECF No. 11-6 at 3] (Wolf Depo.). In addition to the employee's salary, Plaintiff must bear the costs of gasoline and equipment to allow its employee to clear the clogged channel. Defendant argues the Court can use that as a basis to extrapolate the value of the injunction to Plaintiff. The Court agrees that this is sufficient to demonstrate that the value of an injunction to Plaintiff would exceed $75,000. This conclusion is supported by the fact Plaintiff has already asserted in this case that "damages have been constant and ongoing, consistently now and into the future." [ECF No. 11-3 at 10]. There is nothing in the record indicating this problem with Whiskey Creek would abate in the future, and Plaintiff's request for an injunction indicates that it believes this problem will persist absent the construction of a re-routed channel. Accordingly, the amount in controversy requirement is met and subject matter jurisdiction is established.
B. Was Removal Timely?
Federal law provides two time limits to remove a case to federal court. Generally, a defendant must file a notice of removal within 30 days after service of the initial state court pleading. 28 U.S.C. § 1446(b)(1). If the initial state court pleading does not contain a damages calculation, or allow a defendant to reasonably determine the amount in controversy, removal is permitted once a defendant receives a filing that allows it to ascertain that a case is removable. Id. § 1446(b)(3).
Plaintiff urges that removal was not timely because the initial petition in this case was filed on June 29, 2021 and Defendant was served on July 2, 2021. [ECF No. 4 ¶ 16]. Defendant did not file its notice of removal until June 28, 2022. [ECF No. 1]. Plaintiff rejects Defendant's contention that it was unable to ascertain damages until Plaintiff provided responses to its interrogatories which outlined the specifics of the requested injunction. It argues the initial petition provided Defendant with all the information it needed to determine if the case could be removed. According to Plaintiff, the basis for removal was readily ascertainable at the time of initial filing, so the 30-day time limit applies.
Defendant contends that the initial pleading did not expressly disclose the amount in controversy, so the case was removable for up to one year after filing. 28 U.S.C. § 1446(b)(3) provides that a case can be removed upon service 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." Id. Defendant argues that the "other paper" was Plaintiff's responses to the interrogatories.
The Eighth Circuit follows a clear and unambiguous rule regarding when the 30-day time limit under § 1446(b)(1) applies. The 30-day time period runs only if a complaint "explicitly discloses [that] the plaintiff is seeking damages in excess of the federal jurisdictional amount." In re Willis, 228 F.3d 896, 897 (8th Cir. 2000). A defendant is not required to " 'glean' the amount in controversy" from the plaintiff's complaint. Knudson v. Sys. Painters, Inc., 634 F.3d 968, 974 (8th Cir. 2011). The Willis rule serves to "promote[ ] certainty and judicial efficiency by not requiring courts to inquire into what a particular defendant may or may not subjectively know" and disincentivizes plaintiffs from "disguising the amount of damages until after the thirty-day time limit has run to avoid removal to federal court." Willis, 228 F.3d at 897 (citation omitted).
Neither the initial state court petition, nor the amended petition, discloses any amount in controversy. Only when Defendant received Plaintiff's responses to the interrogatories was it served with "other paper[s]," allowing it to determine whether the case could be removable. Although the Court finds that Defendant did not satisfy its amount in controversy burden through its expert, it did establish the amount in controversy through evidence that Plaintiff requires a full-time employee to clear the channel. This was not reflected in the initial pleadings but only revealed in answers to interrogatories. Larkin, 41 F.3d at 389 ("In determining the amount in controversy . . . answers to interrogatories serve as the equivalent of affidavits to either support or defeat diversity jurisdiction."). To comply with the Eighth Circuit's "bright-line approach," a pleading must "set forth a sufficiently detailed and unequivocal statement from which the defendant may unambiguously ascertain that . . . jurisdictional requirements have been satisfied." Gibson v. Clean Harbors Env't Servs., Inc., 840 F.3d 515, 520 (8th Cir. 2016). This rule serves to "discourage[ ] the use of indeterminate allegations by plaintiffs in their filings and other papers, and it eliminates the incentive for defendants to file protective removals." Id. Otherwise, plaintiffs would not be incentivized to "specify estimated damages early in litigation." Id. (quoting Romulus v. CVS Pharmacy, Inc., 770 F.3d 67, 75 (1st Cir. 2014).
The course of litigation in state court appears to illustrate a desire by Plaintiff to avoid removal. Plaintiff sought an extension to respond to Defendant's interrogatories on May 17, 2022, an ordinary request during discovery. [ECF No. 1-3 at 62]. What was unordinary about the request was the length—33 days. This would have extended Plaintiff's deadline to more than one year after the filing of the initial state court petition. Defendant conditionally granted the extension provided that Plaintiff respond to the two specific interrogatories which would provide it with information about the amount in controversy and whether the case could be removed. [ECF No. 1-3 at 63-64]. Plaintiff did not respond to this request and only responded to Defendant's interrogatories on June 9, 2022, one day before a hearing on a motion to compel. [ECF No. 11-3 at 1-23]. At the state court hearing, Plaintiff disclaimed an interest in monetary damages, and then filed an amended petition on June 17, 2022. [ECF No. 1-3 at 90-97]. Defendant then removed the case on June 28, 2022, a few days before the one-year deadline. [ECF No. 1].
Defendant argues that this request was intended to delay "answer[ing] discovery until one day after the removal deadline." However, Defendant was not served until July 2, 2022, which would make the removal deadline July 3, 2022—one year and one day after service. See 28 U.S.C. § 1446(b) ("The notice of removal of a civil action . . . shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading . . . [.]").
Discouraging this type of litigation strategy is precisely the purpose behind the Eighth Circuit's clear rule on removal. This reasoning is shared by other Circuits. See, e.g., Walker v. Trailer Transit, Inc., 727 F.3d 819, 823-24 (7th Cir. 2013) (holding "[i]t's clear that the 30-day removal clock is triggered only by the defendant's receipt of a pleading or other litigation paper facially revealing that the grounds for removal are present," and collecting cases) (emphasis omitted); Moltner v. Starbucks Coffee Co., 624 F.3d 34, 38 (2d Cir. 2010) ("We join the Eighth Circuit . . . in holding that the removal clock does not start to run until the plaintiff serves the defendant with a paper that explicitly specifies the amount of monetary damages sought."); Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 695, 697 (9th Cir. 2005) (joining other circuits by adopting a bright line rule for "indeterminate pleadings," a rule which aims to "bring[ ] certainty and predictability to the process and avoid[ ] gamesmanship in pleading.") (footnote omitted).
The Eighth Circuit has strictly interpreted this rule. In one case, it indicated in dicta that § 1446(b)(1)'s time limit does not apply to actions for equitable relief at all. See Reece v. Bank of N.Y. Mellon, 760 F.3d 771, 774 (8th Cir. 2014) (noting that a defendant "was not obligated to remove to federal court within the thirty-day period" because the complaint sought only equitable relief); Knudson, 634 F.3d at 974 (finding that the complaint "did not explicitly state the amount in controversy," thus it "did not trigger the running of § 1446(b)'s thirty-day deadline.").
III. CONCLUSION
For the foregoing reasons, Plaintiff's Motion to Remand is DENIED. [ECF No. 4].
IT IS SO ORDERED.