# Cameron v. Auster Oil & Gas Inc

> District Court, W.D. Louisiana · September 26, 2019

URL: https://www.frixlaw.com/law-library/cases/10648790

## Case

- **Court:** District Court, W.D. Louisiana
- **Decided:** September 26, 2019
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION

PARISH OF CAMERON ET AL CASE NO. 2:18-CV-00677

VERSUS JUDGE SUMMERHAYS

AUSTER OIL & GAS INC ET AL MAGISTRATE JUDGE KAY

REASONS FOR DECISION
Presently before the court is the Report and Recommendation [doc. 103] issued by the
Magistrate Judge regarding the Motion to Remand [doc. 67] filed by the Parish of Cameron and a
Motion to Remand [doc. 71] filed by intervenor-plaintiffs, the State of Louisiana ex rel., the
Louisiana Attorney General, and the Louisiana Department of Natural Resources (hereafter, state
and parish parties referred to collectively as “Plaintiffs”). In her Report and Recommendation, the
Magistrate Judge recommends that the Motion to Remand be granted on the grounds that removal
was untimely. While the Court concludes that removal here was timely, the Court agrees with the
Magistrate Judge that the Motion to Remand should be granted as explained below. Accordingly,
the motions [doc. 67 and 71] are GRANTED.
I.
BACKGROUND
Several Louisiana parishes filed forty-two lawsuits against various oilfield-related
defendants! (hereafter, all defendants in these matters will collectively be referred to as

! Alpine Exploration Companies, Inc., Anadarko E&P Onshore, LLC, Anderson Exploration Company, Incorporated,
Apache Corporation (Of Delaware), Apache Oil Corporation, Atlantic Richfield Company, Auster Oil and Gas, Inc.,

“Defendants’’) in state court alleging violations of permits issued under the State and Local Coastal
Resources Management Act of 1978 (“SLCRMA”) also known as the Coastal Zone Management
Act, La. Rev. Stat. § 49:214.21 et seq., and associated regulations, rules, and ordinances (“CZM
laws’’) based upon the defendants’ dredging, drilling, and waste disposal in coastal parishes. See,
e.g., doc. 1, att. 59, pp. 3-26.
SLCRMA provides a cause of action against companies that either violate a state-issued
coastal use permit or fail to properly obtain a coastal use permit when required. The act also
contains certain exemptions from the coastal use permitting requirements, namely, uses which do
not have a significant impact on coastal waters” and activities which were “lawfully commenced”

Badger Oil Corporation, Ballard Exploration Company, Inc., Bay Coquille, Inc., Bepco, L.P., Bopco, L.P., BP
America Production Company, Brammer Engineering, Inc., Burlington Resources Oil & Gas Company, LP, Cedyco
Corporation, Central Resources, Inc., Centurion Exploration Company, Chevron Pipe Line Company, Chevron
U.S.A. Holdings, Inc., Chevron U.S.A., Inc., Condor Petroleum Corporation, ConocoPhillips Company,
Covey Energy, Inc., Crimson Exploration Operating, Inc., Cypress E&P Corporation, Darsey Operating Corporation,
Davis Oil Company, Davis Petroleum Corporation, Denbury Onshore, LLC, Denovo Oil & Gas, Inc., Devon Energy
Production Company, L.P., Diasu Oil & Gas Company, Dominion Oklahoma Texas Exploration & Production, Inc.,
Endeavor Energy Resources, L.P., Energen Resources Corporation, Energy Properties, Inc., Energyquest II, LLC,
Enervest Operating, L.L.C., Estate of William G. Helis, Exchange Oil & Gas Corporation, Exco Resources, Inc.,
Exxon Mobil Corporation, Fieldwood Sd Offshore LLC, Freeport Sulphur Company, Freeport-Mcmoran Oil & Gas
L.L.C., Gas Transportation Corporation, Graham Royalty, Ltd., Great Southern Oil & Gas Company, Inc., Gulfport
Energy Corporation, Helis Oil & Gas Company, L.L.C., Henry Production Company, Inc., Hess Corporation, Hilcorp
Energy Company, Hilliard Petroleum Inc., Linder Oil Company, A Partnership, Honeywell International, Inc., HRC
Energy Holdings (La), Inc., Hunt Oil Company, Iberia Operating Corporation, Indian Exploration, Inc., Inexco Oil
Company, Jones Co., Ltd., Kerr-Mcgee Oil And Gas Onshore LP, Kilroy Company Of Texas, Inc., La Mesa
Production Inc., Latex-Star, Inc., Leads Resources L.L.C., Linder Oil Company, A Partnership, LLOG Exploration &
Production Company, L.L.C., LLOG Exploration Company, L.L.C., Lopco, Inc., Louisiana Energy Production LLC,
Lyons Petroleum, Inc., Mar-Low Corporation, Marsh Engineering, Inc., Mccormick Operating Company, Merit
Energy Company, LLC, Mobil Oil Exploration & Producing, Mobil Oil Exploration & Producing Southeast Inc.,
Mosaic Global Holdings, Inc., Northwest Oil Company, Oleum Operating Company, L.C., Omni Operating Co., Oxy
USA Inc., Palace Operating Company, Petroquest Energy, L.L.C., Resource Securities Corporation, Resources
Investment Corporation, Rogers Oil Co., Sable Minerals, Inc., Samuel.Gary Jr. & Associates, Inc., Shell Offshore,
Inc., Shell Oil Company, Shocker Energy Of Louisiana, Inc., Shoreline Southeast LLC, SM Energy Company,
Southeast Inc., Southport Exploration, Inc., Star Energy, Inc., Swepi LP, SWN Production Company, LLC, Taylor
Energy Company, LLC, Texas Pacific Oil Company, Inc., Texas Petroleum Investment Company, The Louisiana
Land And Exploration Company, LLC, The Meridian Resource & Exploration LLC, The Texas Company, Toce
Energy, L.L.C., Total Petrochemicals & Refining USA, Inc., Transco Exploration Company, Transcontinental Oil
Corporation, Union Oil Company of California, Vernon E. Faulconer, Inc., Vintage Petroleum, L.L.C., Wagner Oil
Company, Walter Oil & Gas Corporation, WEC Onshore, LLC, White Oak Operating Company, LLC., Whiting
Petroleum Corporation, Williams Exploration Company, Xplor Energy Operating Company, Xto Energy Inc., Zadeck
Energy Group, Inc., Zenergy, Inc.
B.S. § 49:214.34(A)(10)

prior to the enactment of SLCRMA -- the so-called “historical use” or “lawfully commenced”
exemption.’ Plaintiffs assert that the pre-SLCRMA activities by defendants were not lawfully
commenced and therefore do not fall within the exemption.
The cases were previously removed to this Court on the basis of admiralty jurisdiction,
federal jurisdiction under the Outer Continental Shelf Lands Act (“OCSLA”), 43 U.S.C. §
1349(b)(1), and federal question jurisdiction under 28 U.S.C. § 1331. Those cases were remanded
when the Court rejected these grounds for removal. As for OCSLA, the Court found that the
activities involved did not take place on the Outer Continental Shelf. The Court also found that
admiralty claims brought at law in state court pursuant to the Saving to Suitors’ Clause are not
removable in the absence of an independent jurisdictional basis. Finally, the Court held that the
defendants could establish no federal question jurisdiction because the remedies sought were
specifically limited to those arising under state law.’
Defendants have now removed this case along with eleven others again. The current Notice
of Removal, filed on May 23, 2018, asserts federal officer jurisdiction under 28 U.S.C § 1442 and
federal question jurisdiction under 28 U.S.C. § 1331.° Defendants claim that they first became
aware of these removal grounds when they received an expert report in a related case on April 30,
2018.° Defendants argue that this expert report reveals for the first time that Plaintiffs’ claims
primarily attack activities undertaken before SLCRMA’s effective date (1980), including activities
that were subject to extensive and exclusive federal direction, control, and regulation during World
War IL.

3 La. RS. § 49:214.34(C)(2)
: See Cameron Parish v. Auster Oil & Gas, Inc., W.D. La. 2:16-cv-530, Doc. 89, 101 and 102.
6 Sentntrenart issued by Plaintiffs in the case of Parish of Plaquemines v. Rozel Operating Co. (the “Rozel Report”).

Plaintiffs have filed motions to remand, arguing that (1) the claim of federal officer
jurisdiction is without merit; (2) the claim of federal question jurisdiction is without merit and is
also precluded from re-litigation; and (3) removal was untimely because the expert report was
received months, if not years, after the removing defendants knew or should have known of the
nature of the claims asserted by Plaintiffs. Defendants opposed the Motions to Remand.
On November 20, 2018, the Magistrate Judge issued a Report and Recommendation,
recommending that the Motions to Remand be granted because removal was untimely. The
recommendation that the removal was untimely was based upon the fact that the Plaintiffs’ original
petition makes numerous references to Defendants’ activities which took place prior to the
enactment of SLCRMA and that Defendants were put on notice that pre-SLCRMA activities were
at issue. Defendants timely objected to the Report and Recommendation.
Il.
LAW AND ANALYSIS
A. Timeliness of Removal.
A notice of removal must be filed within 30 days of receipt of the initial pleading in the
case by the defendant. 28 U.S.C. § 1446(b). However, if the initial pleading does not set forth
grounds for removal, “a notice of removal may be filed within 30 days after receipt by the
defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other
paper from which it may first be ascertained that the case is one which is or has become
removable.”’ The Fifth Circuit has held that “the information supporting removal in a copy of an
amended pleading, motion, order or other paper must be ‘unequivocally clear and certain’ to start
the time limit running for a notice of removal.” Bosky v. Kroger Texas, LP, 288 F.3d 208 (5" Cir.

728 U.S.C. 1446(b)(3).

2002). The document need not be a filing to qualify as an “other paper.”? Under some
circumstances, a paper filed in another case may also qualify. Jd. However, if the removal is based
on an “other paper,” that paper must still result from a voluntary act by the plaintiff. Addo v. Globe
Life and Acc. Ins. Co., 230 F.3d 759, 761-62 (Sth Cir. 2000). Generally, when courts are looking
to an “other paper” to determine removability, they are addressing the question in the context of a
diversity jurisdiction case.’ “The presence or absence of federal-question jurisdiction is governed
by the well-pleaded complaint rule, under which federal jurisdiction exists only when a federal
question is presented on the face of the plaintiff's properly pleaded complaint.” Rivet v. Regions
Bank of La.,522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998). However, under some
limited circumstances, courts do look to an “other paper” to establish federal question jurisdiction.
For example, a court may look to an “other paper” to determine whether a plaintiff's state law
claim may be one that is preempted by federal law.!°
The requirement that the grounds for removal be "unequivocally clear and certain" creates
a bright line rule requiring that the document itself reveal the grounds for removal before a party's
removal rights are subject to the 30-day cutoff. '! A party's subjective knowledge is not sufficient
to trigger the removal deadline.!* Similarly, the Fifth Circuit does not impose a due diligence
requirement on the defendant to uncover the grounds for removal based on an ambiguous
pleading.'?
In the instant case, the “other paper” on which defendants base their theory of removability
is an expert report filed in a related case in state court by Plaintiffs, called the Rozel Report. The

8 Brunet v. Butler, 2012 WL 2338740, at *3 (E.D. La. Jun. 19, 2012).
9 Eggert y, Britton, 223 Fed. App’x 394 (5 Cir. 2007).
10 Peters y, Lincoln Elec. Co., 285 F.3d 456 (6" Cir. 2002).
1! Bosky v. Kroger Texas, LP, 288 F. 3d 208, 209 (Sth Cir. 2002).
2 Td at 210.
Chapman v. Powermatic, Inc., 969 F.2d 160 (5® Cir. 1992).

Rozel Report details the precise activities which Plaintiffs allege caused damage and also specifies
preferred methods which would have prevented the damage. Defendants assert that this report
revealed for the first time that Plaintiffs were attacking activities which were subject to extensive
federal direction, control and regulation. Plaintiffs maintain that they have repeatedly referenced
pre-SLCRMA activities dating back to the original complaint. Defendants contend, however, that
while the prior filings may have referenced pre-SLCRMA activities, they did not reveal that
Plaintiffs were challenging specific activities which were heavily regulated by the federal
government during World War II. The Roze/ Report offers the opinion that there are three types of
activities which occurred which violated SLCRMA, namely:
First, there were certain uses that were legally commenced before 1980 but whose
impacts changed post-1980, triggering the requirement for a permit that was never
obtained. Second, there were certain uses that were illegally commenced at their
beginning and therefore did not qualify for the exemption from coastal permitting
or review. And third, there were certain uses that were commenced after 1980 that
did not receive appropriate permits under SLCRMA.
The Rozel Report also relies on language from a 1980 federal Final Environment Impact Statement
(“FEIS”), which was submitted for proposed federal approval of Louisiana’s Coastal Resources
Program:
Any use or activity which, prior to the initiation of the coastal use permit program,
has been lawfully commenced in good faith and for which all required permits have
been obtained is consistent with the Coastal Management Program and no coastal
use permit is required for it.... Moreover, such use or activity shall thereafter be
consistent with the program even if renewals of previously issued permits become
necessary or if new permits are required by other governmental bodies provided
that there is no significant change in the nature, size, shape, location or impacts of
the use or activity.
The authors of the FEIS offered this language to provide guidance regarding the types of activities
that would be exempt with regard to the so-called “historical use” exemption. Under Louisiana
Administrative Code § 43:1.723.B.8, Louisiana law provides a “[b]lanket exemption” under which

a use or activity shall not require a coastal use permit if (1) the use or activity was lawfully
commenced or established prior to the implementation of the coastal use permit process, (2) the
secretary determines that it does not have a direct or significant impact on coastal waters, or (3)
the secretary does not determine that a permit is required under § 723.G.
Defendants argue that Plaintiffs’ adoption of this construction of the exemption necessarily
injects a substantial federal question into the case to the extent that Plaintiffs are challenging
activities regulated by the federal government during World War II. Defendants argue that their
activities were exempt, while Plaintiffs claim they were not. The expert report provides opinions
regarding whether the activities were legally commenced and whether they had an impact on
coastal waters. Defendants assert the expert report is the first time that the pleadings or “other
papers” clearly disclose the specific activities that plaintiffs claim were not exempt and why. They
also contend that this report was the first time that the pleadings clearly and unambiguously
disclose specific practices challenged by Plaintiffs that were heavily regulated during World War
II.
The Magistrate Judge concluded that the Notice of Removal was untimely because the
involvement of pre-SLCRMA activities —i.e., activities occurring before 1980 — was apparent in
the original complaint filed by Plaintiffs. The Court disagrees. Based on the original complaint
and subsequent pleadings, Defendants were on notice that some activities occurring during the
broad time period before 1980 may be at issue in this case. However, the complaint and pleadings
do not reveal that Plaintiffs would be challenging specific activities that took place from 1941 to
1945 when the federal government’s World War II regulatory regime was in place. The basis for
jurisdiction under the federal officer removal statute — whether a defendant was “acting under” a
federal officer — requires scrutiny of the specific activities of the defendant and the relationship

between those activities and the federal government.'* Federal court jurisdiction under Grable
similarly requires some “assessment of litigation reality” to assess the substantiality of a federal
issue; in other words, the role of each legal issue in the context of the facts that have to be
established.'> Here, allegations that merely point to pre-1980 activities do not trigger the removal
deadline based on federal officer removal or federal question jurisdiction with respect to specific
activities occurring during the World War II era. These allegations may put Defendants on notice
that these activities could potentially become relevant, and Defendants could have investigated
their pre-1980 activities and “connected the dots” to reveal grounds for federal court jurisdiction.
However, the trigger for starting the removal clock requires a higher burden: the allegations must
be in the complaint or “other paper’ and must be “unequivocally clear and certain.” □ A
defendant’s subjective knowledge is irrelevant in determining removability, and there is no duty
on the part of the defendant to investigate and “connect the dots” outside the pleadings.
The case of Durham v. Lockheed Martin Corp., 445 F.3d 1247 (9th Cir. 2006), illustrates
this point.!® The plaintiff had alleged asbestos exposure based on his work as an electrician at
various Air Force facilities. He sued Lockheed. The complaint, however, did not identify which
specific Lockheed products resulted in his exposure. At the time, Lockheed provided aircraft to
the government under government contracts, and commercial aircraft to non-government buyers.
A subsequent discovery response identified the specific Lockheed products at issue.!’ Once those
products were identified, Lockheed removed the case on the basis that Lockheed manufactured the
aircraft for the government under a government contract.’ The court in Durham emphasized that

4 See, e.g., MTBE Prod. Liability, 480 F.3d 112 (2d Cir. 2007).
5 Wright & Miller, 13D Fed. Prac. & Proc. Juris. § 3562 (3d ed.).
16 Bosky, 288 F.3d at 209 (emphasis added).
1 Td. at 210.
18 445 F.3d at 1249.
19 Id.
20 Td. at 1249-50.

the specific facts supporting federal officer removal must be disclosed in the pleadings or an “other
paper” before the time period to remove commences.”! According to the court, until the specific
Lockheed aircraft was identified, the grounds for removal had not been disclosed. It was irrelevant
that Lockheed could, through investigation and due diligence, have uncovered the grounds for
removal based on allegations identifying where the plaintiff worked. The Durham court also noted
that the “liberal” interpretation of the federal officer removal provisions in 28 U.S.C. § 1442
extends to the deadline for removal.”*
The Court finds the same reasoning applies in the instant case. Until the point when
Plaintiffs revealed the specific activities mentioned in the Rozel Report, Defendants had no basis
to assert the grounds for removal which they now assert. That report was filed in the related matter
on April 30, 2018. As the Notice of Removal was filed on May 23, 2018, the Court finds that the
removal was timely. As the removal was timely, the court will address the grounds for removal
raised in the current Notice of Removal: “federal officer” removal under 28 U.S.C. § 1442(a) and
federal question jurisdiction under 28 U.S.C. § 1331.
B. Federal Officer Removal.
A defendant may remove any action against “[t]he United States or any agency thereof or
any officer (or any person acting under that officer) of the United States or of any agency thereof,
[sued in] an official or individual capacity for any act under color of such office.” 28 U.S.C. §
1442(a). “[F]ederal officer removal under § 1442 is unlike other removal doctrines: it is not narrow
or limited.” State v. Kleinert, 855 F.3d 305, 311 (5th Cir. 2017). The Supreme Court requires “a
liberal interpretation of § 1442(a) in view of its chief purpose—to prevent federal officers who

21 Tq at 1253. According to the court, this rule “protects the government's right of removal and encourages plaintiffs
to disclose the facts underlying their claims early on. We note that an opposite result would encourage gamesmanship
and defeat the policies underlying sections 1442 and 1446.” Id.
22 see also Morgan v. Huntington Ingalls, Inc., 879 F.3d 602, at fn 10 citing Durham for this proposition.

simply comply with a federal duty from being punished by a state court for doing so.” State v.
Sparks, 978 F.2d 226, 232 (5th Cir. 1992). Section 1442 applies to any “private persons ‘who
lawfully assist’ the federal officer ‘in the performance of his official duty.’” Watson v. Philip
Morris, 551 U.S. 142, 151 (2007). Section 1442(a) creates an exception to the “well-pleaded
complaint” rule in that “the raising of a federal question in the officer's removal petition...
constitutes the federal law under which the action against the federal officer arises for Article
III purposes.” Mesa v. California, 489 U.S. 121, 136 (1989). A defendant may remove a case under
§ 1442(a) by showing “(1) that it is a person within the meaning of the statute, (2) that it has a
colorable federal defense, (3) that it acted pursuant to a federal officer’s directions, and (4) that a
causal nexus exists between [its] actions under color of federal office and the plaintiffs claims.”
Legendre v. Huntington Ingalls, 885 F.3d 398, 400 (Sth Cir. 2018). There is no dispute that
Defendants qualify as “persons” under the first requirement. Accordingly, the Court starts with the
second requirement that Defendants “acted under” a federal officer’s direction.
1. “Acting Under” a Federal Officer.
To satisfy § 1442(a)’s “acting under” prong, a defendant must show “an effort to assist, or
to help carry out, the duties or tasks of the federal superior.” Watson, 551 U.S. at 152. The Watson
Court distinguished a party’s compliance with federal regulations from actions “helping the
Government to produce an item that it needs.”*? Assistance that “goes beyond simple compliance
with the law and helps officers fulfill other basic governmental tasks” meets § 1442(a)’s “acting
under” requirement.”* To establish that a person is “acting under” a federal official, a removing
party must show a “substantial degree of direct and detailed federal control over the defendant’s

24 Td.
10

work....””° This relationship between the defendant and the federal office or official must involve
“subjection, guidance, or control.””° It is not sufficient to merely show that “the relevant acts
occurred under the general auspices of a federal office or officer.”?”
The cases applying this “acting under” requirement provide useful guidance as to how to
draw the line between “direct control” and mere regulation. Many cases where courts have found
sufficient control and direction to satisfy the “acting under” requirement involve government
contractors who manufacture products according to detailed specifications and oversight by an
agency or officer of the federal government.”® For example, in Winters, the plaintiff sued for
personal injuries received as a result of exposure to Agent Orange while working as a civilian
nurse for the United States Agency for International Development in Vietnam.”? Diamond
Shamrock was a government contractor that supplied the mix of herbicides known as Agent
Orange to the United States Defense Department.*’ The Fifth Circuit affirmed the District Court’s
conclusion that Diamond Shamrock was “acting under” a federal office or office in supplying this
mix of herbicides. The court observed that the Defense Department mandated a specific mixture
of herbicides making up Agent Orange and that “the defendants were compelled to deliver Agent
Orange to the government under threat of criminal sanctions.”°! The court concluded that the

25 In re “Agent Orange” Prod. Liab. Litig., 304 F. Supp. 2d 442, 447 (E.D. N.Y. 2004).
26 Zeringue v. Crane Co., 846, F.3d 785, 793 (5th Cir. 2017) (citing Watson v. Philip Morris Cos., Inc., 551 U.S. 142
(2007)).”
27 Ryan v. Dow Chem. Co., 781 F. Supp. 934, 947 (E.D. N.Y. 1992)
8 See, e.g., Zeringue, 846 F.3d 785 (Sth Cir. 2017) (government directives to use asbestos); Savoie v. Huntington
Ingalls, Inc., 817 F.3d 457, 460, 465 (Sth Cir. 2016) (government requirement that contractor use asbestos in the
thermal installation of Navy ships); Jn re Asbestos Products Liab. Litig. (No. VL), 7 F. Supp. 2d 736 (E.D. Pa. 2011)
(“acting under” requirement satisfied where government contractor established that the government had approved
reasonably precise specifications that called for the use of asbestos and that the contractor’s products conformed to
those specifications); Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 399 (Sth Cir. 1998) (government
contracted with the defendants for a specific mixture of herbicides known as Agent Orange); Holdren v. Buffalo
Comps, Inc., 614 F. Supp. 2d 129 (D. Mass. 2009) (contractor complied with precise design specifications).
29 149 F.3d at 390.
30 Id.
31 Id.
11

federal government exercised direct control over the composition and production of Agent
Orange.” In other words, the plaintiff's injuries resulted from an aspect of the product that was
mandated and controlled by the federal government under the terms of a contract with Diamond
Shamrock.
Similarly, in Zeringue, the plaintiff sued multiple defendants for damages caused by
asbestos exposure.*’ He claimed exposure while deployed with the U.S. Navy as well as exposure
when he worked in the Avondale Shipyard near Navy ships that contained asbestos.** The court
found that the defendants had “acted under” a federal office or officer with respect to these asbestos
exposure claims because the Navy had mandated the use of asbestos insulation in its contract
specifications and the defendants complied with those requirements.*? According to the court,
“equipment could not have been installed aboard Navy vessels unless it was first determined by
the Navy to be in conformity with all applicable Navy specifications.”°° The court further noted
that had the defendant not complied with the specifications and provided these products to the
government, “the Navy would have had to build those parts instead.”*’ In all of these cases, the
plaintiffs’ claims arose out of conduct mandated by the government.
On the other hand, two cases where the courts concluded that the “acting under”
requirement was not satisfied illustrate the limits of federal officer removal: Watson, 120 S. Ct.
2301, and In re Methyl Tertiary Butyl Ether ("MTBE") Prod. Liab. Litig., 480 F.3d 112 (2d Cir.
2007). In Watson, the plaintiffs alleged that Phillip Morris manipulated the design of its “light”
cigarettes so that they tested for lower levels of tar and nicotine. The industry’s testing process for

32 Td.
33 846 F.3d 785.
34 Td. at 788.
35 Td.
36 Id. at 792.
37 Id.
12

measuring tar and nicotine was operated under the regulatory supervision of the Federal Trade
Commission (FTC). The Supreme Court concluded that Phillip Morris was not “acting under” the
FTC even though the testing process for tar and nicotine was heavily regulated. The Court noted
that a private party’s compliance with federal law or acquiescence to a federal agency’s order does
not satisfy the "acting under" requirement of the federal officer removal statute, "even if the
regulation is highly detailed and even if the private firm's activities are highly supervised and
monitored.”?* In other words, differences in the degree of regulatory oversight alone cannot bring
a regulated party within the contours of section 1442(a):
As we have pointed out, however, differences in the degree of regulatory detail or
supervision cannot by themselves transform Philip Morris' regulatory compliance
into the kind of assistance that might bring the FTC within the scope of the statutory
phrase “acting under” a federal “officer.” And, though we find considerable
regulatory detail and supervision, we can find nothing that warrants treating the
FTC/Philip Morris relationship as distinct from the usual regulator/regulated
relationship. This relationship, as we have explained, cannot be construed as
bringing Philip Morris within the terms of the statute.’
The Court also distinguished the government contractor line of cases, such as the Agent Orange
and asbestos cases, by reasoning that the defendants in those cases were assisting the federal
government by producing an item that the government needed pursuant to a contract. Jd. No such
contractual relationship existed in the Watson case.
In MTBE Prod. Liab. Litig., the plaintiffs brought claims against private companies that
"manufactured, refined, marketed, or distributed gasoline containing MTBE" on the grounds that
this additive contaminated water supplies.‘ The defendants attempted to remove the case under
the federal officer removal statute on the grounds that the federal Clean Air Act and regulations
promulgated by the Environmental Protection Agency (EPA) required them to reformulate their

38 120 S. Ct. at 2308 (internal cites omitted).
39 Td.
40 480 F.3d at 114.
13

gas with additives such as MTBE to “oxygenate” the gas and therefore reduce emissions in certain
metropolitan areas.*! The District Court concluded that the defendants had satisfied the "acting
under" requirement for removal on the grounds that the defendants used MTBE because EPA
regulations required them to oxygenate their product for certain metropolitan areas. Even though
other additives had been approved to oxygenate gasoline, the District Court noted that "both
Congress and the EPA were aware that the defendants would have to use MTBE in order to comply
with the Clean Air Act's requirements."** The District Court further noted that MTBE was the only
approved additive available in a quantity sufficient to comply with the EPA's regulations. /d. The
Second Circuit reversed. According to the court, there was no evidence of "an explicit directive in
either the Clean Air Act or its implementing regulations" that required the use of MTBE. Jd. In
other words, while the statute and implementing regulations required defendants to oxygenate their
gas, the regulations did not mandate that this be done by the addition of a specific additive, namely
MTBE.” Nor did the court find evidence that these regulations were implemented with the
knowledge that the use of MTBE was the only way that the defendants could comply with the
directives of the EPA's regulations.“
In the present case, Defendants contend that Plaintiffs’ claims challenge the following
aspects of their pre-SLCRMA activities that were allegedly governed by federal regulations and
directives during World War II:
e how Defendants spaced wells;
e Defendants’ use of dredged canals instead of roads;

41 Td.
# Td. at 126.
43 Id.
44 Td.

14

e Defendants’ use of vertically drilled wells;
e Defendant’s use of earthen pits and centralized tank batteries;
e Defendants’ practices involving water discharged from drilling sites and the failure
to re-inject saltwater; and
e Defendants’ use of inadequate tubing.*
Defendants characterize the U.S. oil and gas industry as essentially an agent of the federal
government during World War II, and that the industry’s activities were tightly controlled to
support the country’s war efforts.*° They contend that federal regulations and directives issued
during the war mandated the activities challenged by Plaintiffs. Specifically, in 1941, President
Franklin Roosevelt created the Office of Petroleum Coordinator,*” which subsequently was
renamed the Petroleum Administration for War (“PAW”).*® PAW issued directives to the oil
industry to manage the allocation of material for necessary operations and to maximize oil and gas
production needed for the war. One example offered by Defendants is PAW-issued directives
mandating the spacing of oil wells in order to preserve materials.” Defendants argue that since
PAW controlled the materials necessary for drilling activities, oil companies were required to
comply with PAW mandates in order to function. They also argue that the government set
production quotas. Plaintiffs, however, argue that PAW did not “order” oil and gas companies to
meet quotas, but rather imposed conservation measures known as “allowables,” or ceilings on the
amounts that producers were allowed to produce so that reservoirs were preserved.~°

45 Defendants’ Mem. at 24-31 [doc. 97]. The Court notes that Plaintiffs challenge how Defendants have characterized
their allegations but the court need not resolve that dispute in addressing the elements of § 1442(a).
46 Defendants’ Mem. At 13-15 [doc. 97].
47 See Exhibit X-10 at 353-54, 359; X-11 at 703 to Doc. 97.
48 See Exhibit X-9 at 141 to Doc. 97; see also X-47; X-11 at 738 to Doc. 97.
4 See Exhibit X-29 to Doc. 97.
3° See Exhibit 33 to Doc. 97.
15

Applying the reasoning of Watson and MTBE Prod. Liab. Litig. to the facts of this case,
Defendants have not demonstrated the “subjection, guidance, or control” required to show that
they were acting under a federal office or officer.*! First, unlike Winters and Zeringue, Defendants
have not shown that their World War II era activities were mandated by PAW or any other federal
agency. For example, Defendants point to no actual federal directive governing well spacing.”
Nor have they shown that PAW or any other federal agency mandated vertically drilled wells.©*
Defendants have referred to three specific instances of federal involvement with operations in the
East and West Hackberry fields, where this particular case is located.** Each of the three instances
involved applications for exceptions to Order M-68, which is the PAW order issued regarding
conservation of materials.°> Each of the three applications were approved and the companies
seeking permission were allowed to obtain materials under less stringent requirements. Critically,
Defendants have not offered any instances where PAW prohibited any of their activities in these
areas. As in MTBE Prod. Liab. Litig., there is no evidence that PAW and other federal agencies
directed Defendants’ activities or that they mandated how Defendants were to comply with federal
regulations and directives. In sum, the record demonstrates little more than a regulated industry
complying with the requirements of a federal regulatory regime. But as Watson emphasized,

5! Zeringue v. Crane Co., 846, F.3d 785, 793 (Sth Cir. 2017) (citing Watson v. Philip Morris Cos., Inc., 551 US 142
(2007)).”
5? Plaintiffs’ Mem. at 12 [doc.67-1].
53 While Defendants cite specific federal directives, as Plaintiffs point out, these directives do not mandate or
otherwise direct and control the activities challenged by Plaintiffs. Jd For example, Defendants cite Petroleum
Administrative Order (PAO) 11 as an example of a directive banning directional drilling and a PAW letter interpreting
PAO 11 to require an exception for directional drilling. Defendants’ Mem. at 11. At most, this PAO and PAW letter
show that the federal government required an exception for directional drilling. This requirement, however, was
eliminated eight months after the issuance of PAO 11. Jd. Moreover, directional drilling was never “banned.”
54 See Exhibit 122 to Doc. 97 (approved application for an exception to Order M-68 in order to obtain material for 4
wells The Texas Company proposed to drill on less stringent spacing requirements); Exhibit 123 to Doc. 97 (approved
application for an exception to Order M-68 to obtain materials for 12 wells Stanolind Oil and Gas proposed to drill on
less stringent spacing requirements); and Exhibit 124 to Doc. 97 (approved application for an exception to Order M-
68 to obtain materials to replace flowlines from above mentioned Stanolind wells).
55 Exhibit 30 to Doc. 97.
16

compliance with a regulatory regime standing alone does not amount to the control and direction
required as grounds for federal officer removal.°®
Second, the record does not reflect the government contractor relationship that existed in
Winters and Zeringue. In those cases, the courts highlighted the fact that the defendants were
supplying products needed by the federal government pursuant to contracts, and that without these
contracts the government would have to produce the products themselves. In this context, a state
court lawsuit that targeted a contractor’s activities under a government contract would threaten the
government’s ability to procure the goods that it needs. On the other hand, mere compliance with
federal regulations does not raise the same policy concern. As explained by the Watson Court:
Without evidence of some such special relationship, Philip Morris' analogy to
Government contracting breaks down. We are left with the FTC's detailed rules
about advertising, specifications for testing, requirements about reporting results,
and the like. This sounds to us like regulation, not delegation. If there is a difference
between this kind of regulation and, say, that of Food and Drug Administration
regulation of prescription drug marketing and advertising (which also involve
testing requirements), see Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1316
(C.A.D.C.1998), that difference is one of degree, not kind. a

Here, federal agencies likely entered into contracts for the sale of oil, gas, and other petroleum
products during World War II to support the war effort. But as noted by Plaintiffs, the oil and gas
industry includes “upstream” activities — exploration and production of oil and gas — and
“downstream” activities — the actual refinement of crude oil into usable petroleum products.
Although Defendants gloss over this distinction, any World War II contracts would have generally
involved “downstream” refined petroleum products, while the federal regulation at issue here
involved “upstream” exploration and production activities. Thus, unlike Winters and Zeringue,

5° 120 S. Ct. at 2308.
57 Td.
17

the Plaintiffs’ claims are not grounded in activities mandated by government contracts but are
based on Defendants’ compliance with a federal war-time regulatory regime.
Finally, Defendants’ argument fails to account for the significant role of the state's
regulation of Defendants during this same time period. Defendants contend that World War II era
federal regulations “sidelined” state regulators.°® The facts in the record do not support this
characterization. As Plaintiffs note in their Memoranda in Support of their Motions to Remand,
World War II era federal regulation did not displace regulation by the State of Louisiana. Indeed,
the record reflects that from 1941 through 1945, the Louisiana Office of Conservation issued 397
field orders directed toward specific fields, and 11 state-wide directories.* Plaintiffs point to 101
regulatory hearings held by the Louisiana Department of Conservation in 1943 without any
evidence of interference by PAW. Moreover, individual oilfield “allowables” — i.e., the amount
that a field could produce over a period of time — were set by the Louisiana Department of
Conservation.°! In light of the extensive, parallel state regulation of the oil and gas industry during
this period, the federal government’s World War II era regulation of the industry cannot be
characterized as so pervasive that it resulted in “subjection, guidance, or control” by the federal
government required to remove under § 1442(a).
2. Causal Nexus.
The third requirement for removal under § 1442(a) requires a causal nexus between the
actions taken under federal control and the charged conduct; this element is not met when a
defendant’s challenged actions are “free of federal interference.” See Savoie v. Huntington Ingalls,

58 Defendants’ Mem. at 16 [doc. 97].
5° Exhibit 1 at 3 [doc. 67-3].
60 Exhibit 6 [doc. 67-3].
panels 27-31 [doc. 67-3]. PAW exercised its authority over statewide production by setting statewide allowables.

18

Inc., 817 F.3d 457, 463 (Sth Cir. 2016). To satisfy this requirement, a defendant must show that
the actions it took under the “subjection, guidance, or control” of the federal government caused
the plaintiff's specific injuries.”
Some courts have observed that the 2011 amendment to the federal officer removal statute
appears to replace the causal nexus test with a less restrictive test. Prior to 2011, § 1442(a)
permitted removal by a federal officer who is sued “for any act under color of such office.” That
statute was amended by Congress in 2011 to allow removal by a federal officer in suits “for or
relating to any act under color of such office.”® The Fifth Circuit has continued to apply the causal
nexus test as it existed prior the 2011 amendment and this test is still binding precedent.™ In
Latiolais, the court acknowledged the apparent disconnect between the 2011 amendment to the
statute and the application of the pre-amendment causal nexus test, but concluded that:
All of these cases post-date the 2011 amendment to Section 1442(a)(1), and all
continue to cite Bartel, while drawing a distinction for removal purposes between
claims for negligence (not removable) and strict liability (temovable) pursuant to
the causal nexus test. We are bound by this series of cases.
In May 2019, however, the Fifth Circuit granted Huntington Ingalls’ petition for rehearing en banc
specifically to address whether the causal nexus analysis must be modified to address the 2011
amendment.® Until this issue is ultimately decided, the Court must apply the existing causal nexus
test as set forth in Bartel. Nevertheless, regardless of which causal nexus test is applied, the
Defendants have failed to satisfy the “acting under” requirement for federal officer jurisdiction
and accordingly, the ruling in Latiolais will not change this Court’s ruling on the Motions to
Remand. Courts have noted that the “acting under” and “causal nexus” requirements for federal

62 Td.
6 28 U.S.C. §1442(a)(1) (emphasis added).
64 See Bartel v. Alcoa S.S. Co., Inc., 805 F.3d 169 (5th Cir 2015); Legendre v. Huntington Ingalls, Inc., 885 F.3d 398
(Sth Cir. 2018).
657 atiolais v. Huntington Ingalls, Inc. will be reheard by the full Fifth Circuit in September 2019.
19

officer removal tend to “collapse” into a single inquiry: were the actions that form the basis for
the plaintiffs claims carried out under the “subjection, guidance, or control” ofp the federal
government? The Court answers this question in the negative because, at most, Defendants have
shown activities undertaken in compliance with federal regulations, which is not sufficient to

remove under §1442(a). Accordingly, the Court need not separately address causation or the
requirement that Defendants have a colorable federal defense.
C. Federal Question Jurisdiction.
Defendants alternatively argue that this Court has “federal question” jurisdiction over this

case under 28 U.S.C. § 1331. This Court has “original jurisdiction of all civil actions arising under
the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Cases “arise under”
federal law in two ways: (1) “federal law creates the cause of action”; or (2) “the plaintiff's right
to relief [under state law] necessarily depends on resolution of a substantial question of federal
law.”®” Federal question jurisdiction turns on allegations contained in a “well-pleaded”
complaint.®® Under the “well pleaded complaint” rule -- which applies to the Court’s original and
removal jurisdiction -- “federal question jurisdiction exists only when a federal question is
presented on the face of the plaintiff's properly pleaded complaint.”°? This rule “makes the
plaintiff the master of the claim; he or she may avoid federal jurisdiction by exclusive reliance on
state law.””°
The typical case for “arising under” jurisdiction is where federal law creates the plaintiffs
cause of action. Here, Defendants’ argument addresses a question that has long vexed federal

66 MTBE Prod. Liab. Litig., 488 F.3d at 125.
67 Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 689-90 (2006) (internal quotation marks omitted)
(citing Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1, 27-28
s See Pronahlse Tax Board of Cal. v. Construction Laborers Vacation Trust for Southern Cal., 463 U.S. 1 (1983).
® Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987).
10 Td.
20

courts: when does a state law claim that includes a question of federal law satisfy the "arising
under" prong of federal jurisdiction? With respect to this question, the Supreme Court recently
observed that in “outlining the contours of this slim category, we do not paint on a blank canvas.”
Gunn v. Minton, 568 U.S. 251, 133 S. Ct. 1059, 1065 (2013). Rather, “[u]nfortunately, the canvas
looks like one that Jackson Pollock got to first.” Jd. In Merrill Dow Pharm. Inc. v. Thompson, 478
U.S. 804 (1986), the Supreme Court adopted a restrictive view of "arising under" jurisdiction over
a state law claim that included a federal law issue. In so doing, the Merril] Dow Court seemed to
embrace the view that the federal statute at issue had to create a cause of action; if not, there was
no basis for federal court jurisdiction. Jd.
Defendants rely on a more recent effort by the Court to address this question, Grable &
Sons Metal Products v. Darue Eng’g & Mfg., 545 U.S. 308 (2005). In Grable, the Court concluded
that "a federal court ought to be able to hear claims recognized under state law that nonetheless
turn on substantial questions of federal law, and thus justify resort to the experience, solicitude,
and hope of uniformity that a federal forum offers on federal issues."”! Later, in Gunn, the court
explained that Grable creates a four part test for determining whether a state law claim that
contains a federal issue gives rise to federal court jurisdiction:
e First, the federal issue is "necessarily raised" in the context of the plaintiff's claim;
e second, the federal issue is “actually disputed;”
e third, the federal issue "substantial;" and
e fourth, the federal issue is "capable of resolution in federal court without disrupting the
federal-state balance approved by Congress."

Id. at 258.
21

The Court assumes without deciding that Defendants can show the first Grable
requirement. With respect to the second Grable factor, however, Defendants have not shown that
the federal issue in this case is a legal issue that is “actually disputed.” Defendants assert that in
order to establish “bad faith” practices occurring prior to SLCRMA, Plaintiffs will have to rely on
conduct and practices conducted under the supervision and direction of pre-1980 federal regulatory
regimes, including World War II era regulation by PAW. The questions raised by the impact of
this regulatory scheme, however, are grounded primarily on factual inquiries into a historical
regulatory regime and how that regime affected Defendants’ operations. These factual inquiries
do not involve substantive /egal disputes over the meaning of federal law. In Empire Healthchoice
Assurance, Inc. v. McVeigh,” the Supreme Court stressed that federal question jurisdiction under
Grable was appropriate when a case presented a “nearly pure issue of law,” rather than a “fact-
bound and situation specific” issue. As the Court held in Empire Healthchoice Assurance, “Grable
emphasized that it takes more than a federal element “to open the ‘arising under’ door.” 545 □□□□□
at 313, 125 S.Ct. 2363. This case cannot be squeezed into the slim category Grable exemplifies.”
With respect to the third Grable requirement, Defendants have not shown any issues of
federal law arising out of the World War II federal regulation of the oil and gas industry that are
“substantial” in the context of the Plaintiffs’ claims. These purported federal law issues relate to
the “historical use” or “legally commenced” exemption to the permitting requirements of the
SLCRMA. This exemption is a matter of state law that turns on whether Defendants’ pre-
SLCRMA activities or “uses” were “legally commenced or established prior to the effective date”
of the SLCRMA in 1980. Whether these activities were “legally commenced or established”
requires consideration of the entire period before 1980, including Defendants’ activities during

3 547 U.S. 677, 701 (2006).
™ Td.
22

this period and the regulatory regimes that were in place. Defendants’ jurisdictional “hook,”
however, relies on a federal war-time regulatory scheme that existed over a relatively short period
from 1941 through 1945 and which expired over seventy years ago. This jurisdictional hook does
not present a substantial federal issue for at least three reasons.
First, the “substantiality” of a federal issue under Grable turns on “the importance of the
issue to the federal system as a whole.”’> Defendants have not shown that the resolution of any
legal questions involving the federal government’s World War II era regulations would have any
relevance to any current federal regulatory regime involving the oil and gas industry.
Second, any federal issue involving World War II era regulations will not be central to this
case. In judging substantiality, the Supreme Court has referred to “the centrality of the federal
issue.”’© As used by the Court, “centrality” does not mean the number of citations to federal law,
but the importance of federal law to resolving the case.”’ Here, the overwhelming focus of this
case will be substantial questions of state law: the application of Louisiana’s SLCRMA and the
“legally commenced” exemption to the permitting requirements of that statute. World War II era
regulations will play only a small role in deciding these state law questions.’® Put a different way,
the minor role of federal law does not “justify resort to the experience, solicitude, and hope of
uniformity that a federal forum offers on federal issues.”””
Third, the resolution of legal issues involving World War II era federal regulations has
little relevance today given the role of state regulation of the industry and the changes in the
regulatory landscape during the seventy-year period following the war. As Plaintiffs point out,

Gunn, 568 U.S.251, 133 S. Ct. at 1066.
6 Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677, 699 n. 5 (2006) (emphasis added).
New York ex rel. Cuomo v. Dell, Inc., 514 F. Supp. 2d 397, 399 (N.D. N.Y. 2007).
Merrill Dow, 545 U.S. at 312.
23

federal regulation of Defendants’ activities never displaced the State of Louisiana’s regulation of
the oil and gas industry. During that period, the two regulatory regimes operated within their own
spheres. After World War II, the federal government ultimately shifted more regulatory
responsibility to the states. For example, Plaintiffs cite the passage in Title 1972 of the federal
Coastal Zone Management Act, which was intended in part to “enhance state authority by
encouraging and assisting states to assume planning and regulatory powers over their coastal
zones.”®° Moreover, Louisiana passed SLCRMA in 1980, which impacts the activities of oil and
gas exploration and production companies through the issuance of coastal use permits and other
regulations. Accordingly, the resolution of any federal issues arising from the federal
government’s World War II era regulation of the oil and gas industry now would be made in the
context of a much different regulatory environment in which Louisiana and other states play a
much larger role in regulating the oil and gas industry.
This change in the regulatory environment is also relevant to Grable’s fourth and final
factor. Specifically, the record does not reflect that a federal court resolution of any federal issues
arising from World War II era regulations is consistent with the “federal-state balance approved
by Congress” given the shift in regulatory responsibilities from the federal government to the
states. As a result, denying a federal forum for Plaintiffs’ claims would not upset the allocation of
judicial power between federal and state courts.*!
Finally, Defendants assert that the Levee Board*’ decision dictates federal question
jurisdiction. In Levee Board, the Fifth Circuit found federal jurisdiction over state law tort claims.

80 Plaintiffs’ Mem. at 22 [doc. 67-1] (citing S. Rep. No. 92-753 at 1, 1972 U.S.C.C.A.N. 4776).
81 at 1067 (in a case involving attorney malpractice claims, observing that the state has a strong interest and role in
regulating lawyers).
82 Board of Comm’rs of the Se. Louisiana Flood Prot. Auth-E. v. Tennessee Gas Pipeline Co., LLC, 850 F.3d 714,
723-24 (5th Cir. 2017), cert. denied sub nom, __ U.S.__, 138 S. Ct. 420 (2017).
24

The Board of Commissioners of the Southeast Louisiana Flood Protection Authority-East sued oil
and gas companies involved in exploration and production activities off the southern coast,
alleging that the activities caused infrastructural and ecological damage to coastal lands overseen
by the Levee Board that increased the risk of flooding due to storm surges and required costly
flood protection measures.** The Board asserted causes of action for negligence, strict liability,
natural servitude of drain, nuisance, and breach of contract as to third-party beneficiaries. The
Board sued in state court; the defendants removed, asserting the court’s “arising under”
jurisdiction. The Board’s complaint specifically described “a longstanding and extensive
regulatory framework under both federal and state law” that protects against the effects of dredging
activities and establishes the legal duties by which defendants purportedly are bound.** Although
none of the individual causes of action relied on federal law and the negligence, strict liability, and
natural servitude claims relied on state law, the complaint identified federal and state regulatory
sources bearing on oil and gas activities, including the Rivers and Harbors Act, the Clean Water
Act, and the Coastal Zone Management Act. The plaintiff itself in Levee Board specifically
invoked an extensive regulatory framework under both federal and state law aimed at protecting
against the effects of dredging activities. The Levee Board case is distinguishable from the instant
case. There, the plaintiffs alleged specific violations of federal laws and duties. Here, Plaintiffs
here do not allege any federal law violations. Other courts have also held that this type of case
does not fall within the limited category of cases set forth in Grable and Levee Board.*

83 Td.
84 Td.
85 See The Parish of Plaquemines v. Riverwood Production Co., et al, Civil Action No. 18-5217 (E.D. La. 5/28/19)
for an examination of cases arising under SLCRMA.

25

As the court finds that Defendants have failed to establish grounds for either federal officer
jurisdiction or federal question jurisdiction, Plaintiffs’ Motions to Remand are GRANTED.
D. Certificate of Appeal.
Defendants are entitled to an immediate appeal under 28 U.S.C. § 1447(d) as far as the Court’s
ruling on their entitlement to removal under the federal officer removal statute, and they have indicated
that they plan to do so. They therefore request that the Court certify for interlocutory appeal their
asserted federal question predicate for removal. The request is GRANTED. The Court finds that its
Order and Reasons addresses controlling issues of law as to which there might be substantial ground
for difference of opinion. 28 U.S.C. §1292(b). So certified, the Fifth Circuit might in its discretion
permit an appeal of all issues contained in this Reasons for Decision.
The Court will issue a separate Order in conformity with these Reasons for Decision.
THUS DONE in Chambers on this 26th day of September, 2019.
GUA SE
CO,
Robert R. Bae |
United States District Judge

26

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10648790. Public record. Not legal advice.
