The Donovan Law Group

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

Posted in Delay Deny Defend, Feinberg, GCCF, Gulf Coast Claims Facility, Hood by renergie on November 16, 2011

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

Hood’s Petition Did Not Initiate a Civil Action and GCCF’s Removal to Federal Court
Was Improper

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.”

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.


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

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