16 FRONT STREET, L.L.C.; C. RICHARD COTTON v. MISSISSIPPI SILICON, L.L.C.; GARY C. RIKARD, Executive Director, Mississippi Department of Environmental Quality, In His Official Capacity and As Executive Director of the Mississippi Environmental Quality Permit Board
No. 16-60050
United States Court of Appeals, Fifth Circuit
March 30, 2018
Lyle W. Cayce, Clerk
Plaintiffs-Appellants,
v.
Defendants-Appellees.
Appeal from the United States District Court for the Northern District of Mississippi
Before CLEMENT, PRADO, and OWEN, Circuit Judges.
16 Front Street, LLC and Richard Cotton (collectively, Front Street) filed a citizen suit under the Clean Air Act (CAA),
I
The CAA prohibits construction of any “major emitting facility” unless the requirements of the Prevention of Significant Deterioration (PSD) Program are met.1 The PSD program requires that “a permit has been issued for such proposed facility
This court has previously described the history and intent of the CAA‘s PSD program.4 Importantly, the CAA makes “the States and the Federal Government partners in the struggle against air pollution.”5 Though “[s]tates have the primary role in administering and enforcing the various components of the PSD program[,]’ . . . Congress has set forth explicit substantive and procedural requirements that must be met prior to the construction of any major emitting facility.”6 States must design a plan for the enforcement and implementation
In August 2013, Mississippi Silicon applied to MDEQ for a PSD permit to construct a silicon metal manufacturing plant in Burnsville, Mississippi. MDEQ issued a draft permit, making it available for public notice and comment by posting it on the MDEQ website on October 23, 2013. The following day, it published a notice of the comment period in a local paper, soliciting public comments through November 22, 2013. This notice advised that a public hearing would “be held if the Permit Board finds a significant degree of public interest.” MDEQ also made certain materials relating to the permit available at the Burnsville Public Library. Only the EPA and United States Department of Agriculture commented on the draft permit. After the comment period ended, MDEQ issued a final permit for the Burnsville Plant, which the Mississippi Permit Board voted to accept in December of 2013.
Front Street filed this suit on September 29, 2014 under the citizen suit section of the CAA,
Front Street moved for a temporary restraining order and preliminary injunction. The district court denied the restraining order due to uncertainty about subject matter jurisdiction. The court called for additional briefing on subject matter jurisdiction, and pointed out that MDEQ was “noticeably absent” from the proceedings and that it was unclear what relief could be obtained if MDEQ were not a party.
Four months after filing, Front Street amended the complaint joining Gary C. Rikard, in his official capacity as Executive Director of MDEQ and its Permit Board, as an additional defendant. The amended complaint asserted that there was jurisdiction over the claim against MDEQ under
The district court dismissed Front Street‘s claim against Mississippi Silicon for lack of subject matter jurisdiction after determining that the claim did not meet the requirements of the CAA‘s citizen suit section. The court later dismissed without prejudice the claim against MDEQ for lack of subject matter jurisdiction. The district court concluded that “[b]ecause this Court lacked jurisdiction at the time the original complaint was filed, the time-of-filing rule compels the conclusion that this Court lacks jurisdiction over the amended complaint.”
II
We first consider Front Street‘s claim against Mississippi Silicon under
This court previously analyzed the language of
Front Street contends that Mississippi Silicon is “without a permit” because a “purported PSD permit issued in violation of the [PSD program] requirements” is not a PSD permit. Front Street argues that the violations of the permitting process render Mississippi Silicon‘s permit not a PSD permit, citing language from CleanCOALition labeling PSD permit requirements “preconditions for granting a preconstruction permit.”20 However, in CleanCOALition, we rejected the argument that “without a permit” meant “without a permit that complies with the CAA.”21 We are bound by that decision and therefore reject the argument that “without a permit” means “without a permit that complies with procedural requirements.”
III
We turn to the dismissal of the claims against MDEQ for lack of subject matter jurisdiction, which turns only on the time-of-filing rule. We emphasize that no party contends that the district court had jurisdiction over claims against Mississippi Silicon by virtue of the amended complaint that added MDEQ as a defendant. The only question is whether the district court had subject matter jurisdiction over the claims against MDEQ simply because it was not included as a defendant in the initial complaint, and the district court had no subject matter jurisdiction over the claims against Mississippi Silicon, the sole defendant in the initial complaint.
Front Street‘s original complaint named Mississippi Silicon as the sole defendant, asserting a claim under a federal statute. After the district court questioned why MDEQ had not also been made a defendant, Front Street amended its complaint to include MDEQ as a defendant and asserted federal question jurisdiction under
The statute granting jurisdiction to federal courts when a federal question is asserted is
As an initial matter, nothing in the text of
More recently, the Supreme Court has indicated that the time-of-filing rule pertains to diversity of citizenship cases.26 Writing for the Court in Grupo Dataflux, Justice Scalia recounted that “[i]t has long been the case that ‘the jurisdiction of the court depends upon the state of things at the time of the action brought.‘”27 He recognized the rule‘s familiarity: “This time-of-filing rule is hornbook law (quite literally) taught to first-year law students in any basic course on federal civil procedure.”28 But he described the rule as one used in diversity jurisdiction cases: “It measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship against the state of facts that existed at the time of filing—whether the challenge be brought shortly after filing, after the trial, or even for the first time on appeal.”29
The Court‘s decision in Grupo Dataflux recognized, however, that there has “long been an exception to the time-of-filing rule,”30 citing its decision in Caterpillar, Inc. v. Lewis.31 We begin our analysis of the issue in the present case with Caterpillar because, although it involved jurisdiction based on diversity of citizenship in the context of a removed action, its rationale is instructive.
It was undisputed in Caterpillar that at the time the suit was removed from state court to federal court, complete diversity of citizenship did not exist, and the district court had clearly erred in denying the motion to remand.32 But, as the suit progressed in federal court, the non-diverse party was dismissed after a settlement was reached between that party and the plaintiff.33 By the time of trial and judgment, it was undisputed that “there was...complete diversity.”34 The Supreme Court held that the federal district court had subject matter jurisdiction to try the case and render judgment. The Court first recognized that “[d]espite a federal trial court‘s threshold denial of a motion to remand, if, at the end of the day and case, a jurisdictional defect remains uncured, the judgment must be vacated.”35 But that was not the case in Caterpillar because “no jurisdictional defect lingered through judgment in the District Court.”36
The Supreme Court‘s decision in Grupo Dataflux reinforces this conclusion, though it did not directly address the issue with which we are confronted today. The Court explained in Grupo Dataflux that ”Caterpillar broke no new ground, because the jurisdictional defect it addressed had been cured by the dismissal of the party that had destroyed diversity.”37 The Court explained: “[t]hat method of curing a jurisdictional defect had long been an exception to the time-of-filing rule.”38 In Grupo Dataflux, the Court emphasized that in Caterpillar, “[the] Court unanimously held that the lack of complete diversity at the time of removal did not require dismissal of the case.”39
The distinction the Court drew between the facts presented in Grupo Dataflux and those in Caterpillar also strongly supports our conclusion that because the district court had federal question jurisdiction over the claims against MDEQ, it is irrelevant that it did not have jurisdiction over the claims asserted only against Mississippi Silicon in the initial complaint. In Grupo Dataflux, “[t]here was from the beginning of [the] action a single plaintiff . . . which . . . was not diverse from the sole defendant.”40 The question that the Supreme Court decided was “whether a party‘s post-filing change in citizenship can cure a lack of subject-matter jurisdiction that existed at the time of filing in an action premised upon diversity of citizenship.”41 The Court recognized that because the plaintiff, Atlas, “had two partners who were Mexican citizens at the time of filing, the partnership was a Mexican citizen,” and that because “the defendant, Dataflux, was a Mexican corporation, aliens were on both sides of the case, and the requisite diversity was therefore absent.”42 One month before trial began in Grupo Dataflux, the Mexican partners in Atlas left the partnership.43 The case proceeded to trial and a verdict. The Supreme Court held that there was no jurisdiction under these circumstances.
The Court distinguished the situation in Caterpillar, where, at the time of trial, there had been a change in parties. The
In the present case, there was a change in parties after the initial complaint was filed. MDEQ was added as a new party, and a claim arising under federal law was alleged against it. Allowing a suit against a new party to proceed is not an attempt to cure the jurisdictional defect that existed at the time of filing as to the initial defendant. Had the initial complaint included claims against both MDEQ and Mississippi Silicon, the fact that there was no jurisdiction over the claims against Mississippi Silicon would not have precluded federal question jurisdiction over the claims against MDEQ, assuming the requisite notice had been given. The jurisdictional bases of the claims are independent of one another.
Front Street has cited no decision in which the Supreme Court or a Circuit Court has held that the time-of-filing rule applies to facts like those in the present case. To the contrary, the First Circuit in ConnectU LLC v. Zuckerberg held that the time-of-filing rule does not apply when a plaintiff “switch[es] jurisdictional horses before any jurisdictional issue has been raised” from a defective allegation of diversity jurisdiction in an initial complaint to an allegation of federal question jurisdiction in an amended complaint.49 That court reasoned that “concerns about forum-shopping and strategic behavior” in diversity cases “offer special justifications for” the rule, but that such “concerns are not present in the mine-run of federal question cases.”50 The ConnectU decision further interpreted the Supreme Court‘s decision in Grupo Dataflux as “explicitly
We do not hold that that the Supreme Court‘s decision in Grupo Dataflux restricts the time-of-filing rule to diversity cases. The time-of-filing rule is most frequently employed in the removal context, to prevent a plaintiff from re-pleading after removal to deprive the federal court of jurisdiction. The fact that a case was removed based on a federal question rather than diversity should not affect whether a plaintiff may re-plead in order to obtain a remand to state court. Our court explored this in Boelens v. Redman Homes, Inc., although the plaintiffs in that case had filed suit in federal court and established federal question jurisdiction in their initial complaint.52 They amended their complaint, however, and it failed to establish jurisdiction in federal court.53 The case nevertheless proceeded to trial, but this court held that when the plaintiffs voluntarily amended their complaint, the amended complaint governed whether the court continued to have jurisdiction and that the judgment in their favor obtained at trial must be reversed.54 In so doing, we contrasted cases that had been removed to federal court, rather than initially filed in federal court.55 We reasoned that the time-of-filing rule applies when a case has been removed on the basis of a federal question because “[t]he rule that a plaintiff cannot oust removal jurisdiction by voluntarily amending the complaint to drop all federal questions serves the salutary purpose of preventing the plaintiff from being able to destroy the jurisdictional choice that Congress intended to afford a defendant in the removal statute.”56 We explained that, “[t]he same considerations are not present, however, in a case of original federal question jurisdiction in which the plaintiff, rather than the defendant, is invoking the jurisdiction of the federal court.”57 “In that case, because the burden is on the plaintiff to establish jurisdiction in the first instance, we conclude that the plaintiff must be held to the jurisdictional consequences of a voluntary abandonment of claims that would otherwise provide federal jurisdiction.”58 We looked to the amended complaint, not the initial complaint, in Boelens to determine if the federal court had jurisdiction.
Our decision in Boelens teaches that the time-of-filing rule should apply in the context of cases raising a federal question that have been removed, but that in cases initially brought by a plaintiff in federal court, the time-of-filing rule is not dispositive.59 Jurisdiction in federal court may be lost if the amended pleading fails to state a claim arising under the laws of the United States.
Our decision in Spear Marketing is entirely consistent with Boelens.60 In Spear Marketing, the defendants removed the case to federal court on the ground that
With regard to federal question jurisdiction, this court has said, in certain contexts, that “[a] complaint that is defective because it does not allege a claim within the subject matter jurisdiction of a federal court may be amended to state a different claim over which the federal court has jurisdiction” if the claim “arises out of the conduct or occurrence set forth in the original complaint.”67 Using this rationale, we have allowed amendments that change the cause of action from
In Whitmire v. Victus Ltd., the plaintiff filed suit in federal court asserting causes of action under a federal statute and contended that the district court had supplemental jurisdiction over state-law claims.69 The district court granted summary judgment against the plaintiff on the federal claims, and dismissed the state-law
By contrast, in United States ex rel. Jamison v. McKesson Corp., we rejected attempts by plaintiffs to rest jurisdiction on “substantive jurisdictional fact[s]” that first appear in amended complaints, noting that
To the extent that there is a conflict between Jamison, on one hand, and one of our decisions such as Whitmire, Watkins, Sessions, Johnson, or Arena on the other, the earlier-in-time decision controls. But in any event, none of these cases considers whether, in a suit initially filed in federal court, the addition of a new party in an amended complaint can confer jurisdiction over the new party even though the initial complaint failed to establish federal question jurisdiction as to a different defendant.
The addition of MDEQ as a party is not being used to create jurisdiction over the claim against Mississippi Silicon. Nor could it. As described above, the district court did not have subject matter jurisdiction over the federal question claim in the original complaint, which only named Mississippi Silicon as a defendant.75 We have found no decision that holds that if an original complaint—arising via federal question, not diversity or removal—asserts a claim against a party over which the court has no subject matter jurisdiction, the district court cannot assert federal question jurisdiction over a claim asserted against a new party in an amendment adding the new defendant. It is undisputed that had 16 Front Street sued MDEQ alone, after giving the required 60 days’ notice, the district court would have had jurisdiction. We can discern no basis in the
IV
MS Silicon briefly argues that Front Street lacks standing to appeal the dismissal of the claims against MDEQ because Front Street may refile against MDEQ and therefore suffered no injury as a result of the district court‘s dismissal without prejudice. This argument runs counter to both the Supreme Court‘s and our precedents. As the Supreme Court held in United States v. Wallace & Tiernan Co., “[t]hat the dismissal was without prejudice to filing another suit does not make the cause unappealable, for denial of relief and dismissal of the case ended this suit so far as the District Court was concerned.”76 We have consistently echoed this position77 and accordingly reject the argument that Appellants lack standing to appeal their claim against MDEQ.
V
Finally, Mississippi Silicon moves for attorneys’ fees pursuant to
As to the first argument, “[a]n appeal is frivolous if the result is obvious or the arguments of error are wholly without merit.”79 Bad faith and harassment are not necessary for sanctions, but “[b]ad faith may aggravate the circumstances justifying sanctions.”80 Attempting to distinguish precedent and offering independent legal analysis are factors that can weigh against sanctions.81 Front Street faced long odds in overcoming two legal hurdles as to its claims against Mississippi Silicon: the plain text of the statute and the Fifth Circuit precedent in CleanCOALition. Nevertheless, Front Street made legitimate arguments and attempts to distinguish CleanCOALition. Though ultimately unsuccessful, the arguments were not “wholly without merit” and do not warrant sanctions.
As to the second argument, Mississippi Silicon argues that this appeal is frivolous because Front Street lacks standing to bring it. Mississippi Silicon offers no binding
As to its final argument, Mississippi Silicon requests that this court consider Appellants’ “[r]elentless [l]itigation [c]ampaign” of filing “meritless suits” to damage Mississippi Silicon‘s business interests. While “[b]ad faith may aggravate the circumstances justifying sanctions,”82 Front Street‘s appeal of the claim against Mississippi Silicon is not wholly without merit. We therefore deny sanctions.
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For the foregoing reasons, we AFFIRM the district court‘s judgment that it lacks jurisdiction over Mississippi Silicon, L.L.C., but we REVERSE the district court‘s judgment regarding MDEQ and REMAND for further proceedings, as warranted. Mississippi Silicon‘s motion for attorneys’ fees is also DENIED.