Opposition Brief — Envirocare of Texas, Inc. v. Waste Control Specialists, LLC

: 2 Supr me Court, US. |

Zz) FILED

No. = EP 2 5 vn

In The

+

ENVIROCARE OF TEXAS, INC; ENVIROCARE OF

UTAH, INC; KHOSROW B. SEMNANI; CHARLES A.

JUDD; FRANK C. THORLEY,

Petitioners,

WASTE CONTROL SPECIALISTS, LLC,

Respondent.

.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Fifth Circuit

¢

OPPOSITION TO PETITION

FOR WRIT OF CERTIORARI

¢

MIcHAEL A. CARVIN

Counsel of Record

ANbDREW G. MCBRIDE

Noe J. FRANCISCO

Cooper, CARVIN &

SIDNEY POWELL ROSENTHAL, PLLC

DEBORAH PEARCE REGGIO Suite 200

Powe. & ASSOCIATES 1500 K Street, N.W.

1920 Abrams Parkway, #369 Washington, D.C. 20005

Dallas, TX 75214 (202) 220-9600

(214) 653-3933 Counsel for Respondent

~

COCKLE LAW BRIEF PRINTING CO., (800) 225-694

OR CALL COLLECT (402) 342-2831

i

TABLE OF CONTENTS

Page

ERP RIRIED 5 hoon na cent cesses sensei etente ean 1

SIATEMEENE OF TEE CARB... uw... ccc cacsccneeases 1

AEGRITEN, 05565 006560 can iccccacds daubecaeesbans 5

I. Certiorari Should Be Denied Because Substantial

Jurisdictional Questions Preclude This Court

From Addressing The Merits Of The Questions

gr Aree ie rer irneeen, On ee 5

A. Envirocare Did Not Comply With The 30-

Day Rule Of Section 1446(b).............. 6

B. Section 1447(d) Precludes This Court From

Reviewing The Fifth Circuit’s Order

Remanding This Case To State Court...... 10

II. The Court Of Appeals’ Conclusion That

Removal Was Improper On The Unique Facts Of

This Case Is Not Worthy Of This Court’s

SNS on ona d 4 hS ss beet ends comaendekwakedn 13

III. The Court Should Deny Certiorari On The

PONE DOOD hack ces canescnhepesqacntascnaees 23

SREP MERIEE Sends noc nckan ss sunheeekehnebeenbnes 30

ii

TABLE OF AUTHORITIES

Page

Cases

Aetna Cas. & Sur. Co. v. Flowers, 330 U.S. 464 (1947) .... 11

Akin v. Ashland Chem., 156 F.3d 1030 (10th Cir.

1998), cert. denied, 526 U.S. 1112 (1999)............ 29

Am. Fire & Cas. Co. v. Finn, 341 U.S. 6 (1951)....... 25

Aqualon Co. v. MAC Equip., Inc., 149 F.3d 262 (4th

oD | er rrr rrr eo 29

Archer v. Arms Tech., Inc., 72 F. Supp. 2d 784 (E.D.

Mich. 1999). . ....cncvcesvensenneapepeeeeswebwekeen 20

ARCO Envtl. Remediation v. Dep't of Health & Env't

Quality, 213 F.3d 1108 (9th Cir. 2000) ..16, 17, 20, 21, 22

Arizonans For Official English v. Arizona, 520 U.S.

GD (UGG7) ac vnc canwcveccsveeeskon3ebha tiers 7

Barbara v. New York Stock Exch., 99 F.3d 49 (2d Cir.

SUPE). gc cc cvkcccpitnvkneksévauweayeneeeeeeee 28, 29

Baron v. Strassner, 7 F. Supp. 2d 871 (S.D. Tex.

| Seni Us 20

Bernstein v. Lind-Waldock & Co., 738 F.2d 179 (7th

RE | | re re yO 29, 30

Brennan v. Southwest Airlines, 134 F.3d 1405 (9th

| ry roe ery ea 22

Buchanan v. Delaware Valley News, 571 F. Supp. 868

FED. Pa. TORR. s occdknccttvecstaivi eee 19

Cades v. H&R Block, 43 F.3d 869 (4th Cir. 1994)...... 29

Caravanas v. Hall, No. 99-1405, 1999 U.S. Dist.

LEXIS 12741 (E.D. La. Aug. 10, 1999).............. 20

be ee SN Le Rie ee,

es MANTRA Hl i han mr

ee ee ae

EAN OE REDE NES TNA A RTS tall aN a aad nd a es itis

ili

TABLE OF AUTHORITIES - Continued

Page

Cerpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d

oR eer errr Te rere ress reas y

Case v. Webb, No. 98-10064-CIV, 1998 U.S. Dist.

LEXIS 21679 (S.D. Fla. Dec. 8, 1998) .............. 20

Caterpillar, Inc. v. Lewis, 519 U.S. 61 (1996) ...... passim

Chivas Prods. Ltd. v. Owen, 864 F.2d 1280 (6th Cir.

Py Pere ve Teer eye CP ee terre tere ge 28

Citizens Bank v. Operman, 249 U.S. 448 (1919)......... 7

Dep't of Banking v. Pink, 317 U.S. 264 (1942).......... 7

Desaigoudar v. California Micro Devices Corp., No.

98-15116; 1999 U.S. App. LEXIS 1067 (9th Cir.

a Ee rrerrrrr ree rereers 17, 18, 19, 20

Erie R.R. Co. v. Tompkins, 304 U.S. 64 (1938)....... 5, 26

Ex Parte Matthew Addy S.S. Commerce Corp., 256

ON RE re er ee ret eee rr eee 11

Fax Telecommunicationes, Inc. v. AT&T, 138 F.3d 479

Rs SA Shade caste sneasen eneee 17, 18, 20

FEC v. NRA Political Victory Fund, 513 U.S. 88

ET Nee fa Va be nib wr hsseh C64 Kets secrete 8

Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394

eh al Se shape ee aes: 6s een wh oe ks 08 15, 19

Franchise Tax Bd. v. Construction Laborers Vacation

er rere 14

Fristoe v. Reynolds Metals Co., 615 F.2d 1209 (9th

ee can i aly Car boa ir bu § 6a 05 8 ee O60 06 4en ee 8

Geer Hae, Be WS. Bd (BODE)... wees se sesceens 11

German Nat'l Bank v. Speckert, 181 U.S. 405 (1901) .... 11

iv

TABLE OF AUTHORITIES - Continued

Page

Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d

306 (3d Cir. 1994), cert. denied, 514 U.S. 1063

PROT ee eee eer er eee 17, 18, 20

Grubbs v. Gen. Elec. Credit Corp., 405 U.S. 699

ee eee mere rer rar. 25, 29

Herron v. Local Union 25, No. 96-1335, 1998 U.S.

App. LEXIS 1322 (6th Cir. Jan. 27, 1998)....... 29, 30

In re NASDAQ Market-Makers Antitrust Litig., 929

P. Gee. TR CERIN. E. BORG) oi cence cvincwsvccvess 19

In re Pennsylvania Co., 137 U.S. 451 (1890)........... 11

In re Wiring Device Antitrust Litig., 498 F. Supp. 79

GAT HUME hacia cen etsd ou sehen ceekueenp Rade 20

Kidd v. Southwest Airlines, 891 F.2d 540 (5th Cir.

Se ne errr eT er re eee ny Sere 28

Kobaissi v. Am. Country Ins. Co., 80 F. Supp. 2d 488

Gea UE + kx cennds Viccdemeceesaustawaenekbae 20

Koehnen v. Herald Fire Ins. Co., 89 F.3d 525 (8th Cir.

RTT TT OTE TEC ET OTT eee TCT ree eee re 29

Lewis 9. Casey, SEB US. DED CIR) occ ne wnsscescvees 12

Lexecon, Inc. v. Milberg Weiss Bershad Hynes &

ee Bk Re | ee re re ee 8

Lowe v. NASD Regulation, Inc., No. 99-1751, 1999

U.S. Dist. LEXIS 19489 (D.D.C. Dec. 14, 1999)..... 20

M. Nahas & Co. v. First Nat'l Bank, 930 F.2d 608

i SPR cette pp errr Ty 17, 18, 20

Matton Steamboat v. Murphy, 319 U.S. 412 (1943)...... 7

Vv

TABLE OF AUTHORITIES - Continued

Page

Mech. Rubber & Supply Co. v. Am. Saw & Mfg. Co.,

747 F. Supp. 1292, vacated in part, 810 F. Supp.

SOG Cah OR. TOGO issn ceccknvayccscee races ues 19

Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804

(PPDG) « «cs avnawanissd coolsntteeacdh heen bene penmaee 16

Missouri v. Jenkins, 495 U.S. 33 (1990) .............. 7,8

Moore v. Chesapeake & Ohio Ry. Co., 291 U.S. 205

CRF OG) ccancccsnksvvecasuseuneheagnae veeee eae Rae 16

Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc.,

Se STS. DUO CEI sve viechocwtncennsepeseunbeenss 8

Northern Illinois Gas Co. v. Airco Indus. Gases, 676

ae. 27O CG Ge. BORE) «kena carncdvindvssene ees 8

Patriot Cinemas, Inc. v. General Cinema Corp., No.

86-1190-Y, 1986 U.S. Dist. LEXIS 17085 (D. Mass.

Dec. 1, 1986), vacated and remanded, 834 F.2d 208

oo ge Pere ere eer es err ere 19

Popular Democratic Party v. Puerto Rico, 24

Supp. 20 TOG GPR. BG0G) ae sc cc neccacsrcsesss 20

Portage County Bd. of Comm'rs v. City of Akron, 12

F. Supp. 2d 693 (N.D. Ohio 1998)...........0000. 20

Powers v. Chesapeake & Ohio Ry. Co., 169 U.S. 92

SUE ands bacacbcencbe at echaqe vee esanse can heneeke’ 6

Prospect Dairy Inc. v. Dellwood Dairy Co., 237

FE Supp. 176 (N.D.N.Y. 1966)... 5002 ccenvccensess 20

Reynolds v. Fergusson, 73 F. Supp. 2d 841 (W.D.

SOF ova cndvsaes Reed endeeseweeueewe ckeees 20

Rivet v. Regions Bank, 522 U.S. 470 (1998)..... 12, 14, 27

Schact v. United States, 398 U.S. 58 (1970)........... 7, 8

vi

TABLE OF AUTHORITIES - Continued

Page

Schappel v. UICI, No. 3:99-CV-1544-G, 1999 U.S.

Dist. LEXIS 19444 (N.D. Tex. Dec. 3, 1999)........ 20

Servia-Mendoza v. Burgos, 31 F. Supp. 2d 35 (D.P.R.

BOGS). cc ccccccvccesduct Ob snewh 5s SERRE EEE Re eiaS 20

Smith v. Kansas City Title & Trust Co., 255 U.S. 180

(1923) oc .sccccsscrvanereeenengae Kank Dea Ch aeons 16

Steel Co. v. Citizens For A Better Env’t, 523 U.S. 83

(1DDE) . 00 ccccdcncnctss sic v0eees ea een ane 3 6

Temptations, Inc. v. Wager, 26 F. Supp. 2d 740

CD.NL]. 1998) .. 0c sccvnveschentacaseen peewee tene 20

Thermatron Prods., Inc. v. Hermansdorfer, 423 U.S.

586 (1976)... os sca vcunsucsscmeven see beneunan ates 12

Three J Farms, Inc. v. Alton Box Bd. Co., No. 78-1257,

1978 U.S. Dist. LEXIS 14134 (D.S.C. Nov. 29,

1978), rev'd, 609 F.2d 112 (4th Cir. 1979) .......... 20

Vector Research v. Howard & Howard, 76 F.3d 692

Gils Cie, BIDE). os csecavas dedeencn ce eennean 28, 29

Village of Alden v. Cablevision Indus., No. 98-

CV-325S(H), 1998 U.S. Dist. LEXIS 20339 ,

CVDIN.Y. Oct. 36, FOR iiceccvinscd ehisteeeees 20

Volvo of Am. Corp. v. Schwarzer, 429 U.S. 1331

CPRP OR kos senses becti niu Shares seteciakeee te 11

Westwood Nursing Ctr. v. Haveman, No. 98-

CV-74023-DT, 1998 U.S. Dist. LEXIS 20584 (E.D.

SA. SOs DR ko bo ek A oes ce ee 20

XF Enterprises, Inc. v. BASF Corp., No. 99-3693,

1999 U.S. Dist. LEXIS 16834 (E.D. Pa. Nov. 2,

PP reer ery cee CSCEMEE RAE SOUL GREER 18

Vii

TABLE OF AUTHORITIES - Continued

Page

OTHER

Se ns IP EME io snaked eak iver ceeeeaaleee nl 4

a8 USC. § 1407) ........° ARR aene enw ss Melee 8

a es Be PE 5 oe esd Nason eens x 6, 7, 30

ers IE Saigo FREER Ke 4s ch oun eke 2

Pe es Ee EE oo i ved ced cee nadhacaeebans >, 6, i

UGG BOR oii ks 6, 10, 11, 12

Be Bees EE HA GNES cntkeh a cece hoasewearebis 7

14b Wright, Miller and Cooper § 3722 .............. 15

Arthur R. Miller, Artful Pleading: A Doctrine In

Search Of A Definition, 76 Tex. L. Rev. 1781 (1998) .... 15

Comprehensive Environmental Response, Com-

pensation, and Liability Act, 42 U.S.C. § 9601, et

Texas Free Enterprise Code and Antitrust Act of

1993, Tex. Bus. & Com. Code § 15.05(b)

SEP E Cer cha peh ene lakaresceumicenauainvanns i, 9, 16

1 ‘

INTRODUCTION

This case presents a peculiar instance in which a fed-

eral district court removed plaintiff’s purely state law

claim from Texas state court to federal court, based solely

on the district court’s evaluation of Texas law. That is, the

sole basis for the exercise of federal jurisdiction was the

district court’s determination that plaintiff’s state law

claim was “not viable” under Texas law. In so holding, the

district court at once denied plaintiff of both its chosen

state court forum, and, because it had already deemed

plaintiff’s state law claim “not viable” its state law claim

as well. Plaintiff therefore had no choice but to amend its

complaint to allege a federal cause of action, lest it face the

certainty of immediate dismissal in federal court. The

unanimous court below correctly concluded that on such

extraordinary facts, the district court’s actions could not be

sustained. For the reasons discussed below, this Court

should deny certiorari.

STATEMENT OF THE CASE

On May 2, 1997, Plaintiff-Petitioners Waste Control

Specialists (“WCS”) sued Defendant-Respondents Envi-

rocare of Texas, et al. (“Envirocare”), alleging only state

law causes of action. In particular, WCS alleged that Envi-

rocare had a monopoly in the business of disposal of low-

level radioactive and mixed waste, and had used its

monopoly position to prevent the State of Texas from

approving WCS’s bid to enter the market for low-level

radioactive and mixed waste. In doing so, WCS alleged,

Envirocare violated the Texas Free Enterprise Code and

Antitrust Act of 1993, Tex. Bus. & Com. Code § 15.05(b)

(1987) (“Texas Antitrust Act”), as well as the Texas com-

mon law of libel, slander, business disparagement, and

tortious interference with prospective business relations.

The parties engaged in extensive discovery while in state

court, resulting in 44 depositions and the production by

WCS of approximately 68,134 pages of documents, as well

as the appointment of a special master to resolve discovery

2

disputes. On March 13, 1998, WCS amended its Original

Petition; again, however, WCS alleged only violations of

Texas antitrust and common law. Thereafter, on April 13,

1998, approximately ten months after WCS initially filed

suit, Envirocare sought to remove this case to the United

States District Court for the Western District of Texas

pursuant to 28 U.S.C. § 1447(b).

WCS immediately filed a motion to remand the case to

state court on the ground that its complaint alleged only

violations of Texas law. The district court, however, denied

this motion. The district court acknowledged that under

the well-pleaded complaint rule, “the plaintiff is ‘the mas-

ter of his complaint,’” Pet. App. 47a (citation omitted),

and further acknowledged that “[flederal antitrust law

does not pre-empt Texas’s antitrust law.” Pet. App. 52a.

Nevertheless, the district court held that under the Fifth

Circuit’s prior decision in Carpenter v. Wichita Falls Indepen-

dent School District, 44 F.3d 362 (5th Cir. 1995), it was

obligated to deny the motion to remand if, in its view,

plaintiff had “no legitimate or viable state cause of action,

but only a federal claim.” Pet. App. 48a. The district court

then conducted a detailed analysis of Texas antitrust law,

see Pet. App. 51a-56a, ultimately concluding that “the

Texas Antitrust Act does not apply to Plaintiff’s claims of

anti-competitive behavior.” Pet. App. 56a.1 The district

court emphasized that it was “not address[ing] the merits

of the Plaintiff’s federal antitrust claim, but only whether

the Plaintiff ha[d] alleged a viable state antitrust claim.”

Pet. App. 56a n.8.

1 In so holding, the district court adopted the argument

advanced by Envirocare in its opposition to WCS’s motion to

remand, wherein Envirocare asserted: “Here the only antitrust

remedy available to WCS is federal, not because of federal

preemption but because, under long-established Texas law, the

Texas antitrust statute does not reach to exclusively interstate

transactions — like those pled in WCS’ First Amended Petition.”

Resp. App. 49a (emphasis in original).

3

The district court also held that Envirocare’s notice of

removal, filed ten months after the Original Petition, com-

plied with the 30-day Rule set forth in 28 U.S.C. § 1446(b),

pursuant to which a notice of removal must be filed within

thirty days of receipt of a pleading “from which it may be

first ascertained that the case . . . is or has become remov-

able.” The district court reasoned that it was only when

WCS filed its First Amended Petition on March 13, 1998,

that Envirocare was able to first ascertain that the case was

removable; therefore, the notice of removal, filed within

thirty days of the First Amended Petition, was timely filed.

See Pet. App. 56a-57a.

In the face of a district court decision that both denied

WCS its state court forum and rejected WCS’s state law

claims on their merits, WCS filed a Second Amended

Complaint, wherein for the first time, it alleged violations

of federal antitrust law. R. 1372-1421.

Thereafter, the district court granted Envirocare’s Rule

12(b)(6) Motion to Dismiss the Second Amended Com-

plaint. Pet. App. 14a-44a. The district court accorded WCS

eleven days and ten pages to respond to this motion, and

then held that both the state and federal claims were

foreclosed by the Noerr-Pennington doctrine. Pet. App. 44a.

A unanimous panel of the Court of Appeals for the

Fifth Circuit reversed the district court. Pet. App. 1a-13a.

The court expressly declined to address the merits of

WCS's claims, but instead, reversed the district court on

the sole ground that removal was improper. Pet. App.

6a-7a.

The court first held that the district court erred in

denying WCS’s motion to remand the case, explaining that

the district court’s error rested on its erroneous “adoption

' of language in Carpenter to support its holding that the

artful pleading doctrine could apply irrespective of the

lack of complete preemption.” Pet. App. 5a. The court

explained that Carpenter was, by its terms, limited to

instances where a state law claim was not viable because it

had been completely preempted by federal law. Carpenter was

4

therefore inapplicable to the present case. Pet. App. 6a.

The court thus concluded:

In this circumstance, WCS remained master of its

complaint. Although WCS could have alleged a

federal cause of action in its state petition, it did

not. It filed a complaint in state court alleging

wholly state claims in a non-preempted field. Its

choice is entitled to respect and precluded

removing the case to federal court absent circum-

stances not presented here. For certain, we

express no opinion as to the viability of WCS’s

state law claims. That is for a Texas court to

decide. The district court’s order, issued without

jurisdiction, can have no preclusive effect.

Pet. App. 6a-7a (internal citation omitted).

The court also held that WCS had not waived its right

to challenge the improper removal on appeal when, after

the district court had deemed its state law claim “not

viable,” WCS filed a Second Amended Complaint alleging,

for the first time, federal antitrust claims. Pet. App. 7a-11a.

Applying the equitable test announced in Caterpillar, Inc. v.

Lewis, 519 U.S. 61 (1996), the court concluded that “the

doctrine of waiver after improper removal is not applica-

ble on these facts.” Pet. App. 11a. As the court explained,

in Caterpillar, this “Court noted that the plaintiff, ‘by

timely moving for remand, did all that was required to

preserve his objection to removal,’ and held that a plaintiff

in this predicament need not seek permission for a 28

U.S.C. § 1292(b) interlocutory appeal in order to preserve

the error.” Pet. App. 8a (internal citation omitted). Rather,

“Caterpillar holds that timely objection can preserve the

jurisdictional claim despite subsequent amendment, even

if other considerations [i.e., finality, efficiency, and econ-

omy] may ultimately outweigh that objection.” Pet. App.

8a.

In this case, the Fifth Circuit concluded that “other

considerations” did not outweigh WCS’s properly pre-

served objection. In particular, the court noted that “[t]his

case consumed, relatively, a minimum of judicial

5

resources,” Pet. App. 11a, explaining that “in deciding that

waiver is not applicable to WCS, [it was] greatly influ-

enced because there was no trial on the merits,” which it

noted was at the opposite end of the procedural spectrum

from a Rule 12(b)(6) dismissal. Pet. App. 9a-10a. In addi-

tion, the court noted that unlike Caterpillar, this was not a

“diversity case” wherein “[t]here is no difference [between

a federal and state court] in treatment of the substance of

plaintiff’s claims; the change is largely procedural if at

all,” Pet. App. 8a n.2 (citing Erie R.R. Co. v. Tompkins, 304

U.S. 64 (1938)), and “f[ound] merit in . . . the narrowness

of [WCS’s] amendment,” which “state[d] the one and only

claim the district court suggested it had.” See Pet. App. lla

n.5.

Accordingly, the court ordered that the district court’s

“orders are therefore VACATED, and the case is

REMANDED to the district court with instructions to

remand this action to the state court from which it was

removed in accordance with 28 U.S.C. § 1447(c).” Pet. App.

13a.

The court below denied Envirocare’s motion to Stay its

mandate, and Envirocare has not asked this Court to stay

that mandate pending resolution of its petition for cer-

tiorari. Resp. App. 1a-3a. This case, therefore, has already

been remanded to the Texas state court, Resp. App. 4a-6a,

where proceedings are currently ongoing. Indeed, the

Texas District Court of Andrews County, Texas, 109th Judi-

cial District, has set this case to begin trial on November

27, 2000, at 9:00 a.m. Resp. App. 7a.

ARGUMENT

I. Certiorari Should Be Denied Because Substantial

Jurisdictional Questions Preclude This Court From

Addressing The Merits Of The Questions Presented.

Two separate and independent jurisdictional bars,

which this Court is obliged to address, see Steel Co. v.

Citizens For A Better Env't, 523 U.S. 83, 94-95 (1998), pre-

vent this Court from reaching the merits of the questions

6

presented. First, Envirocare did not comply with the 30-

day Rule set forth in 28 U.S.C. § 1447(c), which, by its

express terms, prohibits a federal court from taking

removal jurisdiction of a case unless the notice of removal

was filed within thirty days of a pleading from which the

defendant could ascertain that the case was removable.

Second, 28 U.S.C. § 1447(d) prohibits any review “by

appeal or otherwise,” including review by this Court, of an

order remanding a case to a state court in accordance with

28 U.S.C. § 1447(c).

A. Envirocare Did Not Comply With The 30-Day

Rule Of Section 1446(b).

Section 1446(b) states that a “notice of removal

... shall be filed within thirty days after receipt . . . of the

initial pleading” or, “[i]f the case stated by the initial

pleading is not removable, . . . within thirty days after

receipt . . . of an amended pleading . . . or other paper

from which it may be first ascertained that the case . . . is

or has become removable.” 28 U.S.C. § 1446(b) (emphasis

added).2 Envirocare, by failing to file its notice of removal

until ten months after WCS filed its Original Petition,

plainly violated this 30-day Rule. Therefore, the district

court and, consequently, this Court, lack jurisdiction of

this case. See Steel Co., 523 U.S. at 94-95.3

2 Prior to 1948, the predecessor to section 1446(b) did not

contain a specified time period for filing a notice of removal, but

simply provided that the petition for removal “may [be] ma[de]

and file[d]” at a certain time. Powers v. Chesapeake & Ohio Ry. Co.,

169 U.S. 92, 100 (1898) (quoting Act of Mar. 3, 1887, c. 373, as

corrected by Act of Aug. 13, 1888, c. 866, 25 Stat. 435) (emphasis

added). This discretionary authorization in the predecessor

statute (which was held to be merely “ ‘modal and formal,’ ” id.

at 98 (citation omitted)), is obviously fundamentally distinct

from section 1446(b)’s current mandatory deadline.

3 Because the Fifth Circuit disposed of this case on what, in

its view, was an alternative jurisdictional ground, see Pet. App.

7

This Court’s decisions in Schact v. United States, 398

U.S. 58 (1970), and Missouri v. Jenkins, 495 U.S. 33 (1990),

make clear that section 1446(b)’s 30-day Rule is jurisdic-

tional. Under those cases, a filing deadline explicitly pre-

scribed by statute is deemed a jurisdictional limit on the

judicial power. In Schact, the Court held that the filing

deadline prescribed by then Supreme Court Rule 22(2) was

not jurisdictional, explaining that “it must be remembered

that this rule was not enacted by Congress but was pro-

mulgated by this Court” and, therefore, could “be relaxed

by the Court in the exercise of its discretion.” Schact, 398

U.S. at 64. Justice Harlan, in a concurring opinion,

expounded upon the difference between a court-created

rule and a duly-enacted act of Congress, and more partic-

ularly, why the latter was jurisdictional but the former was

not. “In the absence of language providing for waiver,” he

explained, “we have without exception treated the statu-

tory limitations as jurisdictional.” Id. at 65 (Harlan, J.,

concurring) (citing Matton Steamboat v. Murphy, 319 U.S.

412 (1943); Dep't of Banking v. Pink, 317 U.S. 264 (1942);

Citizens Bank v. Operman, 249 U.S. 448 (1919)). He elabo-

rated:

As a matter of statutory interpretation, the Court

has not presumed the right to extend time limits

specified in statutes where there is no indication

of a congressional purpose to authorize the Court

to do so. Because we cannot “waive” congres-

sional enactments, the statutory time limits are

treated as jurisdictional.

Id. at 68.

In accordance with Schact, this Court, in Missouri v.

Jenkins, 495 U.S. 33 (1990), held that 28 U.S.C. § 2101(c) -

which provides that an “appeal or any writ of certiorari

to . . . the Supreme Court for review shall be taken or

7a, it had no obligation to address whether Envirocare had

satisfied section 1446(b)’s 30-day Rule. See Arizonans For Official

English v. Arizona, 520 U.S. 43, 66-67 (1997).

8

applied for within ninety days after the entry of such

judgment or decree” - “is mandatory and jurisdictional,”

and a court has “no authority to extend the period for

filing except as Congress permits.” 495 U.S. at 45. See also

FEC v. NRA Political Victory Fund, 513 U.S. 88, 90, 99 (1994).

Cf. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526

U.S. 344, 357 (1999) (Rehnquist, C. J., joined by Scalia and

Thomas, J. J., dissenting) (referring to section 1446(b) as a

“jurisdictional statute[ ]”).4

In this case, the district court held that Envirocare

could not ascertain the removability of this case from

WCS’s Original Petition, and so applied the 30-day Rule

4 Notwithstanding Jenkins and Schact, some lower federal

courts have held that the 30-day Rule is not jurisdictional. See,

e.g., Northern Illinois Gas Co. v. Airco Indus. Gases, 676 F.2d 270,

273 (7th Cir. 1982); Fristoe v. Reynolds Metals Co., 615 F.2d 1209,

1212-13 (9th Cir. 1980). Even these courts, however, hold that

the 30-day Rule “is a strictly applied rule of procedure and

untimeliness is a ground for remand so long as the timeliness

defect has not been waived.” Northern Illinois Gas Co., 676 F.2d at

273. See also Fristoe, 615 F.2d at 1212. Here, there is no argument

that WCS waived or is estopped from raising Envirocare’s

failure to comply with the 30-day Rule, as it vigorously raised

this objection both before the district court, see Plaintiff's

Motion to Remand, R. 637-639; Pet. App. 56a-57a, as well as the

court of appeals. See Brief of Appellant 25-38, No. 98-50952 (5th

Cir. Dec. 23, 1998). Thus, even if it is not jurisdictiorial, the

district court’s violation of the 30-day Rule provides a

compelling, threshold basis for denying removal here, and thus

a significant obstacle to this Court reaching the merits of the

questions presented by petitioners. In this regard, it should be

noted that the district court’s subsequent decision on the merits

provides no basis for ignoring or excusing its failure to comply

with the 30-day Rule. See Lexecon, Inc. v. Milberg Weiss Bershad

Hynes & Lerach, 523 U.S. 26, 42-43 (1998) (Distinguishing

Caterpillar, Inc. v. Lewis, 519 U.S. 61 (1996), this Court

invalidated a full federal trial because the district court had,

contrary to the mandate of 28 U.S.C. § 1407(a), refused to

remand the case to another federal court).

9

only to WCS’s First Amended Petition. This holding was

clear error. Indeed, that Envirocare’s basis for removal

could be “ascertained” from the Original Petition is not

even in dispute in this case, for Envirocare did in fact

ascertain in its Original Answer the very basis upon which it

would, nine months later, seek to remove this case to federal

court.

Specifically, in its notice of removal, the sole basis

upon which Envirocare asserted that this case was remov-

_ able was that “Plaintiff’s First Amended Petition states

clearly for the first time that Plaintiff’s allegations of anti-

trust violations exclusively involve interstate commerce.”

Resp. App. 9a (emphasis added).5 In its Original Answer

filed on June 9, 1997, however, Envirocare explicitly

acknowledged that it had already ascertained this very basis

for removing the case:

Defendants specially except to the allegation in

Plaintiff’s Original Petition that the Defendants

violated the Texas Free Enterprise and Antitrust

Act of 1983 for the reason that the Plaintiff has

failed to properly allege a monopoly violation

against the Defendants. The disposal of low-level

radioactive wastes and/or “mixed wastes” referred to

in the Original Petition involve exclusively interstate

commerce. Transactions which exclusively involve

interstate commerce are not subject to Texas antitrust

laws and instead are governed by the federal antitrust

laws. Defendants request that the Court sustain

this special exception and require the Plaintiff to

replead alleging an actionable violation of the

Texas Free Enterprise and Antitrust Act of 1983

against the Defendants.

Resp. App. 15a (emphasis added).

In short, Envirocare did, on the basis of WCS’s Origi-

nal Petition, in fact “ascertain{ ] that th[is] case is one

° This was likewise the basis upon which the district court

sustained the removal. See Pet. App. 55a-56a.

10

which is or has become removable.” 28 U.S.C. § 1446(b).

Accordingly, Envirocare’s notice of removal, filed ten

months after WCS filed its Original Petition, was filed out

of time and, therefore, this Court has no jurisdiction to

reach the merits of the questions presented.

B. Section 1447(d) Precludes This Court From

Reviewing The Fifth Circuit’s Order Remanding

This Case To State Court.

Pursuant to the Fifth Circuit’s mandate, this case has

already been remanded to state court, where a November

27, 2000, trial date has been set. A decision to grant review

in this case would therefore entail the necessity of staying

an ongoing state court proceeding and removing the

action to federal court. Envirocare has not explained the

procedure by which such a stay could be entered. More-

over, any such action would seem to be inconsistent with

the principles of Younger v. Harris, 401 U.S. 37 (1971). See

id. at 45 (“the normal thing to do when federal courts are

asked to enjoin pending proceedings in state courts is not

to issue such injunctions”). By failing to seek from this

Court an immediate stay of the remand order, Envirocare

has made any review by this Court impossible without

confronting the significant federalism issues raised by

intervening in ongoing state court litigation. This alone

constitutes a reason for denying the writ.

It is perhaps for these reasons that Congress, in enact-

ing 28 U.S.C. § 1447(d), specifically precluded any review,

“on appeal or otherwise,” of any “order remanding a case

to the State court from which it was removed.”® Section

6 Section 1447(d) provides: “An order remanding a case to

the State court from which it was removed is not reviewable on

appeal or otherwise, except that an order remanding a case to the

State court from which it was removed pursuant to section 1443

of this title shall be reviewable by appeal or otherwise.” 28 U.S.C.

§ 1447(d) (emphasis added). Section 1443, which refers to

removal in civil rights cases, is not applicable to the present case.

11

1447(d) is as applicable to this Court as it is to a court of

appeals.” Nothing in the text of the statute limits the

proscription on review to orders issued by, district (as

opposed to appellate) courts. The statute’s proscription,

moreover, is complete, extending to all review “on appeal

or otheru'se.” 28 U.S.C. § 1447(d) (emphasis added).® See

7 Cf. Volvo of Am. Corp. v. Schwarzer, 429 U.S. 1331 (1976)

(Rehnquist, Circuit Justice) (denying stay of district court

remand order because review of the order is barred by section

1447(d)); Ex Parte Matthew Addy S.S. Commerce Corp., 256 U.S.

417, 418-19 (1921) (predecessor of section 1447(d) barred

Supreme Court from reviewing remand order on petition for

writ of mandamus); In re Pennsylvania Co., 137 U.S. 451, 453-54

(1890) (same).

8 Section 1447(d)’s predecessor statute was held not to bar

Supreme Court review by writ of certiorari. See Gay v. Ruff, 292

U.S. 25, 28-30 (1934); Aztna Cas. & Sur. Co. v. Flowers, 330 U.S.

464, 466-67 (1947). Unlike section 1447(d), however, that

predecessor statute barred only review by “ ‘appeal or writ of

error.’ ” See Gay, 292 U.S. at 28 (quoting Judicial Code § 28). This

distinction is crucial because, as Gay explained, the Circuit

Court of Appeals Act of 1891 had granted the Court the power

to review by certiorari decisions that had not reached final

judgment, see Gay, 292 U.S. at 30 —- that is, decisions that could

not be reviewed by appeal or writ of error. See German Nat’! Bank

v. Speckert, 181 U.S. 405, 409 (1901). Certiorari review, therefore,

provided a separate basis for reviewing the court of appeals’

remand. In 1948, however, immediately after Aetna summarily

reaffirmed the holding of Gay, Congress enacted the broad

language of section 1447(d), extending the statutory

proscription to any review “on appeal or otherwise,” 28 U.S.C.

§ 1447(d) (emphasis added) - thus clarifying that the statute

barred review by writ of certiorari, as well as by appeal or writ of

error. In addition, whereas the predecessor statute batred

review only of “ ‘the decision of the district court so

remanding,’ ” Gay, 292 U.S. at 28 (quoting Judicial Code § 28),

section 1447(d) bars review of any “order remanding a case to

the State court from which it was removed,” 28 U.S.C. § 1447(d),

including review by this Court of an order issued by a court of

appeals.

12

Thermatron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 351

(1976) (“There is no doubt that in order to prevent delay in

the trial of remanded cases by protracted litigation of

jurisdictional issues, Congress immunized from all form of

appellate review any remand order issued on the grounds

specified in § 1447(c), whether or not that order might be

deemed erroneous by an appellate court.”). Indeed, this

case is the quintessential example of the evil section

1447(d) was designed to prevent since the Court would

have to further delay a pending state court trial in order to

resolve the already “protracted litigation of jurisdictional

issues.” Id.?

Here, the court below issued an order that this case be

remanded to the state court from which it was removed,

Pet. App. 13a, and in accordance with this order, this case

has been remanded to the state court where it is currently

being litigated. Resp. App. 4a-7a. Accordingly, section

1447(d) precludes this Court from reviewing “on appeal or

otherwise” the court’s order remanding this case to state

court.!0

9 This Court has reviewed cases in a procedural posture

similar to this, i.e., where the court of appeals reversed the

district court’s denial of a plaintiff’s motion to remand. See, ¢.g.,

Caterpillar, Inc. v. Lewis, 519 U.S. 61 (1996). However, the Court

never confronted the propriety of doing so in light of section

1447(d), and has “repeatedly held that the existence of

unaddressed jurisdictional defects ha[ve] no precedential

effect.” Lewis v. Casey, 518 U.S. 343, 353 n.2 (1996).

10 Section 1447(d) does not insulate from this Court’s

review all lower court decisions interpreting the remand

statutes, for this Court retains unfettered authority to review

appellate court decisions affirming a district court’s denial of a

motion to remand, as this Court has done on numerous

occasions. See, e.g., Rivet v. Regions Bank, 522 U.S. 470, 473-74

(1998).

13

II. The Court Of Appeals’ Conclusion That Removal

Was Improper On The Unique Facts Of This Case Is

Not Worthy Of This Court’s Review.

Even assuming the substantial jurisdictional and pro-

cedural problems with this case were resolved in

petitioner’s favor, the case is not worthy of this Court's

review on the merits. Contrary to the petition’s misleading

characterization (as we further explain below), the court

below did not opine or suggest that a state law claim

which embodies a “substantial-federal-question” could not

be removed, for the simple reason that this issue was not

before the court since no one contended that WCS’s anti-

trust claim required the court to resolve any federal law

issues. Thus, the court below discussed only the “complete

preemption” exception to the well-pleaded complaint rule

simply because that was the only exception potentially

implicated by the case - not because it was sub silentio

rejecting another possible exception. Specifically, the dis-

trict court here believed it could remove a state law claim

that was not “viable” because it had no merit under state

law, but the Fifth Circuit correctly held that courts can

remove only state claims that are rendered not “viable”

because they are completely preempted by federal law. No

inferior appellate court disagrees with the Fifth Circuit's

holding or reasoning; no federal appellate court has other-

wise articulated any rule which authorized removal in this

case and there is no split among the federal courts on the

vitality of the “substantial-federal-question” exception

after Rivet - even if that question were presented here. We

will examine each point in turn.

1. The district court here removed a purely state -

antitrust claim to federal court on the grounds that “the

Plaintiff has not adequately alleged a Texas antitrust

action” because, as the “Texas Supreme Court has long

recognized,” the “Texas antitrust statutes do not apply to

actions that are wholly interstate in nature.” Pet. App. 54a,

52a (emphases added). Thus, under the district court’s

astonishing reasoning, a federal court may take a purely

state law claim from state court if, under state law, it

14

believes the plaintiff fails to state a claim on the merits.

There is, of course, no support or logic for the notion that a

federal court may remove a purely state law claim if it

determines that the claim is not “viable” because there is

no merit to it under state law. Pet. App. 50a, 56a n.8.

Rather, it may remove a state law claim if the claim is not

viable because it has been completely preempted by fed-

eral law. In certain circumstances, the “pre-emptive force

of [federal law] is so powerful as to displace entirely any

state cause of action.” Franchise Tax Bd. v. Constr. Laborers

Vacation Trust, 463 U.S. 1, 23 (1983). In these rare cases,

then, “any claim purportedly based on that pre-empted

state-law claim is considered, from its inception, a federal

claim, and therefore arises under federal law.” Rivet v.

Regions Bank, 522 U.S. 470, 476 (1998). Here, it was and is

undisputed that federal antitrust law does not completely

preempt state antitrust laws, so this doctrine is wholly

inapplicable. See Pet. 12; Pet. App. 4a, 52a.

Nevertheless, the district court, misinterpreting scat-

tered phrases from complete preemption cases, created a

new and facially erroneous removal doctrine — removal is

authorized if a state law cause of action fails to state a

meritorious claim under state law. The Fifth Circuit simply

corrected this obvious error. Citing Rivet and other pre-

vious cases, the court below held that it was wrong for the

district court to opine on the “viability of WCS’s allega-

tions . . . [w]ithout complete preemption” because “the

viability of WCS’s state law claims . . . is for a Texas court

to decide.” Pet. App. 4a, 7a. The only question for the

federal court is whether the viability of the state law claim

has been eliminated through complete preemption. There

is nothing remotely controversial or questionable about

this plainly correct decision.

Apparently recognizing this, petitioners struggle

mightily to recast the decision below as somehow rejecting

a ground for removal other than complete preemption -

i.e., the “substantial-federal-question” exception — which,

petitioner maintains, continues to be recognized by other

lower courts, and in an article by Professor Arthur Miller,

15

as viable after this Court’s Rivet decision. Pet. 13-18. But

petitioner’s basic premise is facially erroneous: The court

below did not reject removal of state law claims which

necessarily require resolution of “substantial-federal-ques-

tions.” It did not do so for the obvious reason that this

issue was neither presented nor argued. There is no fed-

eral question embedded in WCS’s state law claim and no

one has ever argued that there was.

A brief analysis of petitioner’s argument is necessary

to demonstrate how it seeks to present an issue that was

not ruled upon by the court below and is not implicated

by this case. The basic thrust of the petition is that, accord-

ing to Professor Miller, removal is appropriate in “three

distinct classes of cases,” not just in cases involving com-

plete preemption of state law. Pet. 16 (quoting 14b Wright,

Miller and Cooper § 3722, at 436). See also A. Miller, “Artful

Pleading: A Doctrine in Search of a Definition,” 76 Tex. L. REV.

1781, 1784 (1998). Specifically, Professor Miller’s article

states:

The Supreme Court has recognized three sepa-

rate categories of cases in which federal courts

may deviate from the well-pleaded complaint

rule: substantial-federal-question cases, complete

preemption cases, and a rather amorphous cate-

gory apparently based on notions of federal

claim preclusion, relevant only to removal juris-

diction and developed by a number of courts of

appeals pursuant to the Supreme Court’s deci-

sion in Federated Department Stores Inc. v. Moitie.

Arthur R. Miller, Artful Pleading: A Doctrine In Search Of A

Definition, 76 Tex. L. Rev. 1781, 1784 (footnote omitted). It

is incontrovertible that the third exception referenced — the

“Moitie footnote two exception” - was eliminated by this

Court’s decision in Rivet, leaving only the “complete pre-

emption” and “substantial-federal-question” exceptions.

Since the court below explicitly acknowledged the “com-

plete preemption” exception, it must be Envirocare’s argu-

ment that the court below somehow eliminated the

“substantial-federal-question” exceptior

16

The “substantial-federal-question” exception to the

well-pleaded complaint rule arises where a plaintiff's

ostensibly state-law cause of action has, as an essential

element, a substantial issue of federal law.'! Here, the

court below never so much as mentioned the “substantial-

federal-question” exception, much less held that the excep-

tion no longer existed. As noted, this is because Envirocare

could not and did not argue its applicability. Thus, this

case does not present a vehicle for addressing the contin-

ued existence or scope of this exception.

Indeed, nowhere in the many pleadings, orders, and

opinions that form the record in this case, does any party

or any court so much as cite this Court’s decisions in

Smith, Merrell Dow, or Moore, see supra note 11, or any other

decision arguably within the “substantial-federal-ques-

tion” line of cases. Rather, in their briefs before the court

below, the only argument that Envirocare advanced was

that removal was proper because, under the Texas courts’

interpretation of the Texas Antitrust Act, WCS’s state law

antitrust claim was “no[t] viable,” Resp. App. 36a, and,

accordingly, this was the only argument that the court

below had occasion to address. See Pet. App. 4a-7a.

Nor can it plausibly be argued that WCS’s state anti-

trust claim would fall within the “substantial-federal-

11 ARCO Envtl. Remediation v. Dep't of Health & Env'’t

Quality, 213 F.3d 1108, 1116 (9th Cir. 2000) (“federal jurisdiction

may still lie if ‘it appears that some substantial, disputed

question of federal law is a necessary element of one of the well-

pleaded state claims’ ”). See Smith v. Kansas City Title & Trust Co.,

255 U.S. 180 (1921); Merrell Dow Pharms., Inc. v. Thompson, 478

U.S. 804, 805 (1986) (rejecting removability of state-law products

liability suit that alleged “that the drug Bendectin was

‘misbranded’ in violation of the Federal Food, Drug, and

Cosmetic Act”); Moore v. Chesapeake & Ohio Ry. Co., 291 U.S. 205,

214-15 (1934) (rejecting federal question jurisdiction of state law

personal injury action alleging that plaintiff’s injury was caused

by defendant’s failure to comply with the Federal Safety

Appliance Act).

17

question” exception even had Envirocare made this argu-

ment. Here, WCS’s state law antitrust claim is totally

independent of federal law: it stands or falls completely on

the application of Texas state law, as the district court's

evaluation as to its “viability” makes abundantly clear. See

Pet. App. 51a-56a.

In short, this case cannot provide a vehicle for

addressing the question presented: the “substantial-fed-

eral-question” exception to the well-pleaded complaint

rule was not raised or addressed in the courts below and is

inapplicable to this case.

2. In any event, contrary to Envirocare’s assertion,

there is no circuit split as to the continued existence of the

“substantial-federal-question” exception to the well-

pleaded complaint rule; every court that has addressed the

issue has held that it exists. The cases that Envirocare

believe reject its existence do not do so, but rather, like the

court below, simply do not address the issue.

Envirocare cites three circuit court cases that, in its

view, are inconsistent with the court decision below, see

Pet. 17 & n.3 — two from the Ninth Circuit, and one from

the Second Circuit.!2 It also cites two circuit court cases

that are consistent with the court below, see Pet. at 17 n.4,

and, presumably, inconsistent with the Second and Ninth

Circuit decisions cited above - one from the Third Circuit,

and one from the Eighth Circuit.!3 These decisions, how-

ever, are fully consistent with one another and with the

court’s decision below for three separate reasons.

12 See ARCO Envtl. Remediation, 213 F.3d at 1113-14;

Desaigoudar v. California Micro Devices Corp., No. 98-15116, 1999

U.S. App. LEXIS 1067 (9th Cir. Jan. 22, 1998) (unpublished

memorandum); Fax Telecommunicationes, Inc. v. AT&T, 138 F.3d

479, 486-87 (2d Cir. 1998). ;

13 See Goepel v. Nat'l Postal Mail Handlers Union, 36 F.3d 306,

311-12 (3d Cir. 1994), cert. denied, 514 U.S. 1063 (1995); M. Nahas

& Co. v. First Nat'l Bank, 930 F.2d 608, 612 (8th Cir. 1991).

18

First, and most importantly, none of these decisions

reject the existence of the “substantial-federal-question”

exception to the well-pleaded complaint rule.'* As in the

case below, neither Goepel nor M. Nahas even addressed,

much less resolved, this question. In M. Nahas, the Eighth

Circuit sustained the removal, reasoning that the plaintiff's

purportedly state law claim had been completely pre-

empted by federal law. See M. Nahas, 930 F.2d at 612. The

Eighth Circuit court therefore had no cause to opine on the

applicability or existence of the “substantial-federal-ques-

tion” exception. Likewise, in Goepel, the Third Circuit

merely held that removal was improper because plaintiffs’

New Jersey statutory and contract claims were not “com-

pletely preempted” by federal law. See Goepel, 36 F.3d at

314. The court did not address the “substantial-federal-

question” exception, much less whether it would have

provided an alternative basis for removal.!> Because nei-

ther Goepel nor M. Nahas even addressed the existence of

the “substantial-federal-question” exception, they are not

at all inconsistent with ARCO, Desaigoudar, and Fax, which

do acknowledge its existence (though, as discussed below,

none apply it).'¢

\4 This is equally true of the district court decisions cited in

footnote 4 of Envirocare’s petition. Pet. 17 n.4. Indeed, one of

these decisions, XF Enterprises, Inc. v. BASF Corp., No. 99-3693,

1999 U.S. Dist. LEXIS 16834, at *6-7, 10 n.3 (E.D. Pa. Nov. 2,

1999), expressly acknowledges its existence.

15 While there is dictum in Goepel that could be read to

suggest that complete preemption is the only valid ground for

removal, see 36 F.3d at 311-12, the Third Circuit did not purport

to analyze or resolve this question. Not surprisingly, lower

courts in the Third Circuit have not read Goepel as passing on

this issue. See, e.g., XF Enters., Inc., 1999 U.S. Dist. LEXIS 16834,

at *10 n.3 (“The court does not read Goepel as eliminating

removal based upon a substantial-federal-question.”).

16 See ARCO, 213 F.3d at 1114; Desaigoudar, 1999 U.S. App.

LEXIS 1067, at *4; Fax Telecommunicationes, 138 F.3d at 486-87.

19

Second, all of these cases are consistent with the court

below’s resolution of the issue it did address - that is,

whether a case can be removed from state to federal court

solely because a plaintiff’s state law claim is “not viable” -

since none of these cases even mention, much less accept,

this argument. Indeed, the Ninth Circuit’s decision in

Desaigoudar, which Envirocare believes supports its view of

the law, explicitly rejects the argument that it advanced in

the courts below. In Desaigoudar, “[i]n an effort to shore up

their position, Defendants also argue[d] that

Desaiguador’s third cause of action, as pleaded, does not

adequately state a claim under California law.”

Desaigoudar, 1999 U.S. App. LEXIS 1067, at *6 n.3. The

Ninth Circuit dismissed this argument out of hand, stating

that “it is enough to simply note that by pleading a state

cause of action poorly, a plaintiff does not forfeit her right

to a state court forum, nor does she transmogrify her cause

of action into a federal one.” Id.

Indeed, the only cases that Envirocare cites as suppor-

tive of this theory, set forth in footnotes 2 and 3 of the

petition, Pet. 15 n.2, 17 n.3, are district court decisions,

several of which were reversed on appeal. All of the

district court decisions in footnote 2 of the petition, how-

ever, either explicitly rely on Federated Department Stores,

Inc. v. Moitie, 452 U.S. 394 (1981), footnote two!” - the

reasoning of which was explicitly rejected by this Court in

Rivet — or, worse still, are the very decisions cited in Moitie

17 See In re NASDAQ Market-Makers Antitrust Litig., 929

F. Supp. 174, 178 (S.D.N.Y. 1996); Mech. Rubber & Supply Co. v.

Am. Saw & Mfg. Co., 747 F. Supp. 1292, 1294-95, vacated in part,

810 F. Supp. 986 (C.D. Ill. 1990); Patriot Cinemas, Inc. v. Gen.

Cinema Corp., No. 86-1190-Y, 1986 U.S. Dist. LEXIS 17085, at *6

(D. Mass. Dec. 1, 1986), vacated and remanded, 834 F.2d 208, 217

n.4 (1st Cir. 1987); Buchanan v. Delaware Valley News, 571 F. Supp.

868, 871 (E.D. Pa. 1983).

20

footnote two.'8 The decisions cited in footnote 3 of the

petition suffer from the same flaw’? or are irrelevant

because they address either the propriety of removal

under diversity jurisdiction,2° complete preemption,?! or

the “substantial-federal-question” exception.22 None of

these decisions even arguably support the novel theory

advanced by Envirocare below, viz., that removal is appro-

priate where a plaintiff’s state law claim is “not viable” as

a matter of state law.

18 See In re Wiring Device Antitrust Litig., 498 F. Supp. 79

(E.D.N.Y. 1980); Three J Farms, Inc. v. Alton Box Bd. Co., No.

78-1257, 1978 U.S. Dist. LEXIS 14134 (D.S.C. Nov. 29, 1978),

rev'd, 609 F.2d 112 (4th Cir. 1979); Prospect Dairy, Inc. v. Dellwood

Dairy Co., 237 F. Supp. 176 (N.D.N.Y. 1964).

19 See Temptations, Inc. v. Wager, 26 F. Supp. 2d 740, 743-44

(D.N.J. 1998).

20 See Kobaissi v. Am. Country Ins. Co., 80 F. Supp. 2d 488,

489 (E.D. Pa. 2000).

21 See Reynolds v. Fergusson, 73 F. Supp. 2d 841, 843-44 (W.D.

Mich. 1999); Archer v. Arms Tech., Inc., 72 F. Supp. 2d 784, 786-88

(E.D. Mich. 1999).

22 See Lowe v. NASD Regulation, Inc., No. 99-1751, 1999 U.S.

Dist. LEXIS 19489, at *9-11 (D.D.C. Dec. 14, 1999); Servia-

Mendoza v. Burgos, 31 F. Supp. 2d 35, 39-40 (D.P.R. 1998); Popular

Democratic Party v. Puerto Rico, 24 F. Supp. 2d 184, 188-90, 195

(D.P.R. 1998); Portage County Bd. of Comm'rs v. City of Akron, 12

F. Supp. 2d 693, 703 (N.D. Ohio 1998); Case v. Webb, No.

98-10064-CIV, 1998 U.S. Dist. LEXIS 21679, at *11 (S.D. Fla. Dec.

8, 1998); Westwood Nursing Ctr. v. Haveman, No. 98-CV-74023-DT,

1998 U.S. Dist. LEXIS 20584, at *4-6 (E.D. Mich. Dec. 3, 1998);

Village of Alden v. Cablevision Indus., No. 98-CV-325S(H), 1998

U.S. Dist. LEXIS 20339, at *11-12 (W.D.N.Y. Oct. 26, 1998).

23 Only three district court cases cited in footnote 3 of the

petition even arguably support Envirocare’s theory. See

Caravanas v. Hall, No. 99-1405, 1999 U.S. Dist. LEXIS 12741, at

*2-6 (E.D. La. Aug. 10, 1999); Schappel v. UICI, No. 3:99-CV-1544-

G, 1999 U.S. Dist. LEXIS 19444, at *7-8 (N.D. Tex. Dec. 3, 1999);

Baron v. Strassner, 7 F. Supp. 2d 871, 874-76 (S.D. Tex. 1998). All

21

Third, in none of the circuit court cases cited by Envi-

rocare would the “substantial-federal-question” exception

have been applicable, and so the holdings of these cases

are all fully consistent with one another.24 In other words,

under the reasoning of any of these cases, including the

case sub judice, the outcomes would remain unchanged.

With respect to the cases that did explicitly reference the

exception - ARCO, Desaigoudar, and Fax - all three con-

cluded that removal was improper; they therefore obvi-

ously found the “substantial-federal-question” exception

inapplicable to the facts presented.25

In M. Nahas, the “complete preemption” exception

provided a basis for removal and, therefore, resort to the

“substantial-federal-question” exception was wholly

unnecessary. See M. Nahas, 930 F.2d at 612. And finally,

with respect to Goepel, although the court did not

expressly address the “substantial-federal-question”

exception, its discussion of the complaint makes clear that

all of the plaintiff's claims were based exclusively on New

Jersey statutes or common law. 36 F.3d at 309.

Although petitioner principally relies on the Ninth

Circuit’s decision in ARCO, that decision neither conflicts

with the decision below nor supports Envirocare’s theory

three of these cases, however, are in the Fifth Circuit; they

therefore are no longer good law, for they are now governed by

the decision below, which has unequivocally rejected

Envirocare’s theory of removal.

24 The same is true of the district court cases cited in

footnote 4 of the petition. Pet. 17 n.4.

25 Although the Second Circuit in Fax ultimately sustained

the district court’s denial of the plaintiff’s motion to remand, it

did so because it concluded that the plaintiff had waived his

objection to removal by not objecting to it. See Fax

Telecommunicationes, 138 F.3d at 487. The Second Circuit, however,

was quite clear that “[t]he district court . . . erred when it took

jurisdiction over the case” and that “if Fax had objected to

removal in the district court, we would vacate the judgment and

remand with instructions to return the case to state court.” Id.

22

of removal. First, ARCO merely acknowledges the exis-

tence of the “substantial-federal-question” exception.?®

This hardly conflicts with the decision below, which is

completely silent on the subject. Moreover, the “substan-

tial-federal-question” exception, as articulated in ARCO

(or anywhere else), does not support removal in this case

for here, as in ARCO, federal law is “not an element” of

the state law cause of action. 213 F.3d at 1116. Nor does

ARCO otherwise remotely endorse the “not viable state

law claim” theory advanced by petitioner and embraced

by the district court.

In short, all of the circuit court cases that Envirocare

cites are consistent with one another; none accept the only

reasoning upon which removal in this case could be sus-

tained, viz., that removal is proper simply because a plain-

tiff’s state law claim is “not viable” under applicable state

law; and at least one case explicitly rejects that reasoning.

Every court that has addressed the “substantial-federal-

question” exception issue agrees that it exists. And the

decisions that Envirocare believes are to the contrary,

including this one, simply did not address the issue.

Accordingly, this case is not worthy of certiorari. See Sup.

Ct. Rule 10(a).

3. Finally, as this complete absence of support

reflects, the court below was clearly correct on the issue

that it did address. Federal courts have no more authority

26 The Ninth Circuit also recognized a third exception,

“where the claim is necessarily federal in character.” See ARCO,

213 F.3d at 1114, 1115-16. This, however, is a special exception

limited to federal statutes that - like the Comprehensive

Environmental Response, Compensation, and Liability Act

(“CERCLA”), 42 U.S.C. § 9601, et seq. - contain “specific

statutory language authorizing exclusive federal jurisdiction”

over certain causes of action. ARCO, 213 F.3d 116 (citing Brennan

v. Southwest Airlines, 134 F.3d 1405 (9th Cir. 1998)) (emphasis

added).

23

or justification to remove nonmeritorious state law claims

than they do to remove meritorious ones.

III. The Court Should Deny Certiorari On The Waiver

Issue.

Nor should the Court grant certiorari to resolve the

inherently fact-bound question whether the court below

correctly applied the equitable balancing test set forth in

this Court’s unanimous decision in Caterpillar. Caterpillar

held that, in certain circumstances, a plaintiff’s meritorious

objection to removal can nonetheless be ignored where, at

the time of judgment, a district court has subject matter

jurisdiction. See 519 U.S. at 73-78. Caterpillar involved an

instance where diversity jurisdiction, lacking at the time of

removal, existed at the time of judgment. See id. at 70. The

holding and reasoning of the court below does not conflict

with Caterpillar or any lower court’s interpretation of Cat-

erpillar and, in any event, does not present an appropriate

vehicle for resolving any ambiguity that may remain in the

wake of Caterpillar.

As an initial, and dispositive, matter, this case cannot

possibly provide any general guidance on the circum-

stances in which it is permissible to overlook an improper

removal on the grounds that the court has jurisdiction at

the time of judgment. Rather, this case presents a unique

and bizarre factual scenario that is created only by virtue

of the district court’s initially erroneous conclusion that

removal is proper because the state law claim had no merit

under state law. Since removal was justified on the ground

that the state law claim was without merit, the district

court, when removing the case, necessarily simultaneously

decided that it would dismiss the state law claim that WCS

sought to pursue. Thus, the removal decision simul-

taneously deprived respondent of both its state court

forum and the possibility of pursuing a state law claim in

the federal forum. In these unique circumstances, WCS

could either add the federal antitrust claim - “the one and

only claim the district court suggested it had,” Pet. App.

24

1la n.5 — or lose its case on the merits. Accordingly, the

action allegedly creating federal jurisdiction after removal

— adding the federal antitrust claim - was plainly forced

on WCS by the district court: it either added the claim or

lost the case. No other plaintiff removed to federal court

has ever faced such an insoluble dilemma since, as noted,

no other appellate court has granted removal on the

ground that the state law claim was not “viable” under

state law. Thus, the decision below cannot conflict with

Caterpillar or any other removal case, since in those other

cases plaintiffs always had the opportunity to have their

state law claim heard on the merits by the federal court.

Eaually important, WCS’s decision to add the federal

claim cannot be fairly characterized as “voluntary” and no

fair balancing of the equities would retroactively justify

the district court’s improper - and properly objected to -

removal on the grounds that WCS added a federal claim.

Accordingly, the Court’s resolution of this case cannot

clarify whatever ambiguity exists in federal courts con-

cerning the circumstances in which Caterpillar authorizes

or requires tolerating improper removal because the fed-

eral court possessed jurisdiction at the time of judgment.

Moreover, as we discuss below, the court’s application of

Caterpillar to these extraordinary facts was undoubtedly

correct and, in any event, the circuit split that Envirocare

alleges is illusory.

1. Envirocare’s argument that the Fifth Circuit’s deci-

sion is somehow inconsistent with Caterpillar is predicated

both on a misreading of Caterpillar and the decision below.

Caterpillar did not hold that a properly preserved objection

to removal was waived whenever “post-removal events

have occurred that confer jurisdiction on the federal

court,” Pet. 19; indeed, it held precisely to the contrary. See

Caterpillar, 519 U.S. at 73-74. Rather, as the court below

correctly explained, Caterpillar held that a “timely objec-

tion can preserve the jurisdictional claim . . . , even if other

considerations” — i.e., “finality, efficiency, and economy” —

“may ultimately outweigh that objection.” Pet. App. 8a. In

other words, Caterpillar recognized an equitable exception

25

to the general rule that lack of jurisdiction at the time of

removal is fatal to all that follows in federal court. Faith-

fully applying Caterpillar’s legal standard to the facts of

this case, the court below merely held that on the facts

presented, considerations of “finality, efficiency, and econ-

omy” did not outweigh WCS’s properly preserved objec-

tion to the district court’s removal.

In Caterpillar, this Court held that the “district court’s

error in failing to remand a case improperly removed is

not fatal to the ensuing adjudication,” 519 U.S. at 64

(emphasis added) — in other words, that such error did not

automatically result in invalidation of the jury verdict.

Rather, it explained that it would examine certain factors

to determine whether the district court's judgment could

stand notwithstanding the improper removal.

Most important is whether the plaintiff has properly

preserved the objection. If not, then the objection to

removal is waived, pursuant to American Fire & Casualty

Co. v. Finn, 341 U.S. 6 (1951), and Grubbs v. General Electric

Credit Corp., 405 U.S. 699 (1972). See Caterpillar, 519 U.S. at

- 72. This Court explained, however, that “neither [Finn nor

Grubb] resolves dispositively a controversy .. .

involv[ing] a plaintiff who moved promptly, but unsuc-

cessfully, to remand a case improperly removed from state

court to federal court, and then challenged on appeal a

judgment entered by the federal court.” Caterpillar, 519

U.S. at 70-71. Rather, where, as here, a plaintiff properly

Preserves his objection to removal, that objection to the

erroneous removal is not waived even if the district court

subsequently acquires subject matter jurisdiction of the

case. Such a plaintiff, “by timely moving for remand, did

all that was required to preserve his objection to removal,”

and “is [not] . . . required to seek permission to take an

interlocutory appeal . . . in order to avoid waiving what-

ever ultimate right of appeal he may have.” Id. at 74.

Nevertheless, the Court held, a plaintiff's properly

preserved objection to removal could be overcome by con-

sideration of certain equitable factors — that is, the district

26

court’s original error was “not fatal” to its ensuing adjudi-

cation on the merits. Id. at 64. As the Court explained,

“once a diversity case has been tried in federal court, with

rules of decision supplied by state law under the regime of

Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), considerations of

finality, efficiency, and economy become overwhelming.”

Id. at 75. Caterpillar was a diversity case, where the defen-

dant has a statutory right to have a state law claim adjudi-

cated by a federal court, see id. at 75, where the federal

litigation already had proceeded for three-and-one-half

years including a six-day jury trial, see id. at 65-67, and

where any retrial in state court would involve precisely

the same state law issues already adjudicated. For these

compelling reasons, this Court found that “[t]o wipe out

the adjudication postjudgment, and return to state court a

case now Satisfying all federal jurisdictional requirements,

would impose an exorbitant cost on our dual court system,

a cost incompatible with the fair and unprotracted admin-

istration of justice.” Id. at 77.

There can be no doubt that the court below properly

applied Caterpillar to the facts of this case. In contrast to

Caterpillar’s three-and-one-half years of federal litigation

culminating in a six-day jury trial, this case spent a total of

four months before the federal district court and was

resolved on the pleadings pursuant to Rule 12(b)(6). The

only federal litigation, aside from the removal question

itself, was Envirocare’s Rule 12(b)(6) motion, to which

WCS had just eleven days to respond. See Pet. App. 11a.

This case, moreover, did not involve diversity jurisdiction,

pursuant to which the same state law is applied to a

plaintiff’s state law claim regardless of which forum is

selected. Rather, in this case, the district court compelled

WCS to plead a federal cause of action in order to have a

case at all. See Pet. App. 8a n.2. Finally, it must be empha-

sized that this case is currently being litigated in state court,

and, indeed, a state court trial date has already been set.

On these facts, there is no doubt but that pursuant to

Caterpillar’s equitable factors of “finality, efficiency, and

27

economy,” this case should remain where it currently is -

in Texas state court.

Notwithstanding Envirocare’s fulminations to the con-

trary, the rule enunciated by Caterpillar, and applied below, is

not “illogic{al]” or “perverse.” Pet. 27. Indeed, the test is

eminently logical. Caterpillar confronted a dilemma posed by

a properly preserved statutory objection, on the one hand,

and the need to preserve scarce judicial resources on the

other. This Court, therefore, crafted a standard pursuant to

which these competing interests could be weighed. And it

held that in a diversity jurisdiction case in which enormous

amounts of federal judicial resources had already been con-

sumed, the balance weighed decisively in favor of preserving

the federal jury verdict, albeit at the admitted cost of the

plaintiff’s properly preserved and meritorious statutory

objection. The same simply cannot be said of the present

case.?7

2. Envirocare argues that the court below announced a

per se rule that whenever an improperly removed case has

been decided pursuant to Rule 12(b)(6), the appellate court

must reverse the district court’s decision and remand the case

to state court. See Pet. 21. This assertion, moreover, is the

27 Envirocare argues that the interest in preserving the

district court’s judgment in this case is no different than in a

diversity case because “the federal District Court would assess

the First Amendment principles underlying the Noerr-

Pennington doctrine in the same manner as would the state

court.” Pet. 25. It would be directly contrary to the basic

rationale of the well-pleaded complaint rule, however, to allow

a federal court to ignore a properly preserved objection to

federal question removal on the ground that the defendant

could assert the same federal defense in both state and federal

court. For the well-pleaded complaint rule rests on the basic

principle that ” ‘a case may not be removed to federal court on

the basis of a federal defense, . . . even if the defense -is

anticipated in the plaintiff’s complaint, and even if both parties

admit that the defense is the only question truly at issue in the

case.’ ” Rivet, 522 U.S. at 475 (citation omitted).

28

precise basis upon which Envirocare alleges that the circuits

are split: “there is a conflict in the Circuit Courts as to the

proper outcome when the ‘ensuing adjudication’ to which

Caterpillar refers is made pursuant to a motion to dismiss.”

See Pet. 21-22 (citing cases).

As the forgoing discussion makes clear, the court below

adopted no such per se rule. Rather, the fact that the federal

litigation consumed few federal judicial resources was but

one of several factors — albeit an important one — considered

by the court in applying Caterpillar’s equitable test. In addi-

tion to considering the fact that “[t]his case consumed, rela-

tively, a minimum of judicial resources,” Pet. App. 11a, the

court considered the fact that this was not a diversity case,

see Pet. App. 8a n.2, and “the narrowness” of WCS’s amend-

ment, which reflected “the one and only claim the district

court suggested it had.” See Pet. App. 11a n.5.

In any event, the alleged circuit split on this issue is

completely contrived. Envirocare argues that the Second and

Sixth Circuits have held that a properly preserved objection

to removal is waived or mooted where the federal litigation

has been resolved pursuant to a Rule 12(b)(6) motion.?®

Envirocare then contends that the Fifth Circuit (in this case

and previously) and a different panel of the Sixth Circuit

have held that the objection is not waived or mooted where

there has been a Rule 12(b)(6) adjudication.2? These cases,

however, do not even arguably present a circuit split on “the

proper outcome [of a case] when the ‘ensuing adjudication’

to which Caterpillar refers is made pursuant to a motion to

dismiss.” Pet. 21-22.

Fatal to Envirocare’s assertion is the simple fact that all

four of these cases were decided prior to Caterpillar; they

28 See Pet. 22 (citing Barbara v. New York Stock Exch., 99 F.3d

49 (2d Cir. 1996); Vector Research v. Howard & Howard, 76 F.3d 692

(6th Cir. 1996)).

29 See Pet. 22 (citing Chivas Products Ltd. v. Owen, 864 F.2d

1280 (6th Cir. 1988); Kidd v. Southwest Airlines, 891 F.2d 540 (Sth

Cir. 1990)).

29

therefore could not possibly represent “a conflict in the

Circuit Courts” as to the meaning of “the ‘ensuing adjudica-

tion” to which Caterpillar refers.” Pet. 22. At a minimum, this

Court’s limited resources should not be used to clarify its

holding in Caterpillar before the circuit courts even have an

opportunity to apply that decision.

In any event, the decision below is perfectly consistent

with Barbara and Vector Research — the two decisions allegedly

creating the split. Neither Barbara nor Vector Research even

addressed the question whether resolution of the waiver

issue should be affected by the stage to which the federal

litigation had advanced. Even more important, unlike this

case or Caterpillar, the plaintiff did not object to the removal

in either of these cases. See Barbara, 99 F.3d at 55; Vector

Research, 76 F.3d at 697. Thus, both were decided pursuant to

this Court’s decisions in Grubbs and Finn?° — which, as

Caterpillar directly held, are inapplicable to cases where the

plaintiff has properly objected to the removal. See Caterpillar,

519 U.S. at 70-71.31

30 See Barbara, 99 F.3d at 55 (citing Grubbs and Finn); Vector

Research, 76 F.3d at 697 (citing Grubbs).

31 As petitioner’s cursory treatment reflects, none of the six

decisions cited in footnote 5 of the petition suggest any split.

Half of them were decided prior to Caterpillar (Koehnen v. Herald

Fire Ins. Co., 89 F.3d 525 (8th Cir. 1996); Bernstein v. Lind-Waldock

& Co., 738 F.2d 179 (7th Cir. 1984); Cades v. H&R Block, 43 F.3d

869 (4th Cir. 1994)), and all of them are totally consistent with

the decision below. Koehnen involved oniy the question whether

the plaintiff could object to a notice of removal filed out of time;

the court simply never addressed the difference between

adjudication under Rule 12(b)(6) versus summary judgment. See

89 F.3d at 528-29. The other 5 cases involved summary judgments

after removal, not the Rule 12(b)(6) resolution involved here. See

Akin v. Ashland Chem., 156 F.3d 1030, 1033 (10th Cir. 1998), cert.

denied, 526 U.S. 1112 (1999); Aqualon Co. v. MAC Equip., Inc., 149

F.3d 262, 264 (4th Cir. 1998); Cades, 43 F.3d at 872; Herron v. Local

Union 25, No. 96-1335, 1998 U.S. App. LEXIS 1322, at *2 (6th Cir.

Jan. 27, 1998) (unpublished); Berstein, 738 F.2d at 182. Herron,

30

In short, there is no circuit split on the question whether

there is a per se rule that a plaintiff may successfully chal-

lenge removal on appeal after a judgment entered pursuant

to Rule 12(b)(6), but not after summary judgment - an issue

that in any event was not even addressed by the court below.

CONCLUSION

For the forgoing reasons, the petition for a writ of

certiorari should be denied.

Respectfully submitted,

MIcHAEL A. CARVIN

Counsel of Record

Anprew G. McBripe

Noe J. FRANCISCO

Cooper, CARVIN &

ROSENTHAL, PLLC

Suite 200

1500 K Street, N.W.

Washington, D.C. 20005

(202) 220-9600

Counsel for Respondent

SIDNEY POWELL

DesporAH PEARCE REGGIO

Powe.tt & ASSOCIATES

1920 Abrams Parkway, #369

Dallas, TX 75214

(214) 653-3933

moreover, was explicitly predicated on the court’s finding that

nothing in the record “suggest[ed] that [the plaintiffs] were

substituting federal claims only as a result of the district court’s

denial of their motion to remand.” Herron, 1998 U.S. App. LEXTS

1322, at *11. Thus, Herron recognized one of the central concerns

of the court below in this case — plaintiff was deprived of both its

claim and its forum by an erroneous removal ruling and thereby

“coerced” into pleading a federal claim. See Pet. App. 3a, lla

n.5. And Berstein, decided pre-Caterpillar, relied on reasoning

that Caterpillar expressly rejected. That is, Berstein reasoned that

in order to avoid waiver, the plaintiff should have “stuck by his

guns” — i.e., foregone amending his complaint to add a federal

claim — “and we would have vindicated his position on appeal.”

738 F.2d at 185. In Caterpillar, however, this Court explicitly

stated that “by timely moving for remand, [the plaintiff] did all

that was required to preserve his objection to removal,” and that

“a plaintiff [is not] required to seek permission to take an

interlocutory appeal . . . in order to avoid waiving whatever

ultimate appeal right he may have.” Caterpillar, 519 U.S. at 74.

la

FILE COPY

United States Court of Appeals

FIFTH CIRCUIT

OFFICE OF THE CLERK

CHARLES R. FULBRUGE III TEL. 504-589-6514

CLERK 600 CAMP STREET

NEW ORLEANS, LA 70130

April 4, 2000

MEMORANDUM TO COUNSEL OR PARTIES LISTED

BELOW:

No. 98-50952 Waste Control Spec v. Envirocare of

Texas USDC No. MO-98-CV-62

Enclosed is an order which has been entered in the appea!

referenced above.

Sincerely,

CHARLES R. FULBRUGE III,

Clerk

By: /s/ Debbie Kranz

Debbie Kranz, Deputy

Clerk

Ms Sidney Katherine Powell

Mr Roy Q Minton

P.S. To Ms Powell: In light of the mandate having

issued this day, under separate cover, your request

to issue the mandate forthwith is considered moot.

MOT-2

2a

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 95-50952

WASTE CONTROL SPECIALISTS, LLC

Plaintiff - Appellant

v.

ENVIROCARE OF TEXAS INC; ET AL

Defendants

ENVIROCARE OF TEXAS INC; ENVIROCARE

OF UTAH INC; KHOSROW B SEMNANI;

CHARLES A JUDD; FRANK C THORLEY

Defendants —- Appellees

Appeal from the United States District Court

for the Western District of Texas, Midland

(Filed Apr. 4, 2000)

ORDER:

(x) The motion of Envirocare of Texas, Envirocare of

Utah, Khosrow B Semnani, Charles A Judd and

Frank C Thorley for ( X ) stay ( ) recail and stay

of the issuance of the mandate pending petition

for writ of certiorari is DENIED.

() The motion of Envirocare of Texas, Envirocare of

Utah, Khosrow B Semnani, Charles A Judd and

Frank C Thorley for ( X ) stay ( ) recall and stay

of the issuance of the mandate pending petition

3a

for writ of certiorari is GRANTED to and includ-

ing - The stay is in force until the final

disposition of the case by the Supreme Court,

provided that the certificate of the Clerk of the

Supreme Court advising that the certiorari peti-

tion has been filed is also filed with this court

within the time stated above. The clerk shall

issue a mandate upon the filing of a copy of an

order of the Supreme Court denying the writ, or

upon the expiration of this stay unless the certif-

icate is filed with the clerk of this court within

that time.

/s/ E. Grady Jolly

E. GRADY JOLLY

UNITED STATES CIRCUIT

JUDGE

4a

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

MIDLANDS-ODESSA DIVISION

WASTE CONTROL

SPECIALISTS, LLC,

Plaintiff

‘ MO-98-CA-62

ENVIROCARE OF TEXAS, INC.;

ENVIROCARE OF UTAH, INC.;

KHOSROW B. SEMNANI;

CHARLES A. JUDD;

FRANK C. THORLEY;

BILLY W. CLAYTON;

AND NANCY M. MOLLEDA,

Defendants

i

ORDER REMANDING CASE TO STATE COURT

(Filed June 19, 2000)

The above referenced case is an antitrust and busi-

ness tort action by a waste disposal business against a

competitor, alleging state antitrust and business tort

claims based on disposal of waste generated by United

States Department of Energy. The case was originally

brought in the 109th District Court, Andrews County,

Texas. Defendants removed the case to federal court on

April 13, 1998. This Court denied Waste Control Special-

ists’ motion to remand, and dismissed Plaintiff's com-

plaint on ground that defendant's activities were

protected under Noerr-Pennington doctrine. Plaintiff

5a

appealed to the Fifth Circuit Court of Appeals, which

held that this Court lacked subject matter jurisdiction

over the case, concluding that this action was improperly

removed to federal district court and that Waste Control

Specialists’ motion to remand should have been granted.

The Fifth Circuit further directed this Court to award

costs and fees to Waste Control Specialists upon submis-

sion of proper proof. Upon Defendants’ petition for panel

rehearing, the Fifth Circuit withdrew the portion of its

opinion regarding attorneys’ fees and directed the district

court to decide “whether the removal of this case was or

was not objectively reasonable, and, thus, whether to

enter an appropriate award of attorney’s fees as provided

in [28 U.S.C.] § 1447(c).” (citing Valdes v. Wal-mart Stores,

Inc., 199 F.3d 290 (5th Cir. 2000). Now before the Court is

Plaintiff’s Withdrawal of Claim for Attorneys Fees, and

Request for Summary Issuance of the Mandate Remand-

ing the Case to State Court. Plaintiff disclaims its pending

request for attorneys fees and costs and requests this

Court to remand the case to the district court in Andrews

County, Texas. Because Waste Control Specialists no

longer urges its request for attorneys fees, the issue of

whether it is entitled to attorneys fees is now moot and

nothing prevents this Court from remanding the case to

the state court from which it was removed, in accordance

with the Fifth Circuit’s mandate.

Accordingly,

IT IS ORDERED that this case be remanded to the

109th Judicial District Court of Andrews County, Texas,

in accordance with 28 U.S.C. § 1447(c) and the Fifth

Circuit’s mandate.

6a

IT IS FURTHER ORDERED that no costs and fees

shall be awarded to Waste Control Specialists, as it has

waived its entitlement to recovery.

SIGNED this 19 day of June, 2000.

/s/ Lucius D. Bunton

LUCIUS D. BUNTON, III

SENIOR UNITED STATES

DISTRICT JUDGE

7a

CAUSE NO. 14,580

WASTE CONTROL \(

SPECIALISTS, LLC. \( IN THE

Plaintiff, )( DISTRICT

)( COURT OF

bd )( ANDREWS

ENVIROCARE OF )( COUNTY, TEXAS

TEXAS, INC., )( 109th JUDICIAL

ENVIROCARE OF ( DISTRICT

UTAH, INC., )(

KHOSROW B. SEMNANI,__

CHARLES A. JUDD, )(

FRANK C. THORLEY, :

Defendants \(

ORDER SETTING TRIAL

(Filed July 17, 2000)

Parties are advised that the above styled and num-

bered cause is set for trial beginning Monday, November

27, 2000 at 9:00 o’clock a.m.

SIGNED this the 14th day of July, 2000.

/s/ James L. Rex

JUDGE PRESIDING

8a

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

MIDLAND DIVISION

WASTE CONTROL

SPECIALISTS, LLC,

Plaintiff,

MMMM MN

V.

ENVIROCARE OF TEXAS, INC., §

ENVIROCARE OF UTAH, INC., 8 CASE NO.

KHOSROW B. SEMNANI, M098CA062

CHARLES A. JUDD, FRANK Cc. §

THORLEY, BILLY W. CLAYTON §

and NANCY M. MOLLEDA,

Defendants. §

Mm

MM

DEFENDANTS’ NOTICE OF REMOVAL

(Filed Apr. 13, 1998)

TO THE HONORABLE UNITED STATES DISTRICT

COURT JUDGE:

Defendants Envirocare of Utah, Inc., Envirocare of

Texas, Inc., Khosrow B. Semnani, Charles A. Judd, Frank

C. Thorley, Billy W. Clayton, and Nancy Molleda file this

notice of removal to the United States District Court for

the Western District of Texas, Midland Division. The

grounds for removal are as follows:

1. The Defendants (except Billy Clayton and Nancy

Molleda) are engaged in the business of disposing low-

level radioactive waste. Envirocare of Utah owns and

operates a disposal site in the State of Utah for low-level

radioactive and mixed wastes. The Plaintiff is attempting

9a

to enter into this market in Andrews, Texas. After failing

to receive the requisite permits and other business, on

May 2, 1997, Plaintiff sued the Defendants in the 109th

Judicial District Court of Andrews County, Texas, Cause

No. 14,580, alleging causes of action for violations of the

Texas Free Enterprise and Antitrust Act of 1983, libel,

slander, business disparagement, and tortious interfer-

ence with prospective business relations.

2. On March 13, 1998, Plaintiff filed Plaintiff’s First

Amended Petition against the Defendants once again

alleging causes of action for violations of the Texas Free

Enterprise and Antitrust Act of 1983, libel, slander, busi-

ness disparagement, and tortious interference with pro-

spective business relations and seeking damages in

excess of $3 billion. However, the alleged antitrust viola-

tions as stated in Plaintiff’s First Amended Petition are

fundamentally different than previously alleged and for

the first time invoke the federal jurisdiction of the United

States District Courts.

3. Specifically, Plaintiff's First Amended Petition

states clearly for the first time that the Plaintiff’s allega-

tions of antitrust violations exclusively involve interstate

commerce. Plaintiff’s Original Petition alleged no geo-

graphic market and merely alleged monopolization of

“the private sector market for the disposal of low-level

radioactive wastes” and disposal of “mixed wastes.” In

contrast, Plaintiff’s First Amended Petition alleges a

monopoly in “the off-site private disposal market for

DOE’s mixed wastes” and in “the off-site private disposal

market for DOE’s low-level radioactive wastes.” Plain-

tiff’s First Amended Petition further alleges in Paragraph

27 that “the relevant market, for each of these products, is

10a

the entire continental United States.” Plaintiff alleges that

Defendants Envirocare of Utah, Envirocare of Texas, and

Semnani used their monopoly power to prevent the

Plaintiff from receiving waste from the Department of

Energy. Plaintiff specifically complains about not receiv-

ing a contract from the U.S. Army Corps of Engineers to

dispose of certain quantities of DOE’s low-level radioac-

tive and mixed wastes and a disposal contract to receive

waste from DOE’s Fernald Ohio Facility. Clearly,

although Plaintiff purports to allege antitrust violations

under Texas law (and the Defendants recognize that the

Texas statute is not preempted by the Sherman Act),

Plaintiff is really alleging strictly federal antitrust viola-

tions since Texas law cannot regulate the stream of

strictly interstate commerce as alleged in Plaintiff’s First

Amended Petition. Thus, if Plaintiff’s antitrust allegations

state a claim at all, they can only state a claim arising

under federal law, the Sherman Act, 15 U.S.C. § 1 et seq.

4. This removal is filed pursuant to 28 U.S.C.

§ 1441(a), which provides for the removal of any civil

action filed in a state court of which federal courts have

original federal jurisdiction under 28 U.S.C. § 1331.

Under 15 U.S.C. § 1 et seq., federal courts have original

jurisdiction over violations of the federal antitrust laws.

The claims for libel, slander, business disparagement, and

tortious interference with prospective business relations

are also properly removable under the supplemental

jurisdiction of the district courts of the United States in

that they are so related to the federal antitrust claims that

they form part of the same case or controversy.

5. Defendants received a copy of Plaintiff’s First

Amended Petition on March 13, 1998. This notice is thus

lla

timely having been filed within thirty days of the receipt

by the Defendants of the pleading made the basis of this

removal, as required by 28 U.S.C. § 1446(b).

6. Plaintiff requested a jury trial in the state court

proceeding.

7. All of the Defendants are represented by the

undersigned counsel and consent to the removal of this

action.

8. Defendants will promptly give Plaintiff written

notice of the filing of this notice of removal as required

by 28 U.S.C. § 1446(d). Defendants will also file a copy of

this notice with the Clerk of the District Court of

Andrews County, Texas, also pursuant to 28 U.S.C.

§ 1446(d).

9. Attached as Exhibit A is a copy of Plaintiff's First

Amended Petition. With the filing of this Notice of

Removal, Defendants have filed a copy of the state court

pleadings with the Clerk of this Court.

Dated this 13th day of April, 1998.

Respectfully submitted,

MINTON, BURTON, FOSTER &

COLLINS

A Professional Corporation

1100 Guadalupe Street

Austin, Texas 78701

(512) 476-4873

(512) 476-1315 (telecopier)

12a

/s/ Roy Q. Minton

Roy Q. Minton

State Bar No. 14196000

Martha S. Dickie

State Bar No. 05833100

Michael Burnett

State Bar No. 00790399

Rick D. Davis, Jr.

COTTON BLEDSOE TIGHE &

DAWSON

500 West Illinois, Suite 300

Midland, Texas 79701

(915) 684-5782

(915) 682-3672 (telecopier)

Bert G. Smith, Jr.

LAW OFFICES OF BERT SMITH

1504 N. Main Street

Andrews, Texas 79714

(915) 523-3877

(915) 523-3878 (telecopier)

Gary A. Weston

NIELSEN & SENIOR

60 East South Temple, Suite 1100

Eagle Gate Plaza & Office Tower

Salt Lake City, Utah 84147

(801) 532-1900

(801) 532-1913 (telecopier)

ATTORNEYS FOR THE

DEFENDANTS

13a

CERTIFICATE OF SERVICE

This is to certify that a true and correct copy of the

above and foregoing has been forwarded to the following

by certified mail on the 13th day of April, 1998:

Joseph R. Egan

John W. Lawrence

EGAN & ASSOCIATES, P.C.

2300 N Street, N.W., Suite 600

Washington, D.C. 20037

Dan Sullivan

ATTORNEY AT LAW

119 N. W. Avenue A

Andrews, Texas 79714

Frank W. Mitchell

SMITH, MARTIN & MITCHELL, L.L.P.

3700 Two Houston Center

Houston, Texas 77010

Broadus A. Spivey

SPIVEY, GRIGG, KELLY & KINSLEY, P.C.

48 East Avenue

Austin, Texas 78701

J. Mark Gidley

WHITE & CASE, L.L.P.

601 Thirteenth Street, N.W.

Washington, D.C. 20005

Lonny Morrison

MORRISON & SHELTON

807 Eighth Street, Suite 400

Wichita Falls, Texas 76301

/s/ Roy Q. Minton

Roy Q. Minton

l4a

CAUSE NO. 14,580

WASTE CONTROL

SPECIALISTS, LLC,

Plaintiff,

IN THE DISTRICT

COURT

V.

ENVIROCARE OF TEXAS,

INC., ENVIROCARE OF

8

8

a

§ | OF ANDREWS

&

UTAH, INC., KHOSROW :

8

8

§

8

8

§

8

COUNTY, TEXAS

B. SEMNANI, CHARLES

A. JUDD, FRANK C.

THORLEY, GEORGE W.

HELLSTROM, BILLY W.

CLAYTON, and NANCY

M. MOLLEDA,

Defendants.

109TH JUDICIAL

DISTRICT

DEFENDANTS’ ORIGINAL ANSWER

(Filed Jun. 9, 1997)

TO THE HONORABLE JUDGE OF SAID COURT:

Defendants Envirocare of Texas, Inc., Envirocare of

Utah, Inc., Khosrow B. Semnani, Charles A. Judd, Frank

C. Thorley, George W. Hellstrom, Billy W. Clayton, and

Nancy M. Molleda (hereinafter collectively referred to as

the “Defendants”) file the following Original Answer to

Plaintiff’s Original Petition:

i

S

Ni

'

15a

GENERAL DENIAL

I.

As authorized by Rule 92 of the Texas Rules of Civil

Procedure, Defendants enter a general denial of the mat-

ters pleaded by the Plaintiff and request that the Court

require Plaintiff to prove its charges and allegations as

required by the law.

SPECIAL EXCEPTIONS

Il.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants violated the

Texas Free Enterprise and Antitrust Act of 1983 for the

reason that the Plaintiff has failed to properly allege a

monopoly violation against the Defendants. The disposal

of low-level radioactive wastes and/or “mixed wastes”

referred to in the Original Petition involve exclusively

interstate commerce. Transactions which exclusively

involve interstate commerce are not subject to Texas anti-

trust laws and instead are governed exclusively by the

federal antitrust laws. Defendants request that the Court

sustain this special exception and require the Plaintiff to

replead alleging an actionable violation of the Texas Free

Enterprise and Antitrust Act of 1983 against the Defen-

dants.

Il.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants violated the

Texas Free Enterprise and Antitrust Act of 1983 for the

16a

reason that the Plaintiff has failed to properly allege a

monopoly violation against the Defendants. Defendants

stand in the relationship of principal and agent; therefore,

as a matter of law Envirocare of Utah, Inc. and/or Envi-

rocare of Texas, Inc. could not have conspired with

Khosrow B. Semnani, Charles A. Judd, Frank C. Thorley,

George W. Hellstrom, Billy W. Clayton, or Nancy M.

Molleda in violation of the antitrust laws to create a

monopoly violation as alleged by the Plaintiff. Defen-

dants request that the Court sustain this special exception

and require the Plaintiff to replead alleging an actionable

violation of the Texas Free Enterprise and Antitrust Act of

1983 against the Defendants.

IV.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants violated the

Texas Free Enterprise and Antitrust Act of 1983. The

Plaintiff fails to properly allege and identify the “relevant

market” for antitrust purposes. Defendants request that

the Court sustain this special exception and require the

Plaintiff to replead alleging the “relevant market” for

purposes of a claim under the Texas Free Enterprise and

Antitrust Act of 1983.

V.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Plaintiff is entitled to

damages for violation of the Texas Free Enterprise and

PaitiectPcwsircny

17a

Antitrust Act of 1993, libel and slander, business dispar-

agement, and tortious interference with prospective busi-

ness relations. Plaintiff's alleged damages are not capable

of reasonable ascertainment, but instead are speculative

and conjectural. Defendants request that the Court sus-

tain this special exception and require the Plaintiff to

replead alleging damages for purposes of a claim under

the Texas Free Enterprise and Antitrust Act of 1983 which

are capable of reasonable ascertainment.

VI.

Defendants Khosrow B. Semnani, Charles A. Judd,

Frank C. Thorley, George W. Hellstrom, Billy W. Clayton,

and Nancy M. Molleda specially except to Plaintiff’s

Original Petition in which it is alleged that they are

individually liable for violating the Texas Free Enterprise

and Antitrust Act of 1983, libel and slander, business

disparagement, and/or tortious interference with pro-

spective business relations. Defendants Khosrow B. Sem-

nani, Charles A. Judd, Frank C. Thorley, George W.

Hellstrom, Billy W. Clayton, and Nancy M. Molleda deny

that they are liable in the individual capacity in which

they have been sued for the reason that the Defendants

were at all material times acting as the agents of Envi-

rocare of Utah, Inc. and/or Envirocare of Texas, Inc. and .

within the scope of proper authority. Defendants request

that the Court sustain this special exception and require

the Plaintiff to replead alleging the manner in which each

of the individual Defendants are liable in their individual

capacities for each cause of action.

18a

Vil.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants are liable to

the Plaintiff for libel and slander. Plaintiff fails to identify

the defamatory statements each of the particular Defen-

dants published. Defendants request that the Court sus-

tain this special exception and require the Plaintiff to

replead alleging the defamatory statements each particu-

lar Defendant allegedly published to a third party

VII.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants are liable to

the Plaintiff for tortious interference with prospective

business relations. Plaintiff alleges that each of the Defen-

dants “intentionally interfered with the Plaintiff’s busi-

ness relations with governmental agencies having

authority to issue authorizations for the Plaintiff’s entry

into relevant markets for the storage, treatment, and/or

disposal of low-level radioactive and mixed wastes, and /

or to provide the Plaintiff with government contracts of

substantial value to the Plaintiff.” Plaintiff fails to iden-

tify and give the Defendants fair notice of the referenced

prospective “business relations,” “governmental agen-

cies,” “relevant markets,” and “government contracts.”

Defendants request that the Court sustain this special

exception and require the Plaintiff to replead identifying

the prospective business relations, governmental agen-

cies, relevant markets, and government contracts.

19a

IX.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants are liable to

the Plaintiff for tortious interference with prospective

business relations. Plaintiff fails to allege and identify

that with a “reasonable probability” the Plaintiff would

have entered into a contract or business relationship with

a governmental agency or other entity but for the Defen-

dants’ interference. Defendants request that the Court

sustain this special exception and require the Plaintiff to

replead alleging facts sufficient to support a claim that

with a “reasonable probability” the Plaintiff would have

entered into a contract or business relation with a govern-

mental agency or other entity but for the Defendants’

interference.

X.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Defendants are liable to

the Plaintiff for tortious interference with prospective

business relations. Plaintiff fails to properly allege a cause

of action for tortious interference with prospective busi-

ness relations against the Defendants because the Plaintiff

does not adequately plead how the complained of actions

violated the antitrust laws or caused the governmental

agencies or other entities to refuse to deal with the Plain-

tiff. Defendants request that the Court sustain this special

exception and require the Plaintiff to replead alleging

how the complained of conduct violated the antitrust

laws or caused any third party to refuse to deal with the

Plaintiff.

20a

XI.

Defendants specially excepts to the allegation in

Plaintiff’s Original Petition that the Defendants are liable

to the Plaintiff for business disparagement for the reason

that it fails to allege a cognizable cause of action under

Texas law. Business disparagement is not a recognizable

separate cause of action from libel which can afford inde-

pendent relief to the Plaintiff.

XII.

Defendants specially except to the allegation in Plain-

tiff’s Original Petition that the Plaintiff “has realized

pecuniary loss in the form of specific lost sales... . ”

However, the Plaintiff never identifies the “specific lost

sales” which is necessary to allow the Defendants the

opportunity to raise appropriate defenses. Defendants

request that the Court sustain this special exception and

require the Plaintiff to replead identifying with at least a

reasonable degree of particularity the “specific lost

sales.”

AFFIRMATIVE DEFENSES

XIII.

By way of further answer, if any is necessary, Defen-

dants allege that the alleged defamatory statements at

issue are true and/or substantially true.

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2la

XIV.

By way of further answer, if any is necessary, Defen-

dants allege that the alleged defamatory statements at

issue contain statements of opinion and other statements

that are not actionable assertions of fact about the Plain-

tiff.

» XV.

By way of further answer, if any is necessary, Defen-

dants allege that they are entitled to immunity from any

liability under the Texas Free Enterprise and Antitrust

Act of 1983 as it relates to the allegations that the Defen-

dants improperly lobbied and contacted governmental

officials. Defendants specifically deny that they ever did

anything to improperly influence government officials.

Nonetheless, efforts to influence public officials do not

violate the antitrust laws even if the intended result is the

elimination of competition. Stated differently, persons

who engage in a publicity campaign directed toward

influencing governmental action is immune, even if dis-

honest means were used in the publicity campaign and

even if a side effect of the campaign was to injure the

competitor’s campaign.

XVI.

By way of further answer, if any is necessary, Defen-

dants allege that if the Defendants have obtained monop-

oly power, it was not willfully acquired or maintained.

Instead, it resulted from growth of development as a

22a

consequence of a superior product, business acumen, or

historical accident.

XVII.

By way of further answer, if any is necessary, Defen-

dants Khosrow B. Semnani, Charles A. Judd, Frank C.

Thorley, George W. Hellstrom, Billy W. Clayton, and

Nancy M. Molleda allege that they are not liable in their

individual capacities.

XVIII.

By way of further answer, if any is necessary, Defen-

dants allege that they are privileged from liability for any

of the complained of conduct. The Defendants only

engaged in reasonable competition within the realm of

fair play.

COUNTERCLAIMS

XIX.

Defendants allege that Plaintiff’s action is groundless

and brought in bad faith or for the purpose of harass-

ment. Defendants therefore request that they be awarded

their costs, reasonable attorney’s fees, and other litigation

expenses from the Plaintiff.

WHEREFORE, Defendants Envirocare of Texas, Inc.,

Envirocare of Utah, Inc., Khosrow B. Semnani, Charles A.

Judd, Frank C. Thorley, George W. Hellstrom, Billy W.

Clayton, and Nancy M. Molleda request that the Court

sustain their special exceptions and ultimately obtain a

23a

judgment of the Court that the Plaintiff, Waste Control

Specialists, LLC, take nothing by this suit and that the

Defendants recover their costs, reasonable attorney’s fees,

and other litigation expenses.

Respectfully submitted,

MINTON, BURTON, FOSTER &

COLLINS

A Professional Corporation

1100 Guadalupe Street

Austin, Texas 78701

(512) 476-4873 (telephone)

(512) 479-8315 (facsimile)

/s/ Roy Q. Minton

ROY O- MINTON

State Bar No. 14196000

Michael Burnett

State Bar No. 00790399

Barry N. Beck

Rick Davis

COTTON, BLEDSOE TIGHE &

DAWSON

A Professional Corporation

500 West Illinois, Suite 300

P.O. Box 2776

Midland, Texas 79701-4337

(915) 684-5782 (telephone)

(915) 682-3672

Bert Smith

Attorney at Law

1504 N. Main Street

Andrews, Texas 79714

(915) 523-3877 (telephone)

(915) 523-3878 (facsimile)

COUNSEL FOR THE DEFENDANTS

24a

CERTIFICATE OF SERVICE

I hereby certify that a true copy of the foregoing was

served on the following on this 9th day of June, 1997:

Dan Sullivan

119 N.W. Avenue A

Andrews, Texas 79714

Joseph R. Egan

John W. Lawrence

Egan & Associates, P.C.

2300 N Street, N.W.

Washington, D.C. 20037

Frank W. Mitchell

Smith, Martin & Mitchell, L.L.P.

3700 Two Houston Center

Houston, Texas 77010

Broadus A. Spivey

Spivey, Grigg, Kelly & Kinsley, P.C.

48 east Avenue

Austin, Texas 78701

/s/ Roy Q. Minton

ROY Q. MINTON

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared Frank C. Thorley, a duly autho-

rized representative of Environcare of Utah, Inc. and

Envirocare of Texas, Inc., who, after being duly sworn,

stated that he has read the above pleading and that the

statements contained in Paragraphs III, XIV, XV and XVIII

25a

of the pleading are within his personal knowledge and”

are true and correct.

/s/ F. C. Thorley

Frank C. Thorley

SUBSCRIBED AND SWORN TO BEFORE ME on the

4 day of June, 1997.

/s/ Deborah R. Pariseau

Notary Public in and for

the State of Utah

My commission expires

Sept. 13, 1999

[SEAL]

Notary Public

DEBORAH R. PARISEAU

4181 West Kirkcaldy Circle

South Jordan, Utah 84095

My Commission Expires

September 13, 1999

State of Utah

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared Khosrow B. Semnani, who, after

being duly sworn, stated under oath that he is the defen-

dant in this action; that he has read the above pleading;

and that every statement contained Paragraphs III, VI,

XIV, XV, XVII, and XVIII of the pleading are within his

personal knowledge and are true and correct.

/s/ Khosrow B. Semnani

Khosrow B. Semnani

26a

SUBSCRIBED AND SWORN TO BEFORE ME on the

4 day of June, 1997.

/s/ Deborah R. Pariseau

Notary Public in and for

the State of Utah

My commission expires

Sept. 13, 1999

[SEAL]

Notary Public ©

DEBORAH R. PARISEAU

4181 West Kirkcaldy Circle

South Jordan, Utah 84095

My Commission Expires

September 13, 1999

State of Utah

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared Charles A. Judd, who, after

being duly sworn, stated under oath t..at he is the defen-

dant in this action; that he has read the above pleading;

and that every statement contained Paragraphs III, VI,

XIV, XV, XVII, and XVIII of the pleading are within his

personal knowledge and are true and correct.

/s/ Charles A. Judd

Charles A. Judd

eee eee

27a

SUBSCRIBED AND SWORN TO BEFORE ME on the

4 day of June, 1997.

/s/ Deborah R. Pariseau

Notary Public in and for

the State of Utah

My commission expires

Sept. 13, 1999

[SEAL]

Notary Public

DEBORAH R. PARISEAU

4181 West Kirkcaldy Circle

South Jordan, Utah 84095

My Commission Expires

September 13, 1999

State of Utah

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared Frank C. Thorley, who, after

being duly sworn, stated under oath that he is the defen-

dant in this action; that he has read the above pleading;

and that every statement contained Paragraphs III, VI,

XIV, XV, XVII, and XVIII of the pleading are within his

personal knowledge and are true and correct.

/s/ F.C. Thorley

Frank C. Thorley

28a

SUBSCRIBED AND SWORN TO BEFORE ME on the

4 day of June, 1997.

/s/ Deborah R. Pariseau

Notary Public in and for

the State of Utah

My commission expires

Sept. 13, 1999

[SEAL]

Notary Public

DEBORAH R. PARISEAU

4181 West Kirkcaldy Circle

South Jordan, Utah 84095

My Commission Expires

September 13, 1999

State of Utah

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared George W. Hellstrom, who, after

being duly sworn, stated under oath that he is the defen-

dant in this action; that he has read the above pleading;

and that every statement contained Paragraphs III, VI,

XIV, XV, XVII, and XVIII of the pleading are within his

personal knowledge and are true and correct.

/s/ George W. Hellstrom

George W. Hellstrom

29a

SUBSCRIBED AND SWORN TO BEFORE ME on the

4 day of June, 1997.

/s/ Deborah R. Pariseau

Notary Public in and for

the State of Utah

My commission expires

Sept. 13, 1999

[SEAL]

Notary Public

DEBORAH R. PARISEAU

4181 West Kirkcaldy Circle

South Jordan, Utah 84095

My Commission Expires

September 13, 1999

State of Utah

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared Billy W. Clayton, who, after

being duly sworn, stated under oath that he is the defen-

dant in this action; that he has read the above pleading;

and that every statement contained Paragraphs III, VI,

XIV, XV, XVII, and XVIII of the pleading are within his

personal knowledge and are true and correct.

/s/ Billy W. Clayton

Billy W. Clayton

30a

SUBSCRIBED AND SWORN TO BEFORE ME on the

4th day of June, 1997.

/s/ Myra Sutherland

Notary Public in and for

the State of Texas

My commission expires

3-30-01

[SEAL]

MYRA SUTHERLAND

Notary Public, State of Texas

My Commission Expires

MARCH 30, 2001

VERIFICATION

Before me, the undersigned Notary Public, on this

day personally appeared Nancy M. Molleda, who, after

being duly sworn, stated under oath that he is the defen-

dant in this action; that he has read the above pleading;

and that every statement contained Paragraphs III, VI,

XIV, XV, XVII, and XVIII of the pleading are within his

personal knowledge and are true and correct.

/s/ Nancy M. Molleda

Nancy M. Molleda

3la

SUBSCRIBED AND SWORN TO BEFORE ME on the

4th day of June, 1997.

/s/ Bennie Anderson

Notary Public in anu for

the State of Texas

My commission expires es |

5-4-2001

[SEAL]

BENNIE ANDERSON

Notary Public, State of Texas

My Commission Expires

MAY 4, 2001

32a

NO. 98-50952

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

WASTE CONTROL SPECIALISTS, L.L.C.,

Plaintiff-Appellant

Vv.

ENVIROCARE OF TEXAS, INC., ENVIROCARE OF

UTAH, INC., KHOSROW B. SEMNANI, CHARLES A.

JUDD, AND FRANK C. THORLEY,

Defendants-Appellees

ON APPEAL FROM THE UNITED STATES

DISTRICT COURT FOR THE

WESTERN DISTRICT OF TEXAS

MIDLAND-ODESSA DIVISION

MO-98-CV-62

BRIEF FOR APPELLEES

Roy Q. Minton, State Bar No. 14196000

Martha S. Dickie, State Bar No. 05833100

MINTON, BuRTON, Foster & COLLINS

A Professional Corporation

1100 Guadalupe Street

Austin, TX 78701

(512) 476-4873; (512) 476-1315 (telecopier)

Don C. Lewis, Texas State Bar No. 12275600

VERNER LuperT BERNHARD

McPHERSON AND HAND

901 15th Street, N.W.

Washington, D.C. 20005-2301

(202) 371-6000; (202) 371-6279 (telecopier)

33a

Rick D. Davis, Jr., State Bar No. 05537700

Cotton, BLEDsor, TiGHE & Dawson, P.C.

P.O. Box 2776

Midland, Texas 79702

(915) 684-5782; (915) 682-3672 (telecopier)

+ = *

TABLE OF CONTENTS

CERTIFICATE OF INTERESTED PERSONS......... ii

CORPORATE DISCLOSURE STATEMENT .......... iv

STATEMENT REGARDING ORAL ARGUMENT.... v

Oe GA I ok nk 5 Coeds oe ewia Lacs ccs vi

ee Ry ee ere ix

stAramemren OP THE BGUGG o.oo oi ccc ccccccss 1

EPURCenee GOP TOE CAIIB. oon. 5 ccs icc anvicuscves 1

A. Course of Proceedings and Disposition in the

Ee NN A556 5 66 Saws Shed ln doe ew chao Sos 1

a ee eee 2

SUMMARY OF THE ARGUMENT ................. 4

ARGUMENT AND AUTHORITIES................. 5

I. WAIVER OF THE RIGHT TO OBJECT TO

PIs <5 05a VERUAIR ah KK kei wkekaxi vac 5

A. Waiver as a Result of WCS’ Voluntary

I so wa ehns ec hicanié ieee as 645 5

B. Remand is Improper Because Federal Juris-

diction Clearly Existed at the Time of Final

PINE 5 «iki tock ban kcices os kastin's tees ecu e

Il. THE DISTRICT COURT’S DENIAL OF WCS’

MOTION TO REMAND WAS CORRECT....... 10

i

34a

The First Amended Petition’s Antitrust Allega-

tions Could Only Be Addressed Through

Application of the Sherman Act.............

1. The First Amended Petition Does Not

Allege Harm To Any Texas Consumer ...

2. The First Amended Petition Involves

Issues of Interstate Commerce Only....

Removal Was Proper Despite the Lack of

PUOCIIID s o vs 5 i005 CARS ES os ie ee

ROMOVal WAS THE ose ceiisc ee cte ees

THE DISTRICT COURT’S ORDER OF DIS-

MISSAL, WAS CURRE s 66660 ce ke Seo We ei ces

A. WCS’ Antitrust Claims Were Properly Dis-

aA a EERE aS ARR IR MEN CoM AN ek

1. WCS’ Antitrust Claims Are Barred by

PUOESE TION 6 5o 56 in a seeds avons

a). WCS Admits That Envirocare’s

Petitioning Was Aimed at Securing

a Result Favorable to Envirocare

and Detrimental to WCS.........

b). WCS Cannot Sustain its Claim of

eo ge Pte

i. Envirocare’s TNRCC License

er ey ear ere

ii. Envirocare’s Remaining Peti-

tioning Conduct Was Also-

| Ee Op sT eT

2. WCS Complains of Harm Caused by

Valid Governmental Decision-making,

RCE Wy II oi ia is eee eke

35a

3. WCS Failed to State a Section 2 Claim in

PO I oes isk Halen exieidss.. 48

B. WCS’ Tort Claims Were Properly Dismissed 50

1. WCS’ Tort Claims Are Barred by the

Principles Discussed Above ........... 50

2. WCS Waived Any Appeal on this Point 50

a). Waiver in the District Court ...... 50

b). Waiver in this Court.............. 51

C. Dismissal of WCS’ “Supplementary Preda-

tory Claims” Was Proper ................. 52

1. WCS Failed to State a Claim for Any

“Supplementary Predatory Claims.” ... 52

2. WCS Waived Any Appeal on this Point 54

Bee ee 55

CRRIIFELATE OF SERVICE.................0.05.5. 56

CERTIFICATE OF COMPLIANCE.................. 57

In this case, WCS cured any alleged federal jurisdic-

tional defect by voluntarily amending its Complaint to

expressly allege a federal cause of action and by doing so

confirmed its consent to adjudicate its suit in federal

court. Following such amendment, this case proceeded to

judgment and fairness to both parties was uncom-

promised throughout the process. The District Court

clearly obtained jurisdiction before the entry of final

judgment, and case law confirms that since federal juris-

diction existed, remand is improper.

36a

II. THE DISTRICT COURT’S DENIAL OF WCS’

MOTION TO REMAND WAS CORRECT.

Even if WCS may challenge the District Court’s deci-

sion on the remand issue, that challenge should be

rejected.

A. The First Amended Petition’s Antitrust Allega-

tions Could Only Be Addressed Through

Application of the Sherman Act.

Where a state claim and a federal claim are available

to plaintiff, it may avoid removal by bringing only the

former in a state court. Plaintiff may not, however, avoid

removal by pleading in state law terms a claim that is, in

fact, solely federal in nature. Carpenter v. Wichita Falls

Indep. Sch. Dist., 44 F.3d 362, 366 (Sth Cir. 1995).

The Texas Free Enterprise and Antitrust Act, Tex Bus.

& Com. Cope §§ 15.01 et seq., (“Texas Act”) does not apply

to WCS’ antitrust claims. Because WCS’ allegations could

be addressed only through application of the Sherman

Act, 15 U.S.C. §§ 1 et seq., no viable state claim was

available and removal was proper. See Carpenter, 44 F.3d

at 366 (case removable where plaintiff “has available no

legitimate or viable state cause of action”).

3 Numerous cases have upheld removal on this ground in

the antitrust context. See, e.g., Metro Ford Truck Sales, Inc. v. Ford

Motor Co., CA 3-95-CV-1010-G (N.D. Tex. 1996) (attached at Tab

B), aff'd, 145 F.3d 320 (5th Cir. 1998), cert. denied, 1999 WL 8053

(U.S. Jan. 11, 1999); In re NASDAQ Mkt. Makers Antitrust Litig.,

929 F. Supp. 174 (S.D.N.Y. 1996); Mechanical Rubber & Supply Co.

v. American Saw & Manuf. Co., 747 F. Supp. 1292, vacated in part

37a

1. The First Amended Petition Does Not

Allege Harm To Any Texas Consumer.

Antitrust law protects consumers, not individual

competitors. Roy B. Taylor Sales v. Hollymatic Corp., 28 F.3d

1379, 1382 (Sth Cir. 1994); Scott v. Galusha, 890 S.W.2d 945,

950 (Tex. App. - Fort Worth 1994, writ denied). The Texas

Act makes this clear:

The purpose of this Act is to maintain and

promote economic competition in trade and

commerce occurring wholly or partly within the

State of Texas and to provide the benefits of that

competition to consumers in the state.

Tex. Bus. & Com. Cove § 15.04. See Caller-Times Publishing

Co. v. Triad Communications, Inc., 826 S.W.2d 576, 581 (Tex.

1992) (Texas Act seeks to “benefit the consumers of the

state,” not individual competitors).

WCS’ First Amended Petition alleged (1) that the

product (more accurately, service) market at issue was

on other grounds, 810 F. Supp. 986 (C.D. Ill. 1990); Patriot Cinemas,

Inc. v. General Cinema Corp., 1987-1 Trade Cases (CCH) { 67,453

(D. Mass. 1986), vacated and remanded on other grounds, 834 F.2d

208 (1st Cir. 1987); Buchanan v. Delaware Valley News, 571 F. Supp.

868 (E.D. Pa. 1983); Salveson v. Western States Bankcard Ass’n, 525

F. Supp. 566 (N.D. Cal. 1981), modified, 731 F.2d 1423 (9th Cir.

1984); In re Wiring Device Antitrust Litig., 498 F. Supp. 79

(E.D.N.Y. (1980); Three J Farms, Inc. v. Alton Box Bd. Co., 1979-1

Trade Cases (CCH) { 62,423 (D.S.C. 1978); Prospect Dairy, Inc. v.

Dellwood Dairy Co., 237 F. Supp. 176 (N.D.N.Y. 1964). Such cases

rebut WCS’ suggestion, discussed infra, that removal in this

context cannot occur because such removal would be

improperly based on a “federal defense” of “preemption” or

because the alleged conduct affected a business located in the

State at issue.

38a

limited to private disposal of DOE’s radioactive waste

and (2) that the sole purchaser of that service was DOE.

See, e.g., FAP {¥ 12, 27, 91-107 (R. 277, 281, 307-10).

Thus the only consumer whose interest is affected by

the state of competition in the relevant market is the

United States government. In such circumstances the

Texas Act does not apply. See Destec Energy, Inc. v. South-

ern California Gas Co., 5 F. Supp. 2d 433, 464 (S.D. Tex.

1997) (Texas Act does not apply simply because conduct

at issue “has some effect on a Texas entity”; Act inappli-

cable where defendant did nothing “affecting the ability

of Texas consumers to obtain the benefits of competi-

tion”); IP. AREEDA & H. Hovenxamp, ANtTiTRusTt Law { 216

at 295 (rev. ed. 1997) (hereinafter “AREEDA [ ___”) (state

statute applies where case involves “sufficient injury to

[the state’s] consumers”).

WCS tries to skirt the issue by suggesting that its

pleading implicates the interest of Texas citizens or tax-

payers generally. Brief 32-33. This ignores the point of

antitrust law, which is to benefit those who purchase the

product in the relevant market by promoting competition

therein. Reiter v. Sonotone Corp., 442 U.S. 330, 343 (1979);

Caller-Times, 826 S.W.2d at 582 (central goal of Texas act is

“{llow prices for consumers”). This is undoubtedly why

the Legislature, having used the broad term “person”

throughout the Act, chose instead the precise term “con-

sumer” in § 15.04.

If any impact on a “citizen” of a state were sufficient

to invoke that state’s antitrust law, then federal question

removal in antitrust cases would never be appropriate

since the realities of modern commerce dictate that one

39a

could always divine some impact attenuated or other-

wise, upon one or more taxpayers or businesses in a

given state. The courts reject such an overly-broad inter-

pretation.‘

2. The First Amended Petition Involves Issues

of Interstate Commerce Only.

WCS’ First Amended Petition claims that Envirocare

prevented WCS from entering into contracts with a fed-

eral agency, which harmed competition in the national

market for disposal of federal waste, where the only

consumer is the United States. Having made such allega-

tions, WCS cannot support its argument that this case

somehow presents issues of intrastate commerce that

invoke the Texas Act.

Perhaps to muddy the water, WCS discusses preemp-

tion, but this is not a preemption case and the issue is a

red herring.5 Envirocare also does not dispute the straw-

man argument that the Texas Act does not lose its force

simply because a case involves a restraint touching on

both interstate and intrastate commerce.6 Where the only

4 See cases cited at notes A

> Under some circumstances a plaintiff could choose either

a Texas antitrust claim or a Sherman Act claim. See ArEepa { 216.

The Texas Act is a valid law; it just does not apply because,

under the facts here alleged, the essence of WCS’ own claim,

not any defense, is necessarily federal in nature. WCS’

argument that a defense cannot provide the basis for removal is

irrelevant. Brief 17-24.

© Elray, Inc. v. Cathodic Protection Serv., 507 S.W.2d 570

(Tex.Civ.App. - Houston {14th Dist.] 1974, no writ) stands for

40a

commerce at issue is interstate, however, the Texas Act

has no application. Pounds Photographic Labs, Inc. v. Nor-

itsu America Corp., 818 F.2d 1219, 1224 (5th Cir. 1987);

Cherokee Laboratories, Inc. v. Rotary Drilling Services, Inc.,

383 F.2d 97, 107 (5th Cir. 1967).

WCS’ suggestion that the Texas Act applies merely

because WCS alleges harm to its business in Texas

evinces a basic misunderstanding of the purpose of anti-

trust law. As noted above, antitrust law is not aimed at

protecting individual competitors. Roy B. Taylor Sales, 28

F.3d at 1382 Rather, antitrust statutes are concerned with

the state of competition in the relevant market and the

consumers who make purchases therein. Doctor’s Hosp. v.

Southeast Medical Alliance, Inc., 123 F.3d 301, 306 (5th Cir.

1997). Where the very nature of the commerce at issue,

not to mention the sole purchaser, is federal or interstate

in nature, then the mere fact that an affected competitor

happens to be located in a given state is insufficient to

invoke that state’s antitrust law. This principle is estab-

lished by the cases cited herein. See notes 3, 7. More

fundamentally, it is a principle that flows naturally from

the difference between antitrust (which protects competi-

- tion) and other laws, such as torts (which protect the

businessman).

this unremarkable proposition. There, Texas law applied to an

agreement executed in Texas between two Texas entities

involving anticompetitive contractual restrictions on Texas

manufacturing and Texas sales. The Court’s decision that Texas

law applied even though both in-state and out-of-state sales

were involved is not surprising, but it sheds no light on the rule

applicable here.

4la

Simply put, WCS never answers the real question:

Why should the State of Texas care about the price paid

by the United States Government for disposal of DOE

waste?

WCS asserts that Texas law applies “if any compo-

nent of a transaction affects intrastate commerce,” (Brief

29) but what does that mean? The cases make clear that it

does not mean that any impact felt, or activity occurring,

within Texas is sufficient to invoke the Texas Act.” Even

assuming that the “transaction” analysis fits the instant

case, where is the “component” that can be isolated as

adversely affecting intrastate commerce in a pleading

concerning federal waste disposal pursuant to federal

contracts and a federal procurement process, where the

only purchaser is a federal agency, where the whole point

of the case is alleged interference with federal authoriza-

tion to do business, and where the “sole and exclusive”

legal authority over the entire matter is proclaimed by

WCS itself (R. 933-34) to reside in the federal gc ->rn-

ment?

7 See Cherokee, 383 F.2d 97 (federal, not Texas, antitrust law

applied even though conduct occurred in Texas and harmed

Texas business); Denison Mattress Factory v. Spring-Air Co., 308

F.2d 403, 413 (5th Cir. 1962) (federal antitrust law applied even

though party claiming violation was Texas business engaged in

manufacturing and sales in Texas); Hughes Bros. Mfg. Co. v.

Cicero Trust & Sav. Bank, 24 F.2d 199 (Sth Cir. 1928) (transaction

interstate in nature despite harm to Texas business); Destec, 5 F.

Supp. 2d at 464; Albertype Co. v. Gust Feist Co., 114 S.W. 791 (Tex.

1908); Sloan v. Miami Margarine Co., 247 S.W.2d 159 (Tex. Civ.

App. - Dallas 1952, writ ref’d n.r.e.); Green v. Temple-Stuart Co.,

408 S.W.2d 744, 746 (Tex. Civ. App. - Fort Worth 1966, no writ).

42a

Not so fast, says WCS: what about the DOE “Pantex”

site in Amarillo? WCS argues that the District Court

“[w]rongly and inappropriately resolv[ed] key factual

disputes” in rejecting WCS’ argument in this regard. Brief

18 n.18.

Unfortunately for WCS, no fact dispute had to be

resolved in this issue: as noted above, its own pleading

framed the issues in the case. Texas’ manifest lack of

interest in the economics of DOE waste disposal would

not be altered simply because a shipment of such waste

happened not to cross state lines. See E.F.I., Inc. v. Mar-

keters Int'l, Inc., 492 S.W.2d 302, 304 (Tex. Civ. App. -

Houston [1st Dist.] 1973, writ ref’d n.r.e.) (federal anti-

trust law governs if intrastate nature of party’s business

is “merely incidental to the interstate nature of it”).

WCS’ charge against the District Court is ironic in

any event, since removal was based on the face of the

First Amended Petition, which contains not a word about

Amarillo or Pantex or shipments from there to WCS.

WCS’ “cite” on this point is not to its pleading, but rather

to a page in a WCS Motion filed below. Brief 5 n.8 (citing

R. 636 [page 6 of its Motion to Remand, in turn citing

testimony wherein the word “Pantex” is mentioned]).

That WCS would (1) attempt to support a “fact” (itself of

questionable import since unpled®) with a reference to its

own Motion, (2) then “support” its assertion regarding

8 The focus is on the face of the pleading, not post hoc

attempts by plaintiff to add some local color to its allegations. 16

J. Moore, Moore’s Feperar Practice § 107.41[1][e][ii] at 167-99

(3d ed. 1998) (on remand motion, inquiry focuses on complaint

“as it is stated at the time of removal”).

43a

Pantex with sheer speculation (i.e., failure to point to a

shred of admissible evidence that there even is any radio-

active waste at Pantex, or that DOE needs to dispose of it

off-site, or that DOE would have any desire to ship it to

WCS in any event), and (3) then take the District Court to

task for “inappropriately” resolving “key factual dis-

putes” when it was WCS who failed to plead those sup-

posedly-crucial “facts” in the first place, is suggestive of

the length to which WCS has strayed from cogent argu-

ment.

WCS points to Pounds, but the decision is distin-

guishable since a discrete “component” of the commerce

there concerned conduct that implicated the interests of

Austin consumers of photo finishing services, who would

have benefitted from increased competition and choice in

the local marketplace. Indeed, the Court stressed that the

conduct at issue “restrict[ed] trade or lessen[ed] competi-

tion in the Austin photo lab business,” and thus was a

matter within the purview and interest of Texas law.

Pounds, 818 F.2d at 1224.

Segal v. McCall Co., 184 S.W. 188 (Tex 1916), is similar:

the Court there was surely correct to find that Texas had

an interest where the contract at issue - described as one

that “fixes the price at which the vendee shall sell at retail

in Texas” - would have restricted the ability of Texas

consumers to enjoy the fruits of open competition in the

purchase of sewing goods. As with Pounds, the contrast

between that fact pattern and the one described in the

First Amended Petition is apparent.

WCS argues from Segal (Brief 30-31) that the Court

should focus on where DOE waste would be disposed of,

44a

not where it would be transported from (a quick reversal

from its earlier emphasis on the importance of the hypo-

thetical Amarillo-to-WCS shipments). Actually, the focus

should be on neither: as noted above, the question here is

not one of geography but rather of competitive effect, i.e.,

whether the price of DOE waste disposal is of interest to

Texas law. Geographical references can be a means of

establishing local competitive impact, which is the real

issue; here, however, WCS’ attempt to add local flavor to

this case is unavailing in light of a pleading that estab-

lishes only a federal economic interest in the health of

competition in the relevant market.

B. Removal Was Proper Despite the Lack of Pre-

emption.

WCS suggests that removal was inappropriate

because removal on “artful pleading” grounds is proper

only in cases involving complete federal preemption of

state law. Brief 14, 18-24. WCS did not make this argu-

ment below and thus waived it. Association for Retarded

Citizens v. Dallas County Mental Health & Mental Retarda-

tion Ctr., 19 F.3d_241, 243 n.4 (Sth Cir. 1994).

The argument is wrong in any event. A federal ques-

tion is a federal question; it is no less so simply because

its federal nature results from something other than pre-

emption. Carpenter makes this point: “If the only remedy

available to plaintiff is federal, because of preemption or

otherwise, and the state court necessarily must look to

45a

federal law in passing on the claim, the case is remov-

We ..5

Accordingly, this Court has not limited removal to

“complete preemption” cases,!° and the rule advocated

by WCS has been criticized. See 14B C. WRIGHT, § 3722 at

444-45 (such a rule “hardly can be considered very well

established”).

This Court wrote in Carpenter that “where the plain-

tiff necessarily has available no legitimate or viable state

cause of action, but only a federal claim, he may not

avoid removal by artfully casting his federal suit as one

arising exclusively under state law.” Carpenter, 44 F.3d at

366. That passage describes this case: WCS cannot sup-

port a state claim and thus it must rely on federal law as

surely as a plaintiff must in the preemption context.

Federal courts have exclusive jurisdiction over cases aris-

ing under the Sherman Act.!! Removal was therefore

appropriate.

9 44 F.3d at 366 (quoting 14A C. Wricut, A. Mier & E.

Cooper, FEDERAL PRACTICE AND PROCEDURE § 3722 (2d ed. 1985))

(emphasis added).

10 See, e.g., De Aguilar v. Boeing Co., 47 F.3d 1404 (Sth Cir.

1995); Nunn v. Feltinton, 294 F.2d 450, 453 (Sth Cir. 1961); Uncle

Ben's, Inc. v. Hapag-Lloyd Aktiengelsellschaft, 855 F.2d 215 (5th Cir.

1988); Villarreal v. Brown Express, Inc., 529 F.2d 1219 (5th Cir.

1976).

11 Florida ex rel. Shevin v. Exxon Corp., 526 F.2d 266, 275 (Sth

Cir. 1976).

46a

C. Removal Was Timely.

It is undisputed that Envirocare filed its notice of

removal within 30 days of receipt of the First Amended

Petition. The federal nature of WCS’ antitrust claims was

first revealed in that pleading, and removal was therefore

timely.

Comparing WCS’ Original Petition with its First

Amended Petition reveals significant differences concern-

ing the consumer whose interests were allegedly at stake

and the relevant markets allegedly at issue. In sum: the

market alleged in the Original Petition included commer-

cial and federal waste; however, the First Amended Peti-

tion limited the relevant market to federal (DOE) waste.

The Original Tetition recognized the difference

between DOE waste and waste from other sources such

as commercial companies, E.g., OP¥J 21-22 (R. 355-56);

{ 39 (R. 362). Having done so - and having demonstrated

its ability to distinguish between the two - WCS then

stated its antitrust causes of action. Absent was any dis~

tinction between DOE and non-DOE waste. Also absent

was any limitation of WCS’ claims to the market for

disposal of DOE waste only. See OPYY 87-92 (R. 380-81).

* * *

47a

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF TEXAS

MIDLAND-ODESSA DIVISION

WASTE CONTROL

SPECIALISTS, LLC

V.

ENVIROCARE OF

TEXAS, INC., et al. §

§

§

§ CIVIL ACTION NO.

§ MO-98-CA062

§

DEFENDANTS’ RESPONSE TO

PLAINTIFF’S MOTION TO REMAND

(Filed May 01, 1998)

TO THE HONORABLE LUCIUS D. BUNTON:

Defendants Envirocare of Texas, Inc., Envirocare of

Utah, Inc., Khosrow B. Semnani, Charles A. Judd, Frank

C. Thorley, Billy W. Clayton, and Nancy M. Molleda file |

this response opposing the motion to remand filed by

Plaintiff Waste Control Specialists, LLC (“WCS”).

INTRODUCTION

This case arises out of WCS’ desire to import radioac-

tive waste from United States Department of Energy

(“DOE”) sites all over the country to its proposed dis-

posal facility in Andrews County, Texas, without first

obtaining any permits or licenses from the U.S. Nuclear

Regulatory Commission (“NRC”) or the State of Texas,

and without being subject to their extensive regulatory

oversight designed to protect the public safety and the

environment.

48a

Envirocare operates a low-level nuclear disposal site

in Utah, which is licensed and permitted by the NRC and

State of Utah, and is, 2ccordingly, subject to extensive

safety and environmental regulations. In various con-

texts, Envirocare has participated in governmental pro-

ceedings related to WCS’ unorthodox proposal. After

involved agencies, including DOE, rejected WCS’ scheme,

WCS sued Defendants in Texas state court for purported

violations of Texas antitrust law, defamation and tortious

interference. WCS also sued DOE in a separate federal

court proceeding for refusing to consider its bid to dis-

pose of nuclear waste from a DOE facility in. Ohio.

On March 13, 1998, WCS filed its First Amended

Petition in which, for the first time, WCS clarified two

++ important points about its claims: (1) WCS’ antitrust

claims are based entirely on Envirocare’s alleged monop-

olization of the market for the disposal of federal (DOE)

nuclear waste and (2) the relevant market for WCS’ anti-

trust claims is “the entire continental United States.” First

Amended Petition {¥ 23, 25, 27 28-32. These clarifications

revealed that the facts and allegations underlying WCS’

antitrust claims are completely outside the scope of any

Texas law — despite WCS’ artful pleading of its claim as

one under Texas’ antitrust statute — and that if such facts

and allegations make out any antitrust claim at all, it

must be federal in nature.! Accordingly, Envirocare

removed this action pursuant to 28 U.S.C. §§ 1441(a) and

1446(b).

1 As set out in Defendants’ Motion to Dismiss filed with

this Court on April 20, 1998, WCS has also failed to state a claim

under Federal law upon which relief can be granted.

Oe

49a

SUMMARY OF ARGUMENT

WCS makes three main arguments for remand. First,

it claims that the removal was premised on federal pre-

emption and, since federal antitrust law does not preempt

state antitrust law, removal was improper. Contrary to

WCS’ mischaracterizations, the removal was based on the

artful pleading doctrine under which removal is proper,

in the words of Professors Wright and Miller when “the

only remedy available to plaintiff is federal, because of

preemption or otherwise.” Here the only antitrust rem-

edy available to WCS is federal, not because of federal

preemption but because, under long-established Texas

law, the Texas antitrust statute does not reach to exclu-

sively interstate transactions — like those pled in WCS’

First Amended Petition. Moreover, Texas antitrust law

could not reach WCS’ amended claims for an even more

fundamental reason — they exclusively involve the market

for disposal of DOE’s low-level nuclear waste, an area

that WCS itself insists is “solely and exclusively” gov-

erned by federal law.

Second, WCS contends that because WCS is a Texas

corporation, its proposed disposal facility is located in

Texas and one DOE facility is in Texas, its claims have an

intrastate component sufficient to state a claim under the

Texas antitrust statute. Under Texas law, however, the

plaintiff’s venue cannot support a Texas antitrust claim if

the transactions at issue are interstate. Everything has to

occur somewhere; interstate commerce does not become

intrastate commerce simply because a component activity

does not straddle state lines. Moreover, the fact that one

DOE facility from which WCS hopes to obtain a disposal

contract is located within Texas does not change the

50a

conclusion that contracts with the federal government,

whether “intrastate” or otherwise, cannot be reached by

the Texas antitrust laws.

Finally, WCS claims that Envirocare has waived

removal. But, it was only when WCS affirmatively

eschewed any claims relating to any intrastate market in

the First Amended Petition, by defining the market at

issue as wholly interstate and wholly federal in character,

that any possible Texas antitrust claim on the face of

WCS’ pleading was foreclosed. At that time, the case was

plainly a-case involving purely federal law and federal

issues, removable under applicable authorities related to

federal question jurisdiction.

WCS CANNOT AVOID FEDERAL JURISDICTION

BY ARTFULLY PLEADING AN INVALID STATE

ANTITRUST CLAIM

WCS argues that under the “well-pleaded” com-

plaint” rule “[i]t is well-settled that where a plaintiff

could maintain claims under both federal and state law,

such plaintiff may choose to ignore the federal claim and

allege only state law claims and remain in state court.”

Motion to Remand at 3 (emphasis in original). Precisely.

When a plaintiff has valid federal and state causes of

action, it can choose to assert only the state cause of

action, thus barring removal on federal question grounds.

Carpenter v. Wichita Falls I.S.D., 44 F.3d 362, 366 (5th Cir.

1995). But, as in this case “where the plaintiff necessarily

has available no legitimate or viable state cause of action,

but only a federal claim, he may not avoid removal by

artfully casting his federal suit as one arising exclusively

uncer siate law.” Id.; see also Avitts v. Amoco Prod. Co., 53

5la

F.3d 690, 693 (5th Cir. 1995) (“Of course, [the well-

pleaded complaint rule] does not mean that a plaintiff

can avoid federal jurisdiction by simply ‘artfully plead-

ing’ a federal cause of action in state law terms.”). This

case falls squarely into the “artful pleading” exception.

As WCS makes clear for the first time in its First

Amended Petition, WCS’ purported Texas antitrust cause

of action is based entirely on interstate, federal transac-

tions. It is well established, however, that the Texas anti-

trust statute does not reach interstate transactions. Segall

v. McCall Co., 184 S.W. 188, 189 (Tex. 1916) (“The «tate

Antitrust Act was not intended to encroach upon a field

of legislation [interstate commerce] over which it had no

jurisdiction.”); Pounds Photographic Labs v. Noritsu America

Corp., 818 F.2d 1219, 1224 (5th Cir. 1987) (“The Texas

courts have held that the Texas antitrust statutes do not

apply to agreements that relate wholly to interstate com-

merce.”); Cherokee Lab., Inc. v. Rotary Drilling Servs., Inc.,

383 F.2d 97, 107 (Sth Cir. 1967) (“Any restraint on the

marketing of the product was imposed in interstate com-

merce and not after the product had been put into intra-

state commerce. The legality vel non of the dealings

should be tested by the federal antitrust laws and not by

those of the State of Texas”), cert. denied, 390 US 904

(1968); Denison Mattress Factory v. Spring-Air Co., 308 F.2d

403, 413 (5th Cir. 1962) (“the contract in question was

interstate as to execution and performance. The contract

should be tested by the Federal antitrust laws. The anti-

trust laws of the State of Texas do not apply.”).

Numerous courts have applied the artful pleading

exception and denied vemand under exactly the same

circumstances presented here - where a plaintiff attempts

52a

to invoke a state law antitrust cause of action for entirely

interstate transactions. In re Nasdaq Market Matters Anti-

trust Litig., 929 F. Supp. 174, 178-79 (S.D.N.Y. 1996);

Mechanical Rubber & Supply v. American Saw & Mfg., 747 F.

Supp. 1292, 1295 (C.D.Ill. 1990); Buchanan v. Delaware

Valley News, 571 F. Supp. 868, 872 (E.D.Penn. 1983); In re

Wiring Device Antitrust Litig., 498 F. Supp. 79, 82-83

(E.D.N.Y. 1980). In Mechanical Rubber & Supply the court

explained its holding as follows:

Where, as here all defendants are unquestiona-

bly engaged in interstate commerce, those who

are damaged from an alleged restraint of trade

find a remedy in the federal, not the state, anti-

trust laws. This conclusion is buttressed in this

case by the longstanding holding of the [rele-

vant state’s] Supreme Court. . . that the state

antitrust statute under which the plaintiffs have

attempted to bring their action applied only to

intrastate commerce and does not reach inter-

state commerce of any kind.

747 F. Supp. at 1295, quoting In re Wiring Device, at 82.

Exactly the same is true in this case.

There is another reason why WCS has not alleged a

claim that can be reached by Texas antitrust law. In its

First Amended Petition, WCS made it clear that its anti-

trust claims exclusively involve the market for the dis-

posal of low-level nuclear waste from DOE sites. First

Amended Petition { 27. Lawyers for WCS confirmed this

fact at a hearing before Judge Cowan on April 3, 1998,

stating flatly that “[t]his case is about DOE.” Transcript at

53a

202.2 WCS’ remand motion reiterates that its antitrust

claims are based solely on the DOE market: “Here Plain-

tiff’s alleged product market-involves low-level radioac-

tive and mixed wastes to be shipped to Texas from DOE

sites around the country (including a site in Texas) for

disposal in Texas.” Motion to Remand at 7.

In its federal lawsuit against DOE, WCS acknowl-

edged that “sole and exclusive” authority over the dis-

posal of DOE’s low-level nuclear waste rests with the

federal government, under federal statutes. See Waste Con-

trol Specialists, LLC v. United States Dep’t of Energy, Fifth

Circuit Appeal No. 97-11353, Appellee’s Brief at 6-8

(attached hereto at Appendix Tab 2). Because, in WCS’

words, the federal government has “sole and exclusive”

authority over the very contracts that form the basis for

WCS’ antitrust claim, Texas antitrust law cannot reach

these claims for the same reason it cannot reach interstate

transactions — because to do so would encroach on Con-

gress’ exclusive domain. See Segall v. McCall Co., 184 S.W.

at 189 (Texas antitrust statute does not apply to transac-

tions exclusively controlled by federal law).3

2 Relevant portions of this transcript are attached at

Appendix Tab 1.

3 Indeed, by its very terms the Texas Act does not apply to

cases where, as here, the restraint at issue is the result of valid

state or federal action. Tex.Bus.&Com.Cope §15.05(g).

54a

WCS’ ATTEMPTS TO EVADE THE ARTFUL

PLEADING RULE ARE UNAVAILING

Federal Preemption is Irrelevant: The central thesis in

WCS’ motion to remand is its incorrect assertion that

Defendants’ removal is premised on federal preemption.

The removal was not based on federal preemption, but on

the artful pleading rule which allows removal in any

instance in which a plaintiff attempts to plead a cause of

action based on facts that make out a valid federal claim

but do not — because of federal preemption or otherwise -

support any state law claim. This point was expressly

made by the Fifth Circuit in Carpenter:

[I]n many contexts plaintiff’s claim may be one

that is exclusively governed by federal law, so

that the plaintiff necessarily is stating, a federal

cause of action, whether he chooses to articulate

it that way or not. If the only remedy available

to plaintiff is federal, because of preemption or

otherwise, and the state court must necessarily

look to federal law in passing on the claim, the

case is removable regardless of what is in the

pleading.

44 F.3d at 366, quoting 14A WricHt, Miter & Cooper,

FEDERAL PRACTICE AND PRocebDure § 3722, pp. 270-75 (2d ed.

1985) (emphasis added).

In Mechanical Rubber & Supply, the court expressly

rejected the argument WCS makes here:

[Defendant] concedes it is clear after California v.

ARC America Corp., 490 U.S. 93. . . (1989), that

federal antitrust law is not intended in any

direct way to preempt state antitrust law except

where there might be a direct conflict between

55a

the two laws. However, it maintains that its

position is not that federal antitrust laws pre-

empt the state antitrust laws, but that the fed-

eral antitrust laws apply to acts affecting or

occurring in the flow of commerce and that the

Illinois antitrust laws apply to acts affecting

intrastate commerce.

This Court agrees with the Defendant.

Count I is sufficiently federal in character that

the Court has subject matter jurisdiction over

[Defendant] and the Plaintiff must properly

bring this count under the federal antitrust laws.

747 F. Supp. at 1296; see also Cassel v. Webco Indus., Inc.,

942 F. Supp. 1409, 1411 (N.D. Okla. 1996) (denying

remand based on finding that, while plaintiff’s wrongful

termination cause of action under state law made out a

Title VII claim, it raised no valid claim under state law).

Neither of the two cases cited by WCS held that

federal preemption is required for removal. In Thompson

v. Nashua Corp., 907 F. Supp. 247 (W.D.Tex 1995), the court

expressly found that the plaintiff, whose allegations were

based on the San Antonio/South Texas market, had made

out a claim under the Texas antitrust laws. Id. at 249.

Because the plaintiff had made out a valid violation of the

Texas antitrust act, the artful pleading rule did not apply.

Id. In Mayfield v. Hartford Life Ins. Co., 699 F. Supp. 605

(W.D. Tex. 1988), the court remanded an antitrust action

filed in state court by the Texas Attorney General alleging

antitrust violations in the pricing and marketing of insur-

ance in Texas. The court held that neither the artful plead-

ing rule nor the complete preemption doctrine applied to

create a basis for removal jurisdiction. Id. at 604-05.

56a

Both Thompson and Mayfield evaluated removal under

the artful pleading rule independent of federal preemp-

tion; neither suggests that such rule requires federal pre-

emption. Both cases involved state antitrust claims based

on a non-federal, intrastate market. Because WCS has

failed to state an antitrust claim cognizable under Texas

law but did plead claims governed by federal law, the

artful pleading rule applies under the same analysis

employed in Thompson and Mayfield.

WCS’ Claims Do Not Contain An Intrastate Component

_That Can Be Reached By Texas Antitrust Law: WCS asserts

that its claims based on the alleged monopolization of the

market for DOE and nuclear waste have an intrastate

component sufficient to sustain a cause of action under

Texas antitrust law because WCS is a Texas corporation

and its disposal facility is located in Texas.* Motion to

Remand at 5-6. WCS also claims that because DOE has a

facility in Texas that generates nuclear waste, part of the

relevant market is intrastate. Id. at 6. WCS is wrong.

First, WCS concedes that the market for disposal of

DOE’s low-level nuclear waste is under exclusive federal

control; thus the DOE transactions on which WCS’ anti-

trust claims are based cannot be subject to the Texas

4 Inconsistent with its reliance on the well-pleaded

complaint rule, WCS attempts to shore up its position on

remand by reference to facts not included in its pleading about

the Pantex facilities near Amarillo. The reference to facts

outside the pleading can only be viewed as tacit admission by

WCS that the Amended Petition is removable on its face.

57a

antitrust statute.> Moreover, since WCS now identifies

DOE as the only consumer in its market, WCS cannot

point to a single Texas consumer whose welfare is at

issue.© With neither a local market nor any harm to a

Texas consumer, WCS’ claims are clearly outside the

scope of the Texas antitrust statute.” Accordingly, WCS’

contention that one DOE facility that might someday be

subject to a WCS proposal is in Texas is irrelevant.

Second, antitrust allegations about alleged harm to

Texas commerce are insufficient to make out a claim

under Texas law if the claims involve only the interstate

movements of goods. In Green v. Temple-Stuart Co., 408

S.W.2d 744, 746 (Tex. Civ. App. - Fort Worth 1966, no

writ), the plaintiff, a Texas retailer, sued a Massachusetts

furniture manufacturer under the Texas antitrust statute,

claiming to have suffered damages as a result of the

defendants’ agreement with a competing Texas retailer to

sell furniture to that retailer only. Even though the plain-

tiff alleged an antitrust violation affecting intrastate com-

merce, the court ruled that the Texas statute did not apply

> Tex.Bus.&Com.Cope §15.05(g). In fact, Texas law bars

private disposal of the radioactive waste at issue in this case.

Tex. HeattH & Sarety Cope §401.203. WCS has acknowledged

that it could only engage in such activity as a DOE contractor

within the “sole and exclusive” jurisdiction of federal law.

6 Consumer welfare is the focus of any antitrust case.

Doctor’s Hospital v. Southeast Medical Alliance, Inc., 123 F.3d 301,

306 (5th Cir. 1997); Consolidated Metal Prod., Inc. v. American

Petroleum Inst., 846 F.2d 284, 292-293 (5th Cir. 1988).

7 The purpose of the Texas antitrust statute is “ .. . to

provide the benefits of . .. competition to consumers in the state”

Tex.Bus.&Com.Cope §15.04. (emphasis added.)

“a

58a

because the agreement at issue was interstate. Id. at 746.

Likewise, in Sloan v. Miami Margarine Co., 247 S.W.2d 169

(Tex. Civ. App. - Dallas 1952, writ ref’d n.r.e.), the court

ruled that an exclusive sale agreement between an Ohio

margarine supplier and a Texas retailer, even though it

affected intrastate commerce, was not reached by the

Texas antitrust statute because the contract itself was

interstate. Here, WCS’ only bid, to date, similarly relates

to a facility in Ohio.

WCS’ reliance on Pounds Photographic Labs v. Noritsu

America Corp., 818 F.2d 1219 (5th Cir. 1988), and Elray, Inc.

v. Cathodic Protection Service, 507 S.W.2d 570 (Tex. Civ.

App. — Houston [14th Dist.] 1974, no writ), in an unavail-

ing attempt to establish an intrastate component to its

claims. In Pounds Photegraphic the court’s finding of an

intrastate component to the plaintiff’s antitrust claims

was based on evidence the defendant had “imposed a

restriction on the movement of a QSS unit from El Paso to

Austin, clearly an impediment to intrastate commerce.”

Id. at 1224. Elray, Inc. is even less helpful to WCS. There,

the court held that the Texas antitrust statute could be

applied to an anticompetitive agreement made in Texas

between a Texas partnership and a Texas corporation.

That holding is inapplicable to this case in which WCS

has, in the First Amended Petition, defined itself as a

federal government contractor in a wholly interstate mar-

ket.

DEFENDANTS’ REMOVAL WAS TIMELY

WCS argues that Defendants’ removal was untimely,

claiming that WCS’ Original Petition and other papers

59a

available more than 30 days prior to the date of removal

| put Defendants’ on notice that WCS’ antitrust claims

involved the interstate disposal of DOE nuclear waste.

Motion to Remand 7-9.8 WCS’ argument focuses on the

wrong issue. As WCS asserts, Defendants have known all

along that WCS’ claims were based at least in part on the

interstate market for the disposal of DOE wastes. The

element that made removal possible, and that was not

clarified until the First Amended Petition was filed, was

that WCS’ claims are now based exclusively on the inter-

state DOE market and do not involve any private, intra-

state nuclear waste disposal market that would have been

sufficient to state antitrust claims under Texas law.? WCS

presents no evidence that Defendants were aware of this

critical fact prior to the filing of the First Amended Peti-

tion.

At the very most, the Original Petition and WCS’

other papers of which Defendants were aware prior to

March 13, 1998 were ambiguous regarding the relevant

market on which WCS’ claims were based. The Fifth

Circuit has held that pleadings that are indeterminate

8 WCS also incorrectly accuses Defendants of seeking to

delay the disposition of this case by removing it. This allegation

is baseless. Defendants have offered to seek to continue ongoing

discovery after the removal by appropriate requests to this

Court, but WCS declined. Further, there is no reason to believe

that this Court cannot or will not proceed as expeditiously as

the state court.

9 Arguably, this critical point was not made completely

clear by WCS until even later, at the April 3, 1998 state court

hearing, where WCS’ lawyers stated that DOE was the only

customer relevant to their lawsuit. See Appendix, Tab 1.

60a

with regard to removal jurisdiction do not put a defen-

dant on notice to inquire into removability and start the

30-day clock running. Leffall v. Dallas I.S.D., 28 F.3d 521,

525 (5th Cir. 1994); Akin v. Big Three Indus., Inc., 851

F.Supp. 819, 825 (E.D. Tex. 1994). Defendants’ removal

was timely.

CONCLUSION AND PRAYER

In its First Amended Complaint, WCS asserts anti-

trust claims based solely on the interstate market for the

disposal of low-level nuclear waste generated by DOE.

Because the Texas antitrust statute does not reach these

claims, the only relief available to WCS is under federal

antitrust law, if at all. Because WCS attempted to artfully

plead a federal antitrust action as an action under Texas

antitrust law, Defendants’ removal was proper. Accord-

ingly, Defendants respectfully pray that this Court deny

WCS’ motion to remand and award Defendants any addi-

tional relief to which they may be justly entitled.

Respectfully submitted,

MINTON, BURTON, FOSTER &

COLLINS

A Professional Corporation

1100 Guadalupe Street

Austin, Texas 78701

(512) 476-4474

(512) 476-1315 (telecopier)

By: /s/ Roy Q. Minton

Roy Q. Minton

State Bar. No. 14196000

Martha S. Dickie

State Bar No. 05833100