Petition — Nelson Oil Co. v. Shell Oil Co.

Supreme Court brief1980

Ask Donna

What actually matters in this document.

Text

te Supreme Court, U.S,

« FILED

80-519 OCT 2 1980

| MICHAEL RODAK IR, CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1980

NELSON OIL COMPANY, INC.,

Petitioner,

-vs-

SHELL OIL COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIROARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS

DAVID LAUFER,

Counsel of Record

KENNETH P. ROBERTS

JAMES H. LEHR

Of LAUFER AND ROBERTS

Attorneys for Petitioner

15760 Ventura Boulevard

Suite 1825

Crocker Bank Building

Encino, California 91436

(213) 990-6633

QUESTIONS PRESENTED

1. Whether the Temporary Emergency

Court Of Appeals erred in sanctioning

the District Court's exercise of juris-

diction, in light of the fact that the

case had already been remanded to state

court, and in violation of 28 U.S.C.

§1447(d).

2. Whether the Temporary Emergency

Court of Appeals erred in affirming the

District Court's failure to defer the

substantive issues herein to the primary

jurisdiction of the Department of Energy,

in light of the failure of the District

Court to consider Petitioner's competi-

tive viability as an independent marke-

ter of gasoline, and in light of the

Department of Energy's statutory obliga-

tion to do so.

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1980

NO.

NELSON OIL COMPANY, INC.,

Petitioner,

-vs-

SHELL OIL COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

TEMPORARY EMERGENCY COURT OF APPEALS,

To The Honorable Chief Justice and

Associate Justices of the Supreme Court

of the United States:

Nelson Oil Company, the Petitioner

herein, prays that a writ of certiorari

issue to review the judgment of the

Temporary Emergency Court of Appeals en-

tered in the above-entitled case on

July 21, 1980.

TABLE OF CONTENTS

QUESTIONS PRESENTED

TABLE OF AUTHORITIES

OPINION BELOW

JURISDICTION

STATUTES AND REGULATIONS

INVOLVED

STATEMENT OF THE CASE

REASONS FOR GRANTING THE WRIT

I. THE TRIAL OF THIS ACTION IN

FEDERAL COURT WAS ERROR AND

IN EXCESS OF JURISDICTION,

BECAUSE A PRIOR DISTRICT COURT

HAD REMANDED THE ACTION TO

STATE COURT AND, PURSUANT TO

28 U.S S.C. §1447 Ta), SUCH ORDERS

ARE FINAL.

A. THE PRIOR ORDER OF THE

DISTRICT COURT REMANDING

THIS ACTION TO STATE

COURT WAS RES JUDICATA

ON THE QUESTION OF THE

PROPER FORUM.

B. THE ECONOMIC STABILIZATION

ACT DOES NOT PERMIT A CIR-

CUMVENTION OF 28 U.S.C.

§1447(d); DEFENSES BASED

iii

UPON THE ACT MAY BE HEARD

IN STATE COURT.

C. SHELL HAS IMPROPERLY USED

THE REMOVAL PROCEDURE FOR

THE PURPOSE OF FRUSTRAT-

ING TIMELY ACCESS TO STATE

COURT.

II. THE DISTRICT COURT AND TECA

ERRED IN INTERPRETING AND

APPLYING THE CERTIFICATION

REGULATION WITHOUT FIRST -

FERRING THE ISSUE TO THE DOE

AND IN A MANNER INCOMPATIBLE

WITH THE EMERGENCY PETROLEUM

ALLOCATION ACT.

CONCLUSION

TABLE OF AUTHORITIES

Cases

American Fire & Casualty Co. v.

Finn,

341 U.S. 6, 95 L.Ed. 702 (1951)

Ashland Oil Corp. v. Federal

Energy Administration,

389 F.Supp. [119 (N.D. Cal. 1975)

Chandler v. O'Bryan,

445 F.2d 1045 Cloth Cir. 1971)

Coan v. State of California,

ll Cal.3d 2660, 520 P.2d 1003 (1974)

Eastern Air Lines, Inc. v. Mobil

Oil Corp.,

403 F.Supp. 757 (S.D. Fla. 1975)

Exxon Corp. v. Federal Energy

Administration,

417 F.Supp. 516 (D. N.J. 1975)

Far East Conference v. United

States,

342 U.S. 570, 96 L.Ed. 576 (1951)

Hampton House Management Corp. v.

Saleh,

357 F.Supp. 591 (S.D. N.Y. 1973)

Missouri Pac. Ry. Co. v.

Fitzgerald,

306 Uce. see, 26' S.Ct. 369,

40 L.Ed. 536 (1896)

Cases

Mobil Oil Corp... v. Federal

Ener Administration,

566 F.2d 67 (TECA 1977)

Morey v. Lockhart,

123 U.S. 56, 31 L.Ed. 68 (1887)

Nelson Oil Co. v. Shell Oil Co.,

Los Angeles Superior Court No.

C271545 (currently pending)

Orange & Rockland Utilities, Inc.

v. Howard Oil Co., 416 F.Supp.

460 (S.D. N.Y. 1976)

Owen Equipment & Erection Co. v.

Kroger,

7 U.S. 365, 57 L.Ed.2d 274 (1978)

Robertson v. Ball,

534 F.2d 63, (5th Cir. 1976)

Shell Oil Co. v. Nelson Oil Co.,

(TECA No. 9-47, Slip opinion,

July 21, 1980)

Terrell Oil Corp. v. Atlantic

Richfield Co.,

468 F.Supp. 860 (E.D. Tenn. 1978)

Thermtron Products, Inc. v.

Hermansdorfer,

423 U.S. 336, 46 L.Ed.2da 542

(1976)

Federal Statutes

10 U.S.C. §211.13(f)

12 U.S.C. §1904 note §210

12 U.S.C. §1904 note §211

15 U.S.C. §751

15 U.S.C. §753(b) (1) (D)

15 U.S.C. §754(a) (1)

28 U.S.C. §1254(1)

28 U.S.C. §1447(d)

Miscellaneous

Department of Energy Notice of

Rulemaking Proceeding,

44 Fed. Reg. 69962 (Dec. 5, 1979)

Exec. Order 11748,

33575 (Dec. 6,

39 Fed. Reg.

1973)

H. R. Rep. No. 93-531, 93d Cong.,

lst Sess. (1973); reprinted in

[1973] U.S. Code Cong. & Admin.

News 2582

vii

OPINION BELOW

The opinion of the Temporary Emer-

gency Court of Appeals is unreported

and is reproduced in Appendix A.

JURISDICTION

The judgment of the Temporary Emer-

gency Court of Appeals was entered on

July 21, 1980. The Petition for Rehear-

ing was denied on September 9, 1980.

The jurisdiction of the Supreme Court is

invoked under 28 U.S.C. §1254(1).

STATUTES AND REGULATIONS INVOLVED

The following statutes and regula-

tions should be considered in determining

the issues herein, the pertinent texts

of which are reproduced in the Appendix:

1. The Economic Stabilization

Act of 1970, 12 U.S.C. §1904, note

§§210, 211;

2. The Emergency Petroleum

Allocation Act of 1973, 15 U.S.C. §751 et

seq. (Appendix H) ;

3. 28 U.S.C. §1447(d) (Appendix

I);

4, 10 C.F.R. §211.13(f) (Ap-

pendix J).

STATEMENT OF THE CASE

Nelson is a Shell-branded indepen-

dent marketer, or "jobber", and franchi-

see of Shell, an integrated refiner and

distributor of petroleum products. Nel-

son filed a complaint against Shell in

California state court, on September 22,

1978, for unfair competition, fraud and

other unfair business practices in con-

nection with Shell's efforts to horizon-

tally control the marketing of Shell gas-

Oline in California. Shell removed the

complaint to federal court and filed a

counterclaim, asserting jurisdiction pur-

suant to, inter alia, the Economic Sta-

bilization Act of 1970, 12 U.S.C. §1904,

note §210 and the Emergency Petroleum

Allocation Act of 1973 ["EPAA"], 15

U.S.C. §754(a) (1).

Shell's counterclaim included an

allegation that Nelson had violated 10

C.F.R. §211.13(f£), which, Shell contend-

ed, required Nelson to "downward certi-

fy" or reduce the Department of Energy

["DOE"]-ordered allocation that Nelson

was entitled to receive from Shell, if

Nelson's customers' needs declined.

Nelson and the amicus below contested

this interpretation. Although requested

by Shell, the DOE has never issued any

order requiring Nelson to downward cer-

tify.

For the sake of clarity, it should

be noted in this regard that this Peti-

.-. |

tion raises only the questions of who is

the proper body to determine the meaning

and application of the regulation and the

manner in which such determination is to

be made; this Petition does not seek this

Court's determination of the meaning of

the regulation.

The District Court (Honorable Robert

Firth), on December 27, 1978, remanded

the removed complaint, as well as Shell's

counterclaim, for adjudication in the

state court, pursuant to 28 U.S.C. §1447

(c). (Appendix E).

Rather than proceed in state court,

Shell refiled its counterclaim in the

District Court (Honorable Manuel Real)

aS a complaint, on February 20, 1979, al-

leging the same claims that had appeared

in its counterclaim, less one count.

Nelson brought motions to dismiss,

on the grounds that the regulatory issues

should be heard by the Department of En-

ergy, and because Judge Firth had already

remanded the entire proceedings to state

court. Both motions were denied.

The action proceeded to trial. At

the conclusion of the trial, the court

awarded Shell:

1. Money damages of

$617,308.98, representing the profit of

3.02 cents per gallon that Shell would

have made if it had sold the gasoline

through its dealers instead of through

an independent ,obber.

2. Immediate reduction of Nel-

son's DOE allocation from Shell by

17,935,929 gallons annually (approxi-

mately 40% of Nelson's gasoline supply),

without regard to the new 1977-1978 base

period set by DOE regulations.

3. <A declaratory judgment that

Shell could give notice to Nelson of ter-

mination of its franchise (this issue is

now pending in the Ninth Circuit Court

of Appeals) (Appendices C, D).

Nelson appealed the judgment to the

Temporary Emergency Court of Appeals

["TECA"], arguing, inter alia, that the

District Court lacked subject matter jur-

isdiction because Shell's complaint was

identical to its prior counterclaim,

which had been remanded to state court,

and that the regulatory issues should

have been deferred to the primary jur-

isdiction of the DOE. The TECA affirmed

the judgment on July 21, 1980 (Appendix

A). On September 9, 1980, Nelson's Peti-

tion for Rehearing was denied (Appendix

B).

REASONS FOR GRANTING THE WRIT

THE TRIAL OF THIS ACTION IN

FEDERAL COURT WAS ERROR AND

IN EXCESS OF JURISDICTION,

BECAUSE A PRIOR DISTRICT COURT

HAD REMANDED THE ACTION TO

STATE COURT AND, PURSUANT TO

28 U.S.C. §1447(d), SUCH ORDERS

ARE FINAL.

A. THE PRIOR ORDER OF THE

DISTRICT COURT REMANDING

THIS ACTION TO STATE

COURT WAS RES JUDICATA

ON THE QUESTION OF THE

PROPER FORUM,

The TECA committed error in af-

firming the judgment of the District

Court, because the District Court had no

subject matter jurisdiction. This is so

because a different District Court had

previously remanded the action, including

Sheil's counterclaim, to state court, and

that order is final and not reviewable.

The statute controlling proce-

dure after removal, 28 U.S.C. §1447(d),

provides:

"An order remanding a

case to the state court from

which it was removed is not

reviewable on aPRSeS or

otherwise ....,

By refiling its remanded counter-

claim as a complaint in another Dis-

trict Court, Shell circumvented the

provisions and purpose of 28 U.S.C.

§1447(d). This court and other courts

have long recognized that once an ac-

tion improperly removed to federal

court is remanded to state court, it

must remain in state court for adjudi-

cation:

"[S]o far as the ques-

tion of a forum in which a

cause is to be litigated is

concerned, the determination

of a federal district court

that a cause is not removable

and remanding it to a state

court is final. Missouri Pac.

Ry. Co. v. Fitzgerald, 160

U.S. 556, 583, te S.Ct. 389,

40 L.Ed. 536 (1896)... .

[The Order to Remand] is

res judicata as to any further

attempts to litigate the same

issues in a federal court."

——_—_—-

Chandler v. O'Bryan, 445 F.2d

1045, 1057 (10th Cir. 1971)

(emphasis added).

The TECA itself acknowledged both

that Shell's counterclaim had been re-

manded to state court and that Shell's

federal complaint was identical to its

remanded counterclaim:

"The claims stated by

Shell in its complaint were

Originally pleaded in a

counterclaim against Nelson

in an action charging unfair

competition brought by Nel-

son. Shell removed the case

to federal court and there-

upon filed its counterclaim.

That case was remanded to

state court in December,

1978." (TECA No. 9-47, Slip

op. at 4, n.l, July 21, 1980)

(Appendix A).

The Court has always been wary

of improper attempts to invoke feder-

al jurisdiction. In American Fire &

Casualty Co. v. Finn, 341 U.S. 6, 95

L.Ed. 702 (1951), this Court stated:

"The jurisdiction of the

federal courts is carefully

guarded against expansion by

judicial interpretation or by

prior action or consent of

the parties. To permit a

federal trial court to enter

a judgment in a case removed

without right from a state

court. . . [would] work a

wrongful extension of feder-

al jurisdiction and give

federal courts a power the

Congress has denied them."

Id. at 17-18 (emphasis added)

(reversing judgment and order-

ing remand to state court).

By permitting Shell to refile its

remanded counterclaim as a complaint,

the District Court and TECA have sanc~

tioned a circumvention of 28 U.S.C.

§1447(d) that constitutes error, and

requires this Court's attention. As

this Court stated in Owen Equipment &

Erection Co. v. Kroger, 437 U.S. 365,

374, 57 L.Ed.2d 274 (1978):

"It is a fundamental

precept that federal courts

10.

are courts of limited juris-

diction. The limits upon

federal jurisdiction, wheth-

er imposed by the Constitu-

tion or by Congress, must be

neither disregarded nor

evaded." (emphasis added)

(reversing Court of Appeals).

Since the first District Court had

already remanded Shell's counterclaim to

state court, there was no basis for its

subsequent adjudication as a "complaint"

in another federal court. The decisions

of this Court and the provisions of 28

U.S.C. §1447(d) require that the action

should have remained in state court and

that there was no possibility of feder-

al jurisdiction.

The rifth Circuit has noted:

"[O]nce the federal dis-

trict court considers the pro-

per factors and decides to re-

mand, the action should go for-

ward in state court without the

further delay of appeal, and

without regard to whether the

federal district court was cor-

rect or incorrect." Robertson

ll.

v. Ball, 534 F.2d 63, 66, n.1,

(5th Cir. 1976); see Thermtron

Products, Inc. v. Hermansdor-

fer, 423 U.S. 336, 343, 46 L.Ed.

2d 542 (1976) (rule well estab-

lished since 1887).

B. THE ECONOMIC STABILIZATION

ACT DOES NOT PERMIT A CIR-

CUMVENTION OF 28 U.S.C.

§1447(d); DEFENSES BASED

UPON THE ACT MAY BE HEARD

IN STATE COURT.

Based upon the discussion, supra,

it is clear that Shell's counterclaim

should have remained in state court.

The TECA, however, excused Shell's re-

filing of the remanded counterclaim

aS a complaint in federal court,

stating:

"Because federal courts

have exclusive jurisdiction

over the claims raised by

Shell, (Economic Stabilization

Act of 1970, §210 12 U.S.C.

§1904 note) Shell filed an

independent action in federal

court following the remand in

Order to pursue its claim in

the proper forum."

(TECA No. 9-47, Slip op. at 4,

12.

n.l, July 21, 1980). (Appendix

A).

The TECA's statement that Shell's

remanded counterclaim had to be refiled

in federal court as a complaint, be-’

cause federal courts have exclusive

jurisdiction over issues involving the

Economic Stabilization Act, is mis-

taken. The issue was addressed in

Hampton House Management Corp. v. Saleh,

357 F.Supp. 591 (S.D. N.Y. 1973).

In Hampton, the defendant had re-

moved the case and asserted, in a motion

for injunctive relief, that federal jur-

isdiction existed under the provisions

of the Economic Stabilization Act. Id.

at 592. Examining the language of the

Act, the court disagreed:

"[D]efendant overlooks

the exception expressly pro-

vided by [12 U.S.C. §1904,

note §211]:

'(NJothing in this sub-

section . . . affects the

power of any court of compe-

tent jurisdiction to consi-

der, hear, and determine any

issue by way of defense

(other than a defense based

on the constitutionality of

this title or the validity

of action taken by any agency

under this title) raised in

any proceeding before such

court,’

"Thus, while the District

Court enjoys exclusive juris-

diction to entertain an origi-

nal action arising under the

1970 Act, it shares concurrent

jurisdiction with the State

Court to hear defenses predi-

cated on the Act when raised

in actions originally brought

on other theories. ...

In the State Court action

herein, plaintiff is not seek-

ing any determination concern-

ing any federal agency action;

should defendant wish to as-

sert such a claim, the statute

expressly authorizes its adju=

dication by the State Court.

357 F.Supp. at 592-93 (empha-

Sis added) (remanding case

to state court).

Thus, the TECA's statement that

Shell had to refile its remanded coun-

terclaim as a complaint "in order to

14.

pursue its claims in the proper forum"

(Slip op. at 4, n.1l) is contradicted

by the actual language of the Act.