Opinion
CIVIL ACTION NO. 1:20-CV-01174
2020-11-18
D & J INVESTMENTS OF CENLA LLC, et al. v. BAKER HUGHES A GE CO., LLC, et al.
Donald T. Carmouche, Brian T. Carmouche, D. Adele Owen, John H. Carmouche, Ross J. Donnes, Victor L. Marcello, William Robert Coenen, III, Talbot Carmouche & Marcello, Baton Rouge, LA, Jerold Edward Knoll, Knoll Law Firm, Marksville, LA, for D & J Investments of Cenla LLC, Deborah H. Greer, James W. Greer, Jr., Daniel L. Webb, Jim Adams, Darwin Oliver Arrington, Richard Bardwell, Barfield Insurance Agency LLC, James Benedict, Cassandra S. Carmouche, Cayse Collision Repair LLC, Michael S. Cerami, David W. Chesser, Sr., Emural Cook, Jack Cooper, Jr., Sherry S. Daniels, Latonnia G. Downs, Teresa B. Drexel, Gary K. Ermatinger, Sandra J. Fountain, Peter W. Gardner, Andre Garsaud, Ellen Gaspard, Susan C. Gauthier, Johnny Gilley, Michael Guillory, James Hodges, Jennifer Long, Derrick J. Malone, James A. Methvin, Shane Morgan, Sandra Nagle, Ellis Nick, Amy Overfield, Mark A. Peterson, Sandra K. Shirah, Charles M. Smith, Bridget R. Taylor, Sherry J. Taylor, Nicholas E. Thompson, Clyde M. Todd, Jr., John S. Tucker, Angela Waggener, Arthur Waller, Denise White, Randy L. Wilkerson, Adam McCoy. Andrew M. Stakelum, Mitchell Blake Bryant, Pro Hac Vice, Tracie Jo Renfroe, Pro Hac Vice, King & Spalding, Houston, TX, Eric E. Jarrell, Michael J. Cerniglia, Robert J. Burvant, King & Jurgens, New Orleans, LA, for Baker Hughes a GE Co. LLC, Baker Hughes Energy Services LLC, Dresser LLC, Dresser RE LLC, GE Oil & Gas LLC. Scott L. Zimmer, Kean Miller, Shreveport, LA, for GHD Services Inc. John S. Campbell, III, Edward Daniel Hughes, Taylor Porter et al., Baton Rouge, LA, for Stantec Consulting Services Inc. Louis E. Layrisson, III, Benjamin Eric Gonsoulin, J. Scott Janoe, Pro Hac Vice, Baker Botts, Houston, TX, Charles S. Weems, III, Stephen A. LaFleur, Gold Weems et al., Alexandria, LA, for Halliburton Energy Services Inc.
Donald T. Carmouche, Brian T. Carmouche, D. Adele Owen, John H. Carmouche, Ross J. Donnes, Victor L. Marcello, William Robert Coenen, III, Talbot Carmouche & Marcello, Baton Rouge, LA, Jerold Edward Knoll, Knoll Law Firm, Marksville, LA, for D & J Investments of Cenla LLC, Deborah H. Greer, James W. Greer, Jr., Daniel L. Webb, Jim Adams, Darwin Oliver Arrington, Richard Bardwell, Barfield Insurance Agency LLC, James Benedict, Cassandra S. Carmouche, Cayse Collision Repair LLC, Michael S. Cerami, David W. Chesser, Sr., Emural Cook, Jack Cooper, Jr., Sherry S. Daniels, Latonnia G. Downs, Teresa B. Drexel, Gary K. Ermatinger, Sandra J. Fountain, Peter W. Gardner, Andre Garsaud, Ellen Gaspard, Susan C. Gauthier, Johnny Gilley, Michael Guillory, James Hodges, Jennifer Long, Derrick J. Malone, James A. Methvin, Shane Morgan, Sandra Nagle, Ellis Nick, Amy Overfield, Mark A. Peterson, Sandra K. Shirah, Charles M. Smith, Bridget R. Taylor, Sherry J. Taylor, Nicholas E. Thompson, Clyde M. Todd, Jr., John S. Tucker, Angela Waggener, Arthur Waller, Denise White, Randy L. Wilkerson, Adam McCoy.
Andrew M. Stakelum, Mitchell Blake Bryant, Pro Hac Vice, Tracie Jo Renfroe, Pro Hac Vice, King & Spalding, Houston, TX, Eric E. Jarrell, Michael J. Cerniglia, Robert J. Burvant, King & Jurgens, New Orleans, LA, for Baker Hughes a GE Co. LLC, Baker Hughes Energy Services LLC, Dresser LLC, Dresser RE LLC, GE Oil & Gas LLC.
Scott L. Zimmer, Kean Miller, Shreveport, LA, for GHD Services Inc.
John S. Campbell, III, Edward Daniel Hughes, Taylor Porter et al., Baton Rouge, LA, for Stantec Consulting Services Inc.
Louis E. Layrisson, III, Benjamin Eric Gonsoulin, J. Scott Janoe, Pro Hac Vice, Baker Botts, Houston, TX, Charles S. Weems, III, Stephen A. LaFleur, Gold Weems et al., Alexandria, LA, for Halliburton Energy Services Inc.
MEMORANDUM RULING
DAVID C. JOSEPH, UNITED STATES DISTRICT JUDGE
Before the Court is a Motion for Remand filed by Plaintiffs, D & J Investments of Cenla LLC, et al. , in the above-captioned matter. [Doc. 21 ]. Because there is complete diversity among all properly joined Defendants and removal was otherwise proper, the Motion is DENIED.
BACKGROUND
This matter stems from property damage claims brought by 48 landowners against the owners and operators of an industrial valve manufacturing facility in Rapides Parish, Louisiana (the "Dresser Facility") based on allegations of groundwater and soil contamination. [Doc. 1-1 ]. Plaintiffs contend that, for the approximately 25 years during which the Dresser Facility was in operation, solvents, cutting oils, acids, and caustics were disposed of improperly – thereby causing contamination to nearby properties. [Id. ]. The plaintiffs also included the Louisiana Department of Environmental Quality ("DEQ") as a defendant based, generally, on allegations that the DEQ was negligent in both its regulatory oversight of the alleged contamination and its notification of adjacent landowners. [Id. ].
In 2012, Dresser, Inc. ("Dresser") discovered elevated levels of hydrocarbons ("TPH") in the groundwater adjacent to the Dresser Facility and notified the DEQ of the excessive TPH concentrations. [Doc. 33-1 ]. In response, the DEQ instructed Dresser to submit an investigation work plan in compliance with the DEQ's Risk Evaluation/Corrective Action Program ("RECAP"). [Doc. 33-2 ]. The DEQ accepted the RECAP plan and directed Dresser to initiate its investigation. [Doc. 33-5 ]. Based on Dresser's preliminary findings, the scope of the investigation was subsequently broadened into other areas affected by the contaminants. [Id. ]. Accordingly, Dresser submitted a revised investigation work plan and continued to comply with the DEQ's instructions. [Doc. 33-6 ]. On January 8, 2020, the DEQ notified property owners and residents in affected areas near the groundwater and soil contamination emanating from the Dresser Facility. [Doc. 33-9 ]. In essence, the DEQ's notice stated that Dresser, as the owner of the facility, bears the responsibility for investigating the contamination, described the results of Dresser's preliminary investigations, and explained Dresser's proposed remediation process. [Id. ].
On July 30, 2020, Plaintiffs initiated this action in the 35th Judicial District Court of Louisiana to recover for groundwater and soil contamination underlying their respective properties. [Doc. 1-1 ]. Defendants removed the action to federal court pursuant to diversity subject matter jurisdiction, 28 U.S.C. § 1332 , on September 10, 2020. [Doc. 1 ]. Plaintiffs are a number of individuals and juridical entities with Louisiana and California citizenships. [Id. ]. Defendants are all companies with non-Louisiana citizenships as well as the DEQ. [Id. ].
Defendants removed the matter to this Court based on the complete diversity of all properly joined parties and Plaintiffs’ alleged improper joinder of the DEQ to obviate the Court's diversity jurisdiction. [Id. ]. On October 8, 2020, Plaintiffs filed this Motion for Remand, contending that: (i) the DEQ cannot be sued in federal court based on the State of Louisiana's Eleventh Amendment sovereign immunity; (ii) Defendants cannot establish that the DEQ was improperly joined as a party; and (iii) Defendants’ Notice of Removal fails to sufficiently allege the citizenship of Defendant Dresser RE, LLC. [Doc. 21 ].
The Court notes that the DEQ has not been properly served by Plaintiffs nor has it made an appearance in this litigation. Though this might be of some relevance in interpreting Plaintiffs’ intent in joining the DEQ as a defendant to this lawsuit, the Court makes no inferences in this regard. Because an improperly joined defendant need not consent to removal, the DEQ's non-appearance is of no moment to the Court's denial of the Motion to Remand.
LAW AND DISCUSSION
A defendant in a state court proceeding generally may remove the pending action to federal court provided there is federal subject matter jurisdiction. See 28 U.S.C. §§ 1441(a) , 1446. At issue before the Court is the existence of federal diversity subject matter jurisdiction, which requires that the amount in controversy exceed $75,000, exclusive of interest and costs, and the citizenships of the plaintiffs be completely diverse from those of the defendants. See 28 U.S.C. § 1332 ; Strawbridge v. Curtiss , 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806).
Plaintiffs do not dispute that the jurisdictional amount is satisfied.
Once a motion to remand is filed, the burden is on the removing party to establish that removal was proper. Manguno v. Prudential Prop. & Cas. Ins. Co. , 276 F.3d 720, 723 (5th Cir. 2002). Accordingly, Defendants bear the burden of establishing that the Court has diversity jurisdiction over this action.
I. ELEVENTH AMENDMENT SOVEREIGN IMMUNITY
As a threshold matter, Plaintiffs maintain that removal was not proper because the Eleventh Amendment precludes suit against the DEQ in federal court. The Eleventh Amendment bars suits against a state in federal court "unless that state has waived its sovereign immunity or Congress has clearly abrogated it." Corn v. Mississippi Dep't of Pub. Safety , 954 F.3d 268, 274 (5th Cir. 2020). It is clear that this Eleventh Amendment immunity extends to suits against "arms of the state", such as the DEQ. Id. Thus, Plaintiffs claim that the Court must remand this action to state court because the State of Louisiana has neither waived its sovereign immunity nor has Congress abrogated it insofar as it applies to state law claims brought in federal court. Moreover, Plaintiffs argue that Louisiana's sovereign immunity is dispositive with respect to subject matter jurisdiction – thereby precluding this Court from further examining the propriety of the DEQ's joinder to this action. [Doc. 36 ]. Stated differently, Plaintiffs urge the Court to construe the Eleventh Amendment in a manner that prohibits consideration of an improper joinder claim when the disputed party is a state.
Plaintiffs’ proposed application of the Eleventh Amendment has no basis in law and, if applied, would significantly undermine the improper joinder doctrine. Indeed, the Fifth Circuit directly repudiated this interpretation in Melder v. Allstate Corporation , 404 F.3d 328 (5th Cir. 2005). In Melder , multiple Louisiana residents sued State Farm and Allstate in Louisiana state court for using credit-scoring formulas that had a discriminatory impact based on race and the economic condition of the area where the property to be insured was located. Id. at 330. The plaintiffs also brought a negligence claim against the Louisiana Insurance Rating Commission ("IRC") for failing to properly regulate the insurance rates. Id. State Farm and Allstate removed the action to federal court based on diversity subject matter jurisdiction and improper joinder of the IRC. Id. As a preface to discussing the improper joinder claim, the Fifth Circuit stated that:
in making this determination for the claim against LIRC, we do not consider the Eleventh Amendment ... Obviously, to do otherwise would fly in the face of the purpose, and controlling law, for not allowing improper joinder to defeat federal jurisdiction. See 28 U.S.C. § 1441(b) (removal permitted if ‘none of the parties in interest properly joined ... is a citizen of the State in which such action is brought’; emphasis added). As discussed below, only Allstate and State Farm were ‘properly joined.’
Id. As such, the Eleventh Amendment does not prohibit this Court from considering Defendants’ claim that the State of Louisiana, through the DEQ, was improperly joined.
II. PLAINTIFFS’ JOINDER OF THE DEQ AS A DEFENDANT
Plaintiffs next argue that the Court should grant their Motion for Remand because the presence of the DEQ as a party precludes complete diversity. Defendants counter that Plaintiffs improperly joined the DEQ as a defendant and that the Court should therefore disregard its presence in determining whether complete diversity exists. Defendants further assert that this Court has diversity jurisdiction because the remaining defendants are completely diverse from the plaintiffs. Federal jurisprudence is clear that "a state is not a ‘citizen’ for purposes of diversity jurisdiction." Tradigrain, Inc. v. Mississippi State Port Auth. , 701 F.2d 1131, 1132 (5th Cir. 1983). It follows that in an action where a state is a party, § 1332 generally does not provide a basis for subject matter jurisdiction. See Allen v. C & H Distributors, L.L.C. , 813 F.3d 566, 571 (5th Cir. 2015) ("Ordinarily ‘[i]n an action where a state is a party, there can be no federal jurisdiction on the basis of diversity of citizenship because a state is not a citizen for purposes of diversity jurisdiction.’ "). Likewise, an entity that is "merely an alter ego of the state," such as the DEQ, is not considered a citizen under § 1332. See Watkins v. Louisiana Dep't of Transp. & Dev. , CIV.A. 09-1743, 2010 WL 744911, at *2 (W.D. La. Feb. 26, 2010) (holding that the Louisiana Department of Transportation and Development is "equivalent to the State of Louisiana for purposes of determining diversity of citizenship.").
The improper joinder doctrine provides a "narrow exception" to the complete diversity requirement for diversity jurisdiction. Vaillancourt v. PNC Bank, Nat. Ass'n , 771 F.3d 843, 847 (5th Cir. 2014). If proven, the Court can ignore the presence of the improperly joined non-diverse party when determining whether complete diversity exists. See Waste Mgmt., Inc. v. AIG Specialty Ins. Co. , 974 F.3d 528, 533 (5th Cir. 2020) ("The fraudulent joinder doctrine provides that a district court must disregard, for diversity jurisdiction purposes, the citizenship of an improperly joined defendant."); Flagg v. Stryker Corp. , 819 F.3d 132, 136 (5th Cir. 2016) ("[I]f the plaintiff improperly joins a non-diverse defendant, then the court may disregard the citizenship of that defendant, dismiss the non-diverse defendant from the case, and exercise subject matter jurisdiction over the remaining diverse defendant."); Borden v. Allstate Ins. Co. , 589 F.3d 168, 171 (5th Cir. 2009) ("The fraudulent joinder doctrine ensures that the presence of an improperly joined, non-diverse defendant does not defeat federal removal jurisdiction premised on diversity."). Accordingly, here, if Defendants successfully establish that Plaintiffs improperly joined the DEQ as a party to this action, the Court may disregard the DEQ's joinder as a defendant in its analysis of the parties’ complete diversity.
Fifth Circuit jurisprudence uses the terms "improper" and "fraudulent" interchangeably when discussing the improper joinder doctrine.
The improper joinder doctrine derives from 28 U.S.C. § 1441(b) , which provides that an action removeable solely on the basis of diversity jurisdiction cannot be removed "if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." (emphasis added); Smallwood v. Illinois Cent. R. Co. , 385 F.3d 568, 572 (5th Cir. 2004). The burden on the removing party to prove improper joinder of the non-diverse party is heavy. Id. at 574. The removing party must establish that "there was actual fraud in the pleading of jurisdictional facts or [that] the plaintiff cannot establish a cause of action against the non-diverse defendant." Waste Mgmt., Inc. , 974 F.3d at 533. At issue in this case is the latter form of improper joinder, which requires the defendant to demonstrate that there is no possibility of recovery by the plaintiff against the purported improperly joined defendant in state court. Smallwood , 385 F.3d at 573.
This inquiry therefore necessarily implicates a Federal Rule of Civil Procedure 12(b)(6) analysis pursuant to which the Court is charged with determining whether the "complaint ... contain[s] sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Waste Mgmt., Inc. , 974 F.3d at 533 (quoting Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). In applying this standard, the court must "[accept] all well-pleaded facts as true and [view] those facts in the light most favorable to the plaintiff." Bustos v. Martini Club, Inc. , 599 F.3d 458, 461 (5th Cir. 2010). Typically, if the complaint would survive a Rule 12(b)(6) challenge, there is no improper joinder. Smallwood , 385 F.3d at 573. Because Defendants removed this action based on diversity jurisdiction, Louisiana substantive law applies to the Court's analysis in this regard. See Erie R. Co. v. Tompkins , 304 U.S. 64, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938).
The Fifth Circuit recognizes an alternate manner of determining whether a plaintiff has a possibility of recovery under state law, which permits the court to pierce the pleadings and conduct a summary inquiry. See Davidson v. Georgia-Pac., L.L.C. , 819 F.3d 758, 765 (5th Cir. 2016) ("When ‘a complaint states a claim that satisfies 12(b)(6), but has "misstated or omitted discrete facts that would determine the propriety of joinder ... the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry." ’ ") (quoting Smallwood , 385 F.3d at 573 ). Here, the Court can resolve this inquiry without the necessity of piercing the pleadings.
III. SUFFICIENCY OF PLAINTIFFS’ CLAIM AGAINST THE DEQ
In this case, Plaintiffs assert a Louisiana negligence claim against the DEQ for allegedly concealing its knowledge of groundwater and soil contamination and failing to properly oversee remediation activities. [Doc. 1-1 ]. Defendants contend that Plaintiffs cannot demonstrate a reasonable basis of recovery against the DEQ because the DEQ had no legal duty to warn Plaintiffs of the potential groundwater and soil contamination upon acquiring knowledge nor to oversee remediation of the contamination in a particular manner. [Doc. 33 ]. Additionally, Defendants argue that the DEQ's actions pertaining to environmental protection are regulatory in nature and thus challenges to DEQ actions are outside the scope of a federal district court's jurisdiction. [Id. ].
Louisiana courts employ a "duty-risk analysis" in adjudicating negligence actions. Duncan v. Wal-Mart Louisiana, L.L.C. , 863 F.3d 406, 409 (5th Cir. 2017) (citing Lemann v. Essen Lane Daiquiris , 923 So.2d 627, 633 (La. 2006) ). To prevail on a negligence claim, a plaintiff must prove that: (i) the defendant owed the plaintiff a duty to conform his conduct to a specific standard (duty); (ii) the defendant's conduct failed to conform that standard (breach); (iii) the defendant's breach of his duty was a cause in fact of the plaintiff's injuries (cause in fact); (iv) the defendant's breach was a legal cause of the plaintiff's injuries (legal cause); and (v) the plaintiff sustained actual damages (damages). Id. Whether the defendant owes a duty is a question of law that the Court resolves by considering statutes, jurisprudence, and general principles of fault. Lemann , 923 So.2d at 633. In addition, the Court "must make a policy decision in light of the unique facts and circumstances presented." Id.
Plaintiffs rely on Louisiana's general negligence statutes – Louisiana Civil Code articles 2315 and 2316 – and the Louisiana Constitution in support of their assertion that the DEQ owed the public a duty to warn upon acquiring knowledge of the contamination and to properly oversee remediation. Louisiana Civil Code article 2315(A) states that "[e]very act whatever of man that causes damage to another obliges him by whose fault it happened to repair it", and Louisiana Civil Code article 2316 provides that "[e]very person is responsible for the damage he occasions not merely by his act, but by his negligence, his imprudence, or his want of skill."
Plaintiffs further contend that this duty to warn stems from the Louisiana Constitution's provision that, "[t]he natural resources of the state, including air and water, and the healthful, scenic, historic, and esthetic quality of the environment shall be protected, conserved, and replenished insofar as possible and consistent with the health, safety, and welfare of the people. The legislature shall enact laws to implement this policy." La. Const. Ann. art. IX, § 1.
The Louisiana legislature, in accordance with this mandate, has passed into law certain statutes intended to provide, "comprehensive policies on a statewide basis to unify, coordinate, implement programs to provide the most advantageous use of the resources of the state and to preserve, protect, and enhance the quality of the environment in Louisiana." La. Rev. Stat. Ann. § 30:2003(B). Under this statutory scheme, the primary agency charged with implementation of the laws and regulations designed to protect Louisiana's environment is the DEQ, which was given "jurisdiction over matters affecting the regulation of the environment within the state, including ... water pollution control." La. Rev. Stat. Ann. § 30:2011(A)(1).
Even so, Plaintiffs fail to demonstrate how these statutory and state constitutional provisions give rise to a specific duty on the part of the DEQ to inform them of reported contamination within a particular timeframe or to otherwise oversee remediation in any particular manner. Furthermore, several Louisiana statutes indicate that the Louisiana legislature intended for the DEQ to serve in a purely regulatory capacity and not to bear civil liability for environmental harm caused by private parties.
First, Louisiana Revised Statutes section 2050.1 states that the Secretary of the DEQ, "shall establish policies and procedures to address violations of this Subtitle in a formal and consistent manner." This provision requires the DEQ to have a procedure in place for handling violations of Louisiana law governing environmental protection but grants the Secretary discretion to articulate the substance and mechanics of that procedure.
Likewise, in a chapter titled "Liability for Hazardous Substance Remedial Action," Louisiana Revised Statutes section 30:2271(A)(4) provides that "[t]he state cannot and should not bear the costs associated with a private profit making venture." Importantly, nowhere in the regulatory scheme creating the DEQ, or otherwise enacting environmental regulations to be enforced by the DEQ, does Louisiana law create a cause of action against the DEQ for contamination caused by private industry.
The policy reasons for this are clear. It is against public interest for Louisiana's chief environmental regulator, when determining how to allocate its scarce resources, to prioritize its efforts in consideration of the potential for civil liability rather than of the Louisiana citizens or natural resources that face the gravest environmental threats. Creating or permitting such a private cause of action against the DEQ would, in effect, make the DEQ beholden first to those citizens or landowners who are able to afford attorneys, to those from whom the DEQ is fearful of being sued, or to those who otherwise may have the loudest voices or wield the most influence. Indeed, undoubtedly for these reasons among others, Louisiana law does not permit a plaintiff to recover damages from the State for exposure to contamination caused by private industry. Though this is an issue of first impression in the Western District of Louisiana, courts in Louisiana's two other federal districts have likewise relied on section 30:2271(A)(4) in concluding that the DEQ is not liable in tort for failing to properly handle contaminations. See, e.g., Butler v. Denka Performance Elastomer LLC , CV 18-6685, 2019 WL 1160814, at *6 (E.D. La. Mar. 13, 2019), appeal dismissed , 806 Fed.Appx. 271 (5th Cir. 2020) ("To seek damages from the state for exposure to emissions from a private defendant's manufacturing facility ventures into absurdity."); Landry v. Laney Directional Drilling Co. , CIV.A. 09-615-JVPSCR, 2009 WL 3833831, at *4 (M.D. La. Nov. 16, 2009) (stating that "[i]mposing a duty on DEQ to bear the cost of testing and remediating sites upon which material has been allegedly deposited from a private drilling company would clearly be contrary to the policy set forth by the statute" where the plaintiffs sued the DEQ for negligently testing hazardous material and failing to properly remediate it). Notably, the Landry court found that the plaintiffs failed to state a claim under Rule 12(b)(6) against the DEQ even though the DEQ allegedly incorrectly represented that no hazardous materials were present in a large volume of "oil field sludge" dumped on their property. 2009 WL 3833831, at *1. ,
In contrast, the DEQ in this case is not alleged to have made any misrepresentations to Plaintiffs, but rather took action to develop an investigation work plan with Dresser and informed the public of the excessive TPH concentrations upon conclusion of Dresser's preliminary investigation.
Plaintiffs rely on Batton v. Georgia Gulf to justify that the DEQ owed a legal duty to notify the public of the TPH contamination. In Batton , the plaintiffs sued the Louisiana Department of Health and Hospitals ("DHH") for failing to warn the public of arsenic contamination in the water supply. 261 F.Supp.2d 575, 579 (M.D. La. 2003). The court held that the plaintiffs stated a viable negligence claim against the DHH based on several Louisiana state courts’ imposition of a duty to warn the public of health dangers. Id. at 601. The Court finds Batton unpersuasive because, among other reasons, the DHH and the DEQ serve different functions and are governed by separate bodies of law.
Ultimately, the Court concludes that Plaintiffs have not stated a cognizable claim against the DEQ. Because Defendants have met their burden of establishing improper joinder of the DEQ, the Court disregards the DEQ's presence as a party in the complete diversity analysis. Plaintiffs do not dispute that complete diversity exists among the remaining parties. Accordingly, the Court has subject matter jurisdiction over this action based on diversity of citizenship.
While Louisiana law does not provide for civil liability against the DEQ, it should be noted that the legislature has set forth an administrative procedure for parties seeking to challenge DEQ action or inaction in Louisiana Revised Statutes section 2050.1. The Louisiana Supreme Court held that judicial review of agency determinations is "an exercise of a court's appellate, rather than original, jurisdiction." Matter of Am. Waste & Pollution Control Co. , 588 So.2d 367, 370 (La. 1991).
Defendants also claim that the DEQ is immune from suit because its alleged actions fall under Louisiana Revised Statutes 9:2798.1, which exempts the state from liability for acts "based upon the exercise or performance or the failure to exercise or perform their policymaking or discretionary acts when such acts are within the course and scope of their lawful powers and duties." Because the Court finds that Plaintiffs failed to demonstrate a reasonable basis of recovery, the Court need not address whether the DEQ is protected by the "discretionary acts" exemption.
IV. CITIZENSHIP OF DRESSER RE, LLC
Finally, Plaintiffs argue that removal was improper because the allegations of Defendant Dresser RE, LLC's ("Dresser RE") citizenship were defective. [Doc. 21-1 ]. When federal subject matter jurisdiction is based on § 1332, the Fifth Circuit requires citizenship to be "affirmatively and distinctly alleged" and not "established argumentatively or by mere inference." Getty Oil Corp., a Div. of Texaco, Inc. v. Ins. Co. of N. Am. , 841 F.2d 1254, 1259 (5th Cir. 1988).
"[T]he citizenship of a[n] LLC is determined by the citizenship of all of its members." MidCap Media Fin., L.L.C. v. Pathway Data, Inc. , 929 F.3d 310, 314 (5th Cir. 2019). Thus, the party invoking diversity jurisdiction, "must specifically allege the citizenship of every member" of the LLC. Id. Defendants allege the citizenship of Dresser RE in the following manner:
Defendant Dresser RE, LLC is a limited liability company with 2 members (Dresser, LLC; and DI Netherlands B.V.), which are citizens of Delaware, Ohio, Texas, and potentially, the Netherlands.
[Doc. 1 ]. Plaintiffs do not dispute that Defendants sufficiently alleged the citizenship of the first member, Dresser, LLC. However, Plaintiffs argue that Defendants’ statement of DI Netherlands B.V.’s potential citizenship does not meet the Fifth Circuit's "affirmative and distinct" standard. [Doc. 21-1 ].
Defendants allege that DI Netherlands B.V. is a besloten vennootschap ("B.V.") organized under the laws of the Netherlands. As Defendants correctly point out, the Fifth Circuit has not yet considered the appropriate characterization of a B.V. for purposes of citizenship under § 1332. In light of the uncertainty regarding the appropriate characterization of a B.V. in the Fifth Circuit, Defendants alleged the citizenship of DI Netherlands B.V. as both a corporation and an unincorporated entity in their Notice of Removal. Therefore, the term "potentially" in Defendants’ allegations simply acknowledges this open question of law.
If DI Netherlands B.V. is similar to a corporation, Defendants allege that "DI Netherlands B.V. is a ‘subject of a foreign state’ pursuant to 28 U.S.C. § 1332." [Doc. 1 ]. Defendants also specifically allege the citizenship of each member DI Netherlands B.V. and conclude that the B.V. would ultimately be a citizen of Delaware, Ohio, and Texas pursuant to the rules governing citizenship of unincorporated entities. [Id. ].
The Seventh Circuit encountered this issue in BouMatic, LLC v. Idento Operations, BV , where it held that a Netherlands B.V. should be treated as a corporation. 759 F.3d 790, 791 (7th Cir. 2014) ("A BV has the standard elements of ‘personhood’ (perpetual existence, the right to contract and do business in its own name, and the right to sue and be sued) and issues shares to investors who enjoy limited liability (which is to say, are not liable for the business's debts). Shares can be bought and sold, subject to restrictions that the business declares. That is a common device in this nation's close corporations too."). Given the similarities, the Court agrees with the Seventh Circuit and holds that a B.V. should be treated as a corporation rather than an unincorporated entity for diversity of citizenship purposes. Regardless of this holding, however, complete diversity is present because DI Netherlands B.V. does not have Louisiana citizenship under either characterization. Accordingly, the Court concludes that Defendants’ allegations of DI Netherlands B.V.’s citizenship are not defective and, thus, that removal to this Court was proper.
CONCLUSION
For the foregoing reasons, IT IS HEREBY ORDERED that Plaintiffs’ Motion for Remand [Doc. 21 ] is DENIED.
IT IS FURTHER ORDERED that Plaintiffs’ claims against the Louisiana Department of Environmental Quality asserted in their Petition for Damages [Doc. 1-1 ] are DISMISSED WITH PREJUDICE.
THUS DONE AND SIGNED in Chambers on this 18th day of November, 2020.