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Ackerman, et al v. ExxonMobil Corp., No. 12-1103

Decided: August 7, 2013

The Fourth Circuit Court of Appeals affirmed the district court order abstaining from exercising jurisdiction under the Colorado River doctrine in a case brought against Defendants.

In June 2004, Maryland residents filed a putative class action (“the Koch” action) against Defendants in Maryland state court, which was ultimately remanded to the Harford County Circuit Court. The complaint alleged several state law causes of action for the contamination of their properties by gasoline and the gasoline additive methyl tertiary-butyl (“MTBE”) from an Exxon station that Hicks operated. In February 2010, the state-court judge granted Plaintiffs’ request for class certification, but then decertified the class in June 2011. In October 2011, the state-court judge asked the Koch Plaintiffs to file a new action for the former class members so that he could consolidate it with the existing one and thereby adjudicate the claims of the named plaintiffs in Koch as well as the former class members. In November 2011, more than 750 former class members filed a new action (the “Ackerman” action) in the Harford County Circuit Court, alleging the same facts and state law claims as Koch. The court delayed issuing a consolidation order, during which time Defendants removed Ackerman from state court and the Koch Plaintiffs amended their state-court complaint to add the Ackerman plaintiffs. Koch was not removed. The Ackerman Plaintiffs also filed a motion in federal court seeking to remand the case to state court and requesting that the district court abstain under the Colorado River doctrine, which permits federal courts, under exceptional circumstances, to refrain from exercising jurisdiction in deference to pending, parallel state proceedings. The district court denied the remand motion, but granted the motion to abstain. The Defendants appealed, arguing that the district court erred by granting the Plaintiffs’ motion to abstain.

On appeal, the Fourth Circuit asserted that the threshold question under a Colorado River inquiry is whether the pending state and federal suits are parallel. Here, the Defendants challenged the district court’s threshold determination that the Koch action was parallel to Ackerman.  Federal courts may decline to exercise their jurisdiction where denying a federal forum would clearly serve an important countervailing interest. At issue in this case is the form of abstention approved by the Court in Colorado River– abstention in favor of ongoing, parallel state proceedings in cases where “considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation” clearly favor abstention.  The Fourth Circuit provided that state and federal actions are parallel “if substantially the same parties litigate substantially the same issues in different forums.” The Defendants conceded that the Koch action as amended was parallel to the Ackerman action, but not the Ackerman action and the pre-amendment Koch action. The Defendants argued that the amendment itself was void ab initio by operation of 28 U.S.C. 1446(d) and the “expressly authorized” exception to the Anti-Injunction Act, 28 U.S.C. § 2283. Under § 1446(d), removing defendants must promptly provide written notice of the removal to opposing parties and to the state court. After notice is provided, “the State court shall proceed no further unless and until the case is remanded.” The Fourth Circuit Court of Appeals agreed with the Defendants that the statute deprives the state court of further jurisdiction over the removed case and that any post-removal actions taken by the state court in the removed case action are void ab initio. However, 1446(d) speaks only in terms of the removed case and, therefore, deprives the state court of jurisdiction and restricts the state court’s actions only as to the removed case. Therefore, 1446(d) did not render the December 1 amendment of the Koch action void.

The Fourth Circuit Court also found that its conclusion did not change when the Anti-Injunction Act was added to the mix. Here, the Fourth Circuit Court found that the primary purposes of amending Koch was not a fraudulent effort to defeat federal jurisdiction and, therefore, an injunction was not permissible. Even if it were, the Fourth Circuit held that it would not exercise its discretion to enjoin the Koch amendment because enjoining would undermine the important goal of preserving an effective dual system of federal and state courts.  The determination that the Koch amendment was not void effective ended the inquiry into parallelism and the court’s decision to abstain. Accordingly, because the action now pending in state court was the Koch action as amended to include the Ackerman plaintiffs, the district court properly concluded that the actions are parallel for purposes of Colorado River abstention.

Full Opinion

– Sarah Bishop