State of Mississippi v. Gulf Coast Claims Facility and Kenneth Feinberg: Case Is Remanded to State Court

State of Mississippi v. Gulf Coast Claims Facility and Kenneth Feinberg:
Case Is Remanded to State Court
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Hood’s Petition Did Not Initiate a Civil Action and GCCF’s Removal to Federal Court
Was Improper
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OCSLA Does Not Apply and Is Not a Proper Basis for Federal Jurisdiction

Tampa, FL (November 16, 2011) – On November 15, 2011, the United States District Court for the Southern District of Mississippi remanded the suit filed on July 12, 2011 by Attorney General Hood on behalf of the State of Mississippi against the Gulf Coast Claims Facility and Kenneth Feinberg (hereinafter collectively “GCCF”) in Hinds County Chancery Court. Hood had filed the suit in an effort to compel GCCF’s compliance with the subpoena duces tecum he had issued in February 2011 on the GCCF pursuant to the authority vested in him by the Mississippi Consumer Protection Act.

In his Motion to Remand, Hood argued that GCCF’s refusal to comply with his subpoena leaves him “unable to determine whether GCCF has been or is in violation of the Consumer Protection Act.” Hood also sought costs and attorneys’ fees associated with bringing the Petition.

Notably, in his Petition to the Hinds County Chancery Court, Hood claimed explicitly that he “brought this action solely under state law and not under federal law; and was not asserting therein any claims arising under federal law,” and he “specifically and expressly denied and disclaimed asserting any such federal claims in the Petition.”

On August 11, 2011, GCCF removed the case to federal court pursuant to Title 28, Sections 1441 and 1446 of the United States Code. Specifically, GCCF claimed that original jurisdiction lies with the federal court by virtue of the Outer Continental Shelf Lands Act (“OCSLA”). Hood moved to remand the case to state court on September 12, 2011, but not before GCCF moved on August 30, 2011, for a stay pending a decision by the Judicial Panel on Multidistrict Litigation regarding whether to transfer this case.

Motion to Stay
As an initial matter, the Southern District of Mississippi Court declined to grant GCCF’s motion for a stay despite the fact that this case was the subject of a MDL conditional transfer order. Until a transfer to multidistrict litigation has become final, a district court’s jurisdiction over pretrial matters is in no way impeded. And when a litigant improperly removes a case, the limited jurisdiction of federal courts is impermissibly invoked, resulting in an undue delay of a state court’s rightful duty to address a case’s merits.

Motion to Remand
Hood offers several arguments in favor of a remand to state court, but the most compelling is his first: that the Petition filed by Hood in Hinds County Chancery Court does not amount to a “civil action,” as that term is used in the federal removal statute, and therefore that GCCF is not entitled to bring the case to federal court.

Generally speaking, when a plaintiff is permitted to bring his case in either state or federal court but chooses the former, the defendant may opt to have a federal court hear the case instead. This principle is contained in Title 28, Section 1441 of the United States Code, which provides that except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

Clearly, Section 1441 permits removal only of “any civil action,” and in Hood’s view, the matter at hand is not such a creature. Hood argued that the subpoena at the center of his Petition “is a pre-litigation investigative tool, and its enforcement in chancery court is not a ‘civil action’ ……”

In 1998, Chief Judge Butler of the Southern District of Alabama held that a petition filed pursuant to Rule 27 of the Alabama Rules of Civil Procedure, which “permits a party to . . . obtain discovery before an action is commenced,” was not itself a civil action. That Court observed that Alabama’s Rule 27 “provides a limited means by which potential plaintiffs (and their attorneys) . . . can examine evidence before actually deciding whether they have a reasonable basis for filing an action.” Such a petition, in that Court’s view, “is a request for discovery, nothing more.”

Hood’s Petition did not seek to prosecute a claim or other cause of action; it merely sought an order requiring production of evidence that may ultimately be used in the prosecution of a claim. As such, it does not amount to a civil action.

In 1994, the Fifth Circuit rejected a plaintiff’s argument that the 30-day removal period began running at the filing of a bill of discovery rather than at the filing of the complaint because the latter was “the first document stating a claim . . . .” The removal statute permits a defendant to invoke the federal courts’ jurisdiction only “after receipt by the defendant . . . of a copy of the initial pleading setting forth the claim for relief . . . .” Therefore, in the Fifth Circuit’s apparent view, removal cannot occur until a complaint has been filed.

According to Rule 3 of the Federal Rules, “[a] civil action is commenced by filing a complaint with the court.” Whatever can be said of the filing by which Hood instituted this matter, it cannot be properly characterized as a complaint; it raises no claim and seeks no damages.

The threshold question before the Southern District of Mississippi Court was whether the matter has yet developed into a full-fledged “civil action.” The Court held, “Precedent commands the conclusion that it has not.”

OCSLA
Judge Reeves also found GCCF’s argument that Hood has unwittingly stated a claim under OCSLA was likewise not compelling. According to OCSLA, federal courts enjoy subject-matter jurisdiction “of cases and controversies arising out of, or in connection with (A) any operation conducted on the outer Continental Shelf which involves exploration, development, or production of the minerals, of the subsoil and seabed of the outer Continental Shelf . . . .” The Fifth Circuit has written that it “applies a broad ‘but-for’ test to determine whether a cause of action arises under OCSLA.” And in GCCF’s view, because it would not exist but for the Deepwater Horizon’s explosion, this case (and, presumably, any other case to which it could ever be a party) necessarily implicates OCSLA.

The analysis of the scope of OCSLA by Judge Reeves is instructive. GCCF is correct that the Fifth Circuit views “the jurisdictional grant contained in U.S.C. § 1349(b)(1) as very broad.” But to view OCSLA’s scope so far-reaching as does GCCF would render GCCF’s every potentially actionable decision a federal case, be it related to the claims process at hand or a GCCF employee’s car wreck en route to the office.

Neither OCSLA’s plain language nor the Fifth Circuit’s decisions interpreting it contain any indication that matters so far removed as these – occurring not on the outer Continental Shelf but doing business in Dublin, Ohio, and aimed not at the “exploration, development, or product of . . . minerals” but rather at “developing and publishing standards for recoverable claims” related to the Deepwater Horizon spill – fall within the purview of Section 1349(b)(1), which addresses “any operation conducted on the outer Continental Shelf . . . .” Plainly, although GCCF’s activities amount [to] an operation, that operation is not conducted “on the outer Continental Shelf.” Therefore, OCSLA does not apply and is not a proper basis for federal jurisdiction.

Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and Selmer M. Salvesen v. Kenneth R. Feinberg, et al.
These are the only two cases of their kind filed in any court in the country. In each case, the complaint alleges, in part, that Defendants Kenneth R. Feinberg, Feinberg Rozen, LLP, and GCCF misled Plaintiffs by employing a “Delay, Deny, Defend” strategy against them. This strategy, commonly used by unscrupulous insurance companies, is as follows: “Delay payment, starve claimant, and then offer the economically and emotionally-stressed claimant a miniscule percent of all damages to which the claimant is entitled. If the financially ruined claimant rejects the settlement offer, he or she may sue.”

The Pinellas and Salvesen plaintiffs do not assert any claims under OCSLA or OPA and rely solely on state law. Plaintiffs’ allegation that Defendants are in violation of OPA is merely evidence of, at the very least, Defendants’ negligence.

Plaintiffs in Pinellas and Salvesen allege:
(a) BP is responsible for the oil spill incident; and
(b) Feinberg, et al. (independent contractors), via employment of their “Delay, Deny, Defend” strategy, are responsible for not compensating and thereby financially ruining the Pinellas and Salvesen plaintiffs and over 100,000 other victims.

Neither the Pinellas nor the Salvesen case has been dismissed by the MDL 2179 Court. Plaintiffs in both cases look forward to eventually having their cases remanded to Florida state court where they will also be able to hold Defendants accountable.

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BP Oil Spill Litigation Quote of the Year:

“GCCF is correct that the Fifth Circuit views ‘the jurisdictional grant contained in 43 U.S.C. § 1349(b)(1) as very broad.’  But to view the Outer Continental Shelf Lands Act’s (“OCSLA’s”) scope so far-reaching as does GCCF would render GCCF’s every potentially actionable decision a federal case, be it related to the claims process at hand or a GCCF employee’s car wreck en route to the office.”

Hon. Carlton W. Reeves
United States District Court Judge
Southern District of Mississippi

Florida Plaintiffs Vow to Hold Kenneth R. Feinberg, Feinberg Rozen, LLP, and GCCF Accountable for “Delay, Deny, Defend” Strategy

Florida Plaintiffs Vow to Hold Kenneth R. Feinberg, Feinberg Rozen, LLP,
and GCCF Accountable for “Delay, Deny, Defend” Strategy
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Plaintiffs Refile Motions to Remand With MDL 2179 Court

Tampa, FL (November 10, 2011) – Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and  Salvesen v. Kenneth R. Feinberg, et al. were originally filed in Florida state court. Since the Judicial Panel on Multidistrict Litigation (“JPML”) has no power over cases pending in state courts, Defendants removed each case to federal court (“Middle District of Florida Court”). Defendants removed each case to federal court solely for the purpose of being able to subsequently file a “tag-along” notice with the JPML for the hopeful transfer of the cases to MDL 2179 in the United States District Court for the Eastern District of Louisiana. A Motion to Remand to State Court was filed by Plaintiffs in each case. Each case was transferred to MDL 2179 by the JPML before the Middle District of Florida Court determined the threshold jurisdictional issue: whether removal from state court was proper.

Earlier today, Plaintiffs’ counsel refiled the Pinellas and Salvesen motions to remand with the MDL 2179 Court.

Background
In order to efficiently manage MDL 2179, the Court consolidated and organized the various types of claims into several “pleading bundles.” The “B1” pleading bundle includes all claims for private or “non-governmental economic loss and property damages.” There are in excess of 100,000 individual claims encompassed within the “B1″ bundle.

On January 12, 2011, the MDL 2179 Court issued PTO No. 25, in order to clarify “the scope and effect” of the “B1″ bundle Master Complaint. The Court held that any individual plaintiff who is a named plaintiff in a case that falls within pleading bundle “B1″ “is deemed to be a plaintiff in the “B1″ Master Complaint.” Also, “the allegations, claims, theories of recovery and/or prayers for relief contained within the pre-existing petition or complaint are deemed to be amended, restated, and superseded by the allegations, claims, theories of recovery, and/or prayers for relief in the respective “B1″ Master Complaint(s) in which the Defendant is named.”

“B1″ Master Complaint
In the “B1″ Master Complaint, the Plaintiffs’ Steering Committee (“PSC”) alleged claims under general maritime law, the Oil Pollution Act of 1990 (“OPA”), 33 U.S.C. § 2701, et seq., and various state laws. Under general maritime law, PSC alleged claims for negligence, gross negligence, and strict liability for manufacturing and/or design defect. Under various state laws, PSC alleged claims for nuisance, trespass, and fraudulent concealment, and also alleged a claim for strict liability under the Florida Pollutant Discharge Prevention and Control Act, Fla. Stat.
§ 376.011, et seq. Additionally, PSC sought punitive damages under all claims and requested declaratory relief regarding any settlement provisions that purport to affect the calculation of punitive damages.

On August 26, 2011, the MDL 2179 Court granted in part Defendants’ Motions to Dismiss the “B1″ Master Complaint. The Court ruled: (a) Admiralty jurisdiction is present because the alleged tort occurred upon navigable waters of the Gulf of Mexico, disrupted maritime commerce, and the operations of the vessel bore a substantial relationship to traditional maritime activity. With admiralty jurisdiction comes the application of substantive maritime law; (b) State law, both statutory and common, is preempted by maritime law, notwithstanding OPA’s savings provisions. All claims brought under state law are dismissed; and (c) General maritime law claims that do not allege physical damage to a proprietary interest are dismissed under the Robins Dry Dock rule, unless the claim falls into the commercial fishermen exception. In re Oil Spill by the Rig Deepwater Horizon in the Gulf of Mexico, on April 20, 2010, – - F. Supp. 2d – -, 2011 WL 3805746 (Aug. 26, 2011 E.D. La.).

Pinellas, et al. v. Feinberg, et al. and Salvesen v. Feinberg, et al.
Pinellas Marine Salvage, Inc., et al. v. Kenneth R. Feinberg, et al. and Selmer M. Salvesen v. Kenneth R. Feinberg, et al. are the only two cases of their kind filed in any court in the country. In each case, the complaint alleges, in part, that Defendants Kenneth R. Feinberg, Feinberg Rozen, LLP, and Gulf Coast Claims Facility (“GCCF”) misled Plaintiffs by employing a “Delay, Deny, Defend” strategy against them. This strategy, commonly used by unscrupulous insurance companies, is as follows: “Delay payment, starve claimant, and then offer the economically and emotionally-stressed claimant a miniscule percent of all damages to which the claimant is entitled. If the financially ruined claimant rejects the settlement offer, he or she may sue.”

Both cases, originally filed in Florida state court, are brought by Plaintiffs under the following seven identical causes of action: (a) Gross Negligence; (b) Negligence; (c) Negligence Per Se; (d) Fraud; (e) Fraudulent Inducement; (f) Promissory Estoppel; and (g) Unjust Enrichment. Defendants in both cases are the same, with the exception that William G. Green, Jr. (“Overseer” of all seafood claims for Defendant GCCF in the State of Florida and “Liaison” to GCCF who is in charge of implementing Defendants’ “Delay, Deny, Defend” strategy) has also been named as a defendant in the Salvesen case.

Plaintiffs do not assert any claims under OPA and rely solely on state law. Plaintiffs’ allegation that Defendants are in violation of OPA is merely evidence of, at the very least, Defendants’ negligence.

BP is responsible for the oil spill incident. Feinberg, et al. (independent contractors), via employment of their “Delay, Deny, Defend” strategy, are responsible for not compensating and thereby financially ruining the Pinellas and Salvesen plaintiffs and over 100,000 other victims.

The Pinellas and Salvesen plaintiffs, and all victims of the BP oil spill, continue to suffer damages from three separate sources: (a) once from the oil spill, the environmental and economic damages of which have devastated their way of life; (b) again by being left in financial ruin as a direct result of Defendants’ tortious acts; and (c) a third time for daring to demand justice, which will consume their time, energy and hopes for years to come if they are held hostage by protracted litigation.

The passage of time is the defendant’s best friend. Memories fade, witnesses are more difficult to locate, and plaintiffs lose the desire to continue to fight and either “move on” or settle for less. By declining to permit formal discovery on Kenneth R. Feinberg and the GCCF, the MDL 2179 Court is ensuring that the defendants will not be held accountable and, more importantly, the claimants-turned-plaintiffs will not be fully compensated for damages.

Discovery on Feinberg/GCCF and the associated pressure of a trial are required in order exert pressure on the parties to negotiate a settlement which reflects the true value of the claims and not one which focuses on minimizing the liability of Feinberg Rozen, LLP, Feinberg/GCCF, and the responsible parties.

Neither the Pinellas nor the Salvesen case has been dismissed by the MDL 2179 Court. Plaintiffs in both cases look forward to eventually having their cases remanded to Florida state court where they will be able to hold Defendants accountable.