Opinion
Case No. 2:06-CV-829.
March 28, 2008
OPINION AND ORDER
This matter is before the Court for consideration of the Defendants' Motions to Dismiss. (Doc. #19, #38, #39, #44). For the reasons that follow, the motions are granted.
I.
Plaintiff, the Sherwin-Williams Company ["Plaintiff"], filed this action against the City of Columbus, Ohio; the City of East Cleveland, Ohio; the City of Toledo, Ohio; the City of Akron, Ohio; the City of Lancaster, Ohio; the City of Cincinnati, Ohio; and various local government officials pursuant to 42 U.S.C. § 1983 for alleged violation of Plaintiff's constitutional rights. Plaintiff seeks declaratory and injunctive relief on its claims. The Court has jurisdiction over this action pursuant to 28 U.S.C. § 1331.
In its Amended Complaint, Plaintiff claims that its rights under the First Amendment to the United States Constitution as well as the Fourteenth Amendment due process clause are being violated as a result of the Defendant Cities' initiation of lawsuits against Plaintiff regarding the testing and abatement of lead paint. In particular, Plaintiff claims that "[t]he threat of multiple lawsuits based on . . . constitutionally protected speech and activity against Sherwin-Williams in its home State of Ohio, where it speaks most often on public issues and is most active in the community through various organizations, impermissibly chills its speech activities today." ( Am. Compl. at ¶ 17). According to Plaintiff, the cities intend to base liability against Plaintiff on Plaintiff's membership in various trade associations, such as the Lead Industries Association ["LIA"] and the National Paint Varnish and Lacquer Association ["NPVLA"], as well as Plaintiff's petitioning of the state, local and federal government regarding various proposed laws and regulations. ( Id. at ¶ 12). Count I of Plaintiff's Amended Complaint seeks a declaration that the various cities' claims against Plaintiff violate the First Amendment. Plaintiff contends that "[a]n immediate determination regarding the constitutionality of the existence of liability based on Sherwin-Williams' speech activities is necessary to avoid a chilling effect on Sherwin-Williams' current and future constitutionally protected activities." ( Id. at ¶ 84).
Count II of the Amended Complaint seeks a declaration that the cities' claims violate the Due Process clause. According to Plaintiff, it had no knowledge at the time it participated in trade associations in connection with the past manufacture, sale and promotion of paint that the harms realized today posed a potential health risk. ( Id. at ¶ 88). Plaintiff further alleges the cities will seek to hold Plaintiff liable "for all alleged injuries arising out of all lead-containing paint or exposures to lead, even if Sherwin-Williams did not manufacture the products that caused the injuries." ( Id. at ¶ 90). Plaintiff alleges that allowing the cities to proceed in this manner violates fundamental principles of fairness and notice. Plaintiff also alleges that the delay in commencing the state court actions has prejudiced Plaintiff, amounting to a violation of due process. ( Id. at ¶¶ 92-93).
Count III of the Amended Complaint seeks a declaration that the contingency fee agreements between the cities and private counsel violate the Due Process clause.
The cities move to dismiss the Plaintiff's Amended Complaint pursuant to Fed.R.Civ.P. 12(b)(1) and 12(b)(6).
II.
Rule 12(b)(6) allows the Defendant to raise, by motion, the defense of "failure to state a claim upon which relief can be granted." In considering a motion under the rule, the Court is to construe the complaint in the light most favorable to the Plaintiff, accepting all well-pled factual allegations as true, to determine whether Plaintiff could prove no set of facts that would entitle Plaintiff to relief. Kottmyer v. Maas, 436 F.3d 684, 688 (6th Cir. 2006). Although a liberal standard, it does require more than bare assertions of legal conclusions. League of United Latin American Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir. 2007), citing Bovee v. Coopers Lybrand CPA, 272 F.3d 356, 361 (6th Cir. 2001). As the Supreme Court recently explained, the Plaintiff's factual allegations "must be enough to raise a right to relief above the speculative level . . . on the assumption that all the allegations in the complaint are true. . . . Bell Atlantic Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007) (internal citations omitted). "To state a valid claim, a complaint must contain either direct or inferential allegations respecting all the material elements to sustain recovery under some viable legal theory." League of United Latin Amer. Citizens, 500 F.3d at 527, citing Twombly, 127 S. Ct. at 1969.
III.
A. Cities of East Cleveland, Toledo and Lancaster
The Cities of East Cleveland, Toledo and Lancaster move to dismiss the Plaintiff's Amended Complaint for two reasons. First, the cities contend that the Anti-Injunction Act precludes this Court from enjoining the prosecution of the state court cases. Second, the cities assert that this Court lacks jurisdiction over claims for declaratory or injunctive relief that arise as defenses to state court lawsuits. The Court addresses these arguments, in turn.1. The Anti-Injunction Act.
The Cities first argue that the Anti-Injunction Act, 28 U.S.C. § 2283, precludes this Court from enjoining the state court actions against Sherwin-Williams. The Act provides:
A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary to aid of its jurisdiction, or to protect or effectuate its judgments.28 U.S.C. § 2283. A federal court can enjoin a state court action only if it falls within one of three exceptions to the Anti-Injunction Act. Atlantic Coast Line RR Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 287 (1970).
The Court finds the cities' reliance on the Anti-Injunction Act misplaced. Plaintiff Sherwin-Williams does not ask this Court to enjoin any action in state court. Rather, Plaintiff seeks a decision from this Court regarding the alleged violation of its constitutional rights. Thus, the Court concludes that whether any of the exceptions to the Anti-Injunction Act even apply is not relevant to the case at bar. To the extent the Cities of East Cleveland, Toledo and Lancaster seek dismissal of Plaintiff's complaint based on the Anti-Injunction Act, the motion is without merit.
2. Jurisdiction over Declaratory Action.
The cities also seek dismissal of Plaintiff's Complaint on the basis that this Court does not have jurisdiction over declaratory actions that seek to adjudicate claims which arise as defenses to state court lawsuits. According to the cities, the federal claims raised by Plaintiff are defenses to the cities' claims that can be raised in state court. The cities rely on the Supreme Court's decision in Public Service Commission v. Wycoff, 344 U.S. 237 (1952), in which the Court held:
Where the complaint in an action for declaratory judgment seeks in essence to assert a defense to an impending or threatened state court action, it is the character of the threatened action, and not of the defense, which will determine whether there is federal-question jurisdiction in the District Court. If the cause of action, which the declaratory defendant threatens to assert, does not involve a claim under federal law, it is doubtful if a federal court may entertain an action for a declaratory judgment establishing a defense to that claim. This is dubious even though the declaratory complaint sets forth a claim of federal right, if that right is in reality in the nature of a defense to a threatened cause of action. Federal courts will not seize litigations from state courts merely because one, normally a defendant, goes to federal court to begin his federal-law defense before the state court begins the case under state law. . . .Id. at 248 (citations omitted). This holding was reiterated by the Sixth Circuit in Michigan Savings and Loan League v. Federal Home Loan Bank Board, 683 F.2d 957 (6th Cir. 1982), where the Court held that there is no federal jurisdiction when federal preemption is raised as a defense to a threatened state action.
The cities argue that Plaintiff's claims in this case are virtually identical to the defenses it has previously raised in similar lawsuits in other jurisdictions. In this regard, the cities refer to the trial in the State of Rhode Island, State of Rhode Island v. Lead Industries Ass'n. In that case, the alleged violation of Plaintiff's First and Fourteenth Amendment rights were pled as affirmative defenses to the state's claims. The cities maintain that because the claims can be raised as defenses to the state court actions, they are not properly before this Court as a basis for a declaratory judgment action.
The cities note that the State of Rhode Island moved to strike Sherwin Williams' affirmative defenses; the motion was granted because the court reasoned that the nature of the suit was not directed at speech but at public nuisance. ( Motion of Cities of Toledo, East Cleveland, and Lancaster at 11, n. 3).
In response, Plaintiff Sherwin-Williams contends that a federal cause of action does not fall outside this Court's jurisdiction simply because it can also be raised as an affirmative defense to a state court claim. In Rodriguez v. Tennessee Laborers Health and Welfare Fund, 463 F.3d 473 (6th Cir. 2006), the Sixth Circuit held that a district court had subject matter jurisdiction over an ERISA plan participant's request for declaration that he was eligible to receive benefits from third-party insurers without having to reimburse the plan. The Sixth Circuit held that "[t]he key issue then in determining whether the federal courts have jurisdiction over a claim for declaratory relief is whether the impending or threatened action would raise a federal question." Id. at 476-77. The Sixth Circuit concluded in Rodriguez that, although the precise content of a threatened claim against the ERISA plan participant was uncertain, the Defendant Fund could have commenced suit under ERISA seeking reimbursement. Id. at 477. Thus, the court found that the district court had subject matter jurisdiction over the Plaintiff's claim for declaratory judgment.
While Sherwin-Williams cites Rodriguez as supporting its position in this case, the Court finds an important distinction between the nature of the threatened action in Rodriguez and that in the case at bar. In Rodriguez, the Sixth Circuit found that, since the Defendant to the declaratory judgment action could have commenced a federal claim, it was appropriate to entertain a declaratory judgment action on the Plaintiff's claim. In this case, the nature of the threatened action against Sherwin-Williams arises solely under theories of state law. While the theories advanced by the cities implicate defenses premised on federal law, the Court cannot conclude that the "impending or threatened action would raise a federal question." Rodriguez, 463 F.3d at 476-77. More fundamentally, the position taken by Plaintiff would require this Court to determine the merits of an affirmative defense in a case over which it would otherwise have no subject matter jurisdiction.
In particular, the claims include public nuisance, concert of action, unjust enrichment and indemnity. (Doc. #39 at 9).
Sherwin-Williams also asserts that, in the § 1983 setting, it is permissible for a Plaintiff to bring suit for state officials' violation of constitutional rights. This is certainly true; however, in this case, the alleged violation of rights occurs only in connection with the threatened state court actions by the cities. This important, distinguishing factor leads the Court to conclude that it is without subject matter jurisdiction over Sherwin-Williams' request for declaratory relief. Accordingly, the Court finds the motion to dismiss filed by the Cities of Toledo, East Cleveland and Lancaster, Ohio, meritorious. The Court notes that it does not pass on the merits of Plaintiff's claims; the issues raised can only be determined in the context of the state-law cases.
B. Cities of Columbus and Cincinnati
The City of Cincinnati, Ohio has filed a Motion to Dismiss Sherwin-Willaims' Amended Complaint. On March 12, 2008, Sherwin-Willliams filed a Motion to Dismiss without prejudice from this action the City of Cincinnati, the City Solicitor in her official capacity as Law Director of Cincinnati, and the Mayor of Cincinnati in his official capacity, pursuant to Fed.R.Civ.P. 41(a). In view of Sherwin-Williams' motion, the previous motion to dismiss filed by the City of Cincinnati is rendered moot.
The City of Columbus, Ohio moves to dismiss Sherwin-Williams' Amended Complaint on the basis that there is no case or controversy for purposes of Article III of the United States Constitution. At the time of the city's motion, it had not yet commenced suit against Sherwin-Williams. Thus, in its motion, the city argues that "[t]he mere fact that the City of Columbus passed an ordinance that authorizes that certain action may be taken at some point in the future, when no such action has yet been taken, does not satisfy the requirement of ripeness that there has been an injury that is concrete and particularized." (Doc. #38 at 7). The Court notes that, since the filing of its motion, the City of Columbus has filed suit against Sherwin-Williams. Sherwin-Williams claims that it is suffering a current chilling of its right to free speech and that, for purposes of Article III, an actual case or controversy exists.
Article III, § 2 of the United States Constitution confers jurisdiction in the federal courts for "cases" and "controversies." In order to satisfy Article III, the Plaintiff must show: (1) that Plaintiff suffered an "injury in fact," which means an "invasion of a legally protected interest" that is both "concrete and particularized" and "actual and imminent." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992); (2) a causal connection between the injury and the conduct complained of, Id.; and (3) that a favorable decision would likely redress or remedy the injury. Id at 561.
In this case, the Court concludes that Sherwin-Williams fails to articulate an injury that is both "concrete and particularized" and "actual and imminent." The injury to Sherwin-Williams occurs only in the context of a state court action against it and then, if at all, depending on the claims or defenses asserted. In the Court's view, the fact that an action has been commenced against Sherwin-Williams does not present an immediate injury to Plaintiff sufficient to satisfy Article III. Sherwin-Williams has the opportunity to raise its First Amendment issues as an affirmative defense to the City of Columbus' claims. Further, this Court finds that the state court is entirely capable of considering such a constitutional challenge.
The Court notes that Sherwin-Williams refers to a decision of the Fifth Circuit in Sherwin-Williams v. Holmes County, 343 F.3d 383 (5th Cir. 2003). There, a school district in Mississippi sued Sherwin-Williams, other paint manufacturers, and a number of trade associations, including the Lead Industries Association, in state court. The state court action was removed to federal court. While a motion to remand was pending, Sherwin-Williams filed a declaratory judgment action in federal court, seeking review of four issues: (1) whether various school districts could impose liability based on Sherwin-Williams' membership in various trade associations; (2) whether claims regarding failure to warn of the danger of paint were preempted by the Federal Hazardous Substances Act ["FHSA"]; (3) whether Sherwin-Williams could be the proximate cause of harm without identification of any product it made creating a lead paint hazard in a particular facility; and (4) whether Sherwin-Williams had a duty to reimburse the schools and counties for various costs. A motion to dismiss was filed based on the Anti-Injunction Act, 28 U.S.C. § 2283, as well as principles of comity, federalism and abstention.
The district court concluded that an actual controversy existed between the parties and the court further found that the Anti-Injunction Act did not apply as there was no state court action pending. Nevertheless, the court declined to exercise jurisdiction over the action. On appeal, the Fifth Circuit reversed this decision. The court noted the presence of two federal issues, the First Amendment and possible preemption of state law claims under the FHSA. The court recognized that, since there was diversity jurisdiction, both the federal and state courts had jurisdiction over Sherwin-Williams complaint. In the Fifth Circuit's view, the issue of federal preemption presented in the Complaint required the district court to exercise jurisdiction over the action.
In reaching this decision, the Fifth Circuit cited with approval a case from the Sixth Circuit, United States v. Kentucky, 252 F.3d 816, 826 (6th Cir. 2001). There, the Sixth Circuit considered the issue of abstention under the Declaratory Judgment Act when both state and federal courts had concurrent jurisdiction. The court held that, if the action presents a facially conclusive claim of federal preemption, the federal court should decide the matter. Id. This Court observes that the Sixth Circuit's decision is not controlling of the instant action since the there is no concurrent jurisdiction or any claim of federal preemption.
In the Court's view, Sherwin-Williams' Complaint in the Fifth Circuit case is entirely distinguishable from the Complaint in this case. There is no claim of federal preemption in the case at bar. Furthermore, there is no diversity jurisdiction in this Court to give rise to concurrent jurisdiction. The Complaint in this case is based solely on an issue that is an affirmative defense and which can be raised and addressed in the state court. Thus, the Court is not persuaded by the application of the Fifth Circuit's decision to the case at bar. The Court finds the City of Columbus' argument that there is no case or controversy for purposes of Article III of the United States Constitution, meritorious.
Finally, the Court notes that, in its Memorandum contra, Sherwin-Williams addresses the appropriateness of this Court's possible abstention under the doctrine set forth in Younger v. Harris, 401 U.S. 37 (1971). Under this doctrine, principles of federalism require a district court to abstain from interfering with a pending state court matter, and dictate that "constitutional claims should be raised and decided in state courts without interference from federal courts." Doscher v. Menifee Circuit Court, 75 Fed. Appx. 996, 997 (6th Cir. 2003), citing Penzoil Co. v. Texaco, Inc., 481 U.S. 1, 17 (1987). Younger abstention is appropriate when three elements are satisfied: "(1) there must be an ongoing state judicial proceeding; (2) the proceeding must implicate state interests; and (3) there must be an adequate opportunity in the state proceeding to raise constitutional challenges." Id., citing Middlesex County Ethics Comm. v. Garden State Bar Assoc., 457 U.S. 423, 432 (1982); Kelm v. Hyatt, 44 F.3d 415, 419 (6th Cir. 1995).
According to Sherwin-Williams, abstention would not be appropriate because the lawsuits by the cities do not implicate important state interests or allow Sherwin-Williams an adequate opportunity to address its alleged constitutional injury. The Court disagrees. The lawsuits at issue in state court implicate state interests, regardless of whether the cases succeed or not. Sherwin-Williams may have an affirmative defense based on a First Amendment right. This Court finds that a state court is entirely capable of addressing such a defense. Accordingly, the Court would find Younger abstention appropriate.
IV.
For the foregoing reasons, the Motions to Dismiss (Doc. #19, #38, #39 and #44) are GRANTED.