Great Lakes Gas Transmission Ltd. Partnership v. Essar Steel Minnesota, LLC
103 F. Supp. 3d 1000
D. Minnesota
2015

Background

  • Great Lakes Gas Transmission (a limited partnership with a publicly traded MLP partner, TC PipeLines, LP) sued Essar Steel Minnesota (ESML) and affiliated foreign Essar entities for breach of a Transportation Services Agreement (TSA) that incorporated Great Lakes’ FERC-filed tariff (Tariff).
  • Great Lakes alleges ESML failed to pay reservation charges and seeks damages under state-law contract and related theories (veil piercing, joint venture, agency).
  • ESML raised at trial-prep that diversity jurisdiction might be lacking because citizenship of TC PipeLines, LP’s public unitholders was not alleged; parties also disputed whether federal question jurisdiction exists.
  • The Court previously concluded on the merits that defendants breached the TSA; remaining issue is damages and appropriate forum.
  • ESML moved to dismiss for lack of subject-matter jurisdiction; Great Lakes moved to amend to plead federal-question jurisdiction under the NGA; both parties filed motions in limine.
  • The Court considered whether federal jurisdiction exists under diversity (28 U.S.C. § 1332) or federal-question/Grable principles (28 U.S.C. §§ 1331, 1337 and NGA § 717u) and whether amendment was timely.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether diversity jurisdiction exists Great Lakes pleaded diversity; did not address MLP unitholders' citizenship ESML: TC PipeLines, LP’s public unitholders may include Minnesota citizens, destroying complete diversity No — diversity fails because citizenship of all partners/unitholders of an LP/MLP must be considered under Carden and plaintiff conceded likely non‑diversity
Whether the NGA or Tariff creates a federal cause of action (portal one) Great Lakes: NGA/Tariff obligations and filed-tariff status support federal jurisdiction; analogizes to ICA/FCA tariff cases ESML: NGA does not create an express private right and does not compel collection; plaintiff conceded NGA has no express private cause of action NGA does not create an express private cause of action; court declines to resolve whether an implied NGA cause of action exists but proceeds on portal two grounds
Whether a state-law breach claim "necessarily raises" a substantial federal question (Grable portal two) Great Lakes: TSA incorporates federal Tariff; damages element requires construction/application of Limitation of Liability, Force Majeure, and Remedies provisions — federal issues are actually disputed and substantial ESML: Federal issues are defenses or collateral and FERC dismissed complaint; no substantial federal question for plaintiff’s state claims Held for plaintiff on portal two: Count One necessarily raises actually disputed and substantial federal questions because interpretation of multiple Tariff provisions (federal law) is essential to damages; federal forum proper (original jurisdiction under § 1331/1337 and exclusive NGA § 717u applies)
Whether Great Lakes may amend complaint late to add federal-question jurisdiction Great Lakes: federal-question jurisdiction existed all along; should be allowed to amend ESML: Amendment untimely, prejudicial, futile, and fails Rule 16(b) good-cause; amendment would not cure jurisdictional defects Denied: plaintiff failed to show diligence (Rule 16), and amendment would be futile; but court finds federal jurisdiction on the existing pleadings under Grable analysis

Key Cases Cited

  • Carden v. Arkoma Associates, 494 U.S. 185 (1990) (for diversity: citizenship of all partners of a partnership must be considered)
  • Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (1983) (distinguishing two "portals" for federal-question jurisdiction)
  • Grable & Sons Metal Prods. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005) (federal-question jurisdiction where state claim necessarily raises a substantial, disputed federal issue)
  • Gunn v. Minton, 568 U.S. 251 (2013) (substantiality inquiry asks whether issue is important to the federal system as a whole)
  • Louisville & Nashville R.R. Co. v. Rice, 247 U.S. 201 (1918) (Court held suit to recover tariff charges can present federal question jurisdiction)
  • Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533 (1983) (federal-question jurisdiction in tariff-enforcement context)
  • Pan American Petroleum Corp. v. Superior Court of Delaware, 366 U.S. 656 (1961) (statute’s exclusive-jurisdiction clause is not itself a generator of jurisdiction)
  • Caterpillar Inc. v. Williams, 482 U.S. 386 (1987) (plaintiff is master of the complaint; federal defenses cannot create federal-question jurisdiction)
  • Vaden v. Discover Bank, 556 U.S. 49 (2009) (compulsory federal counterclaims do not create "arising under" jurisdiction)
  • MCI Telecommunications Corp. v. Garden State Inv. Corp., 981 F.2d 385 (8th Cir. 1992) (discusses filed-tariff claims and federal jurisdiction in tariff contexts)
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