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GILBERG v. STEPAN CO.

August 20, 1998

PABLO GILBERG, Plaintiff,
v.
STEPAN COMPANY, et al., Defendants.



The opinion of the court was delivered by: HEDGES

RONALD J. HEDGES, U.S.M.J.

 INTRODUCTION

 This matter comes before me on plaintiff's motion to remand. I have considered the papers submitted in support of and in opposition to the motion. I heard oral argument on March 9, 1998.

 BACKGROUND

 From 1916 through 1956, the Maywood Chemical Works ("Maywood Chemical") manufactured iridescent gas mantles at a facility located in Maywood and Rochelle Park, New Jersey ("the facility"). As part of the manufacturing process Maywood Chemical "milled," or extracted, thorium, a radioactive metal, from monazite ore. One byproduct of thorium milling is "tailings," a sand-like residue similar in appearance to clay. Since it contains residual amounts of radioactive material in the state of decay, thorium tailings can present a substantial health hazard.

 Maywood Chemical also conducted other manufacturing activities at the facility, including leather digestion, caffeine extraction, and the production of protein, lithium, aromatic chemical, and narcotic and flavor products. These operations also produced manufacturing waste. That waste was stored, along with Maywood Chemical's thorium tailings, in earthen-diked areas located on the facility's property. It is this mixed waste that forms the basis of this action, for it now appears that waste from the facility is responsible for radiological and chemical contamination of over 80 commercial and residential properties throughout the communities of Maywood, Lodi, and Rochelle Park, New Jersey.

 It is alleged that the waste was conveyed into the surrounding communities by various means. Some waste is said to have migrated through Lodi Brook -- which ran through the facility until it was replaced by a storm drainage system -- and onto neighboring properties. Other waste is alleged to have been physically removed and transported to properties offsite for use as mulch, fill, and surface grade. Still other waste is said to have leached into ground and subsurface water, resulting in the contamination of eleven wells in Lodi, and the municipal pools of Lodi, Maywood and Rochelle Park. Finally, it is alleged that waste was used as fill when a section of Route 17 was constructed across a portion of the facility in 1932.

 Plaintiff, a former resident of Lodi, claims that his real property and water supply were contaminated by waste from the facility. His action, which was commenced in the Superior Court of New Jersey, Middlesex County, on December 9, 1997, seeks recovery for injuries resulting from his personal exposure, and the exposure of his property, to these contaminants. Plaintiff is not alone. His attorneys represent over 400 present and former residents of Maywood, Lodi, and Rochelle Park, who also contend that they, their relatives and/or their property were injured by exposure to waste from the facility. Indeed, when plaintiff's attorneys commenced his action in state court, they also filed 256 separate but similar actions on behalf of their other clients. Rather than submit 257 complaints, however, plaintiff's attorneys, with the approval of Middlesex County court officials, filed a single joint Complaint (the "Joint Complaint"), which was then adopted in whole or in part by the plaintiffs in each of the 257 actions (individual filing fees, totaling some $ 45,000 in the aggregate, were also paid).

 The Joint Complaint is an unwieldy beast. Its 71 pages of captions (one for each of the 257 actions) fronts 101 pages of allegations and pleadings. Forty-six counts plead causes of action for negligence, absolute liability, strict liability, trespass, nuisance, battery, per quod damages, millison, wrongful death, consumer fraud, intentional spoliation of evidence, and punitive damages. Named defendants include Stepan Company ("Stepan"), which acquired Maywood Chemical and the facility in 1959, T.J. Gustenhoven Real Estate, Higgins Realtors, Gentry Realty Associates, Michael Tracey, and various fictitious entities and individuals. Not all defendants were named in every count, however, and not every count was adopted by plaintiff in the action sub judice. Only the causes of action for negligence, absolute liability, strict liability, trespass, nuisance, battery, per quod, millison, and intentional spoliation of evidence were adopted by plaintiff, and these were only alleged against Stepan and the various fictitious entities and individuals.

 Stepan removed this action on January 7, 1998. *fn1" The Notice of Removal alleges that removal was proper on several grounds. The first is that plaintiff's claims are completely pre-empted by the exclusive cause of action for injuries arising out of "nuclear incidents" provided by the Price-Anderson provisions of the Atomic Energy Act of 1954, 42 U.S.C. § 2210. The second is that "at relevant times" Stepan was an agent or employee of the federal government and, therefore, plaintiff's claims fall under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b)(1) & 2671-80. The third is that Stepan was a "person acting under" a federal officer in regard to the conduct which underlies plaintiff's claim for intentional spoliation of evidence, and, therefore, removal was proper under the Federal Officer Removal Statute, 28 U.S.C. § 1442(a)(1). The fourth and last basis for removal is that diversity of citizenship under 28 U.S.C. § 1332 exists between the parties.

 On February 6, 1998, plaintiff filed an Amended Complaint as of right under Rule 15(a). The Amended Complaint, which is a mere 16 pages in length, drops the claims for millison, per quod, and intentional spoliation of evidence. It also substitutes two real persons for fictitious defendants: Robert Vernieri, who is alleged to have been a hauler/transporter of the waste which was taken to properties offsite for use as mulch and fill, and John O'Brien, who is alleged to have been a Stepan plant manager who conspired to conceal Stepan's wrongful, contaminant-releasing activity from plaintiff. At the same time, plaintiff filed this motion to remand under 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction. *fn2"

 DISCUSSION

 A removed action must be remanded "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). The burden of establishing the propriety of removal and the existence of subject matter jurisdiction falls on the removing party. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085, 112 L. Ed. 2d 1046, 111 S. Ct. 959 (1991). Furthermore, removal statutes are "strictly construed against removal and all doubts should be resolved in favor of remand." Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987). With this standard in mind, I turn to Stepan's four asserted grounds upon which jurisdiction can rest.

 Diversity Jurisdiction.

 A defendant can remove from state court any civil action "of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a) & (b). Under 42 U.S.C. § 1332(a), district courts have original jurisdiction over civil actions when there is diversity of citizenship between parties and the amount in controversy exceeds $ 75,000. However, "[a] case falls within the federal district court's 'original' diversity 'jurisdiction' only if diversity of citizenship among the parties is complete, i.e., only if there is no plaintiff and no defendant who are citizens of the same State." Wisconsin Dept. of Corrections v. Schacht, U.S. , , 141 L. Ed. 2d 364, 118 S. Ct. 2047, 2052 (1998). At the same time, a plaintiff cannot defeat removal merely by naming a non-diverse defendant; that defendant also has to be "properly joined and served" for removal to be barred. § 1441(b); see Schacht, U.S. at , 118 S. Ct. at 2053 (diversity measured by status of action and parties in state court at time of removal). Furthermore, for purposes of removal "the citizenship of defendants sued under fictitious names shall be disregarded." § 1441(a). Here, the only non-fictitious defendant named by plaintiff prior to removal was Stepan. Since it is uncontraverted that plaintiff is a citizen of New Jersey, Joint Complaint at 72, and that Stepan is a Delaware corporation with its principal place of business in Illinois, Joint Complaint at 97, diversity was complete at the time of removal. Jurisdiction, therefore, is proper under sections 1332 and 1441.

 Unfortunately, that is not the end of the inquiry. The Amended Complaint plaintiff filed as of right after removal substituted Vernieri and O'Brien for two fictitiously-pled defendants. Plaintiff-now claims that Vernieri and O'Brien are non-diverse and that this action must be remanded. Pursuant to 28 U.S.C. § 1447(e), a federal court can either permit the post-removal joinder of non-diverse, jurisdiction-destroying parties and remand, or it can deny their joinder and retain the action. Stepan argues that denial of joinder is the proper course since plaintiff has not averred sufficient facts to demonstrate that Vernieri and O'Brien are not fraudulently joined.

 There is another problem, however, and it stands in the way of my resolving the section 1447(e) joinder issue. The Amended Complaint fails to allege the citizenship of Vernieri and O'Brien. I cannot make findings of fact as to citizenship when there are no facts on the issue of citizenship in the record. I need not concern myself with this dilemma, however, if I find that one of Stepan's other asserted grounds for jurisdiction is valid.

 The Price-Anderson Provisions of the Atomic Energy Act of 1954.

 The Price-Anderson Act ("the Act"), 42 U.S.C. § 2210, vests district courts with original jurisdiction over "any public liability action arising out of or resulting from a nuclear incident." 42 U.S.C. § 2210(n)(2). Moreover, the Act expressly authorizes removal by a defendant of any such action commenced in state court to the district court "in the district where the nuclear incident takes place." § 2210(n)(2). The Atomic Energy Act of 1954, as amended, 42 U.S.C. §§ 2011-2281, of which the Price-Anderson Act is but a section, defines "public liability action" as

 
any suit asserting public liability. A public liability action shall be deemed to be an action arising under section 2210 of this title, and the substantive rules for decision in such action shall be derived from the law of the State in which the nuclear incident involved occurs, unless such law is inconsistent with the provisions of such section. [ 42 U.S.C. § 2014(hh)].

 "Public liability," in turn, is defined as

 
any legal liability arising out of or resulting from a nuclear incident or precautionary evacuation (including all reasonable additional costs incurred by a State, or a political subdivision of a State, in the course of responding to a nuclear incident or a precautionary evacuation), except (i) claims under State or Federal workmen's compensation acts of employees of persons indemnified who are employed at the site of and in connection with the activity where the nuclear incident occurs; (ii) claims arising out of an act of war; and (iii) whenever used un subsections (a), (c), and (k) of section 2210 of this title, claims for loss of, or damages to, or loss of use of property which is located at the site of and used in connection with the licensed activity where the nuclear incident occurs. "Public liability" also includes damage to property of persons indemnified: Provided, That such property is covered under the terms of the financial protection required, except property which is located at the site of an used in connection with the activity where the nuclear incident occurs. [ 42 U.S.C. § 2014(w)].

 "Nuclear incident," is defined in relevant part as

 
any occurrence, including an extraordinary nuclear occurrence, within the United States causing, within or outside the United States, bodily injury, sickness, disease, or death, or loss of or damage to property, or loss of use of property, arising out of or resulting from the radioactive, toxic, explosive or other hazardous properties of source, special nuclear, or byproduct material. [ 42 U.S.C. § 2014(q)].

 Since thorium falls within the definition of "source material," 42 U.S.C. § 2014(z), and thorium tailings within the definition of "byproduct material," § 2014(e), Stepan argues that the claims asserted in the Joint Complaint assert legal liability arising out of an "occurrence . . . causing . . . bodily injury, sickness, [etc.,] arising out of or resulting from the radioactive, toxic, explosive or other hazardous properties of source . . . or byproduct material." In short, Stepan argues that plaintiff pleads a public liability action properly removable under the Act.

 Plaintiff, relying on In re Cincinnati Radiation Lit., 874 F. Supp. 796 (S.D. Ohio 1995), *fn3" contends that for there to be an "occurrence," as that word is used in the definition of "nuclear incident," there must be an unintended release of radioactive material. The Joint Complaint, plaintiff argues, alleges only intentional releases of thorium and thorium tailings, and thus the Act does not apply. Stepan counters that under the plain language of the Act, the intentional/unintentional distinction plaintiff relies upon is "spurious." The resolution of the issue, therefore, would appear to turn on the proper construction of "occurrence" as utilized in the definition of "nuclear incident."

 "It is axiomatic that statutory interpretation begins with the language of the statute itself. Courts presume that Congress expressed its legislative intent through the ordinary meaning of the words it chose to use, and if the statutory language is unambiguous, the plain meaning of the words ordinarily is regarded as conclusive." In re TMI, 67 F.3d 1119, 1123 (3d Cir. 1995) (citation omitted) (quoting Government of Virgin Islands v. Knight, 28 V.I. 249, 989 F.2d 619, 633 (3d Cir. 1993), cert. denied, 510 U.S. 994, 126 L. Ed. 2d 457, 114 S. Ct. 556 (1993)), cert. denied sub nom. Metropolitan Edison v. Dodson, 517 U.S. 1163, 134 L. Ed. 2d 660, 116 S. Ct. 1560 (1996). Taken in isolation, the word "occurrence" conveys a broad meaning. Webster, for example, defines occurrence as "something that takes place" or "the action or process of happening or taking place." Webster's New International Dictionary 1561 (3d ed. 1976). Random House defines it as "the action, fact or instance of occurring" and "something that happens; [an] event [or] incident." Random House Dictionary of the English Language 1340 (2d ed. 1987).

 However, "it is a 'fundamental principle of statutory construction (and, indeed, of language itself) that the meaning of a word cannot be determined in isolation, but must be drawn from the context in which it is used." Textron Lycoming Reciprocating Engine Div. v. United Auto., Aerospace and Agric. Implement Workers of Am., U.S. , , 140 L. Ed. 2d 863, 118 S. Ct. 1626, 1629 (1998) (quoting Deal v. United States, 508 U.S. 129, 132, 124 L. Ed. 2d 44, 113 S. Ct. 1993 (1993)). In this regard, it is significant that the definition of nuclear incident employs "occurrence" in concert with the clause "including an extraordinary nuclear occurrence," so as to read, "the term 'nuclear incident' means any occurrence, including an extraordinary nuclear occurrence." § 2014(q). The phrase extraordinary nuclear occurrence is statutorily defined:

 
the term "extraordinary nuclear occurrence" means any event causing a discharge or dispersal of source, special nuclear, or byproduct material from its intended place of confinement in amounts offsite, or causing radiation levels offsite, which the Nuclear Regulatory Commission or the Secretary of Energy, as appropriate, determines to be substantial, and which the Nuclear Regulatory Commission or the Secretary of Energy, as appropriate, determines has resulted or will probably result in substantial damages to persons offsite or property offsite . . . . As used in this subsection, "offsite" means away from "the location" or "the contract location" as defined in the applicable Nuclear Regulatory Commission or the Secretary of Energy, as appropriate, indemnity agreement, entered into pursuant to section 2210 of this title. [ 42 U.S.C. § 2014(j)].

 An occurrence which underlies the definition of "extraordinary nuclear occurrence" cannot be just "any event," but can only be an event at 'the location' or 'the contract location' as those terms are defined "in the applicable . . . indemnity agreement." § 2014(j).

 The proximity to and interrelationship between the word "occurrence" and the phrase "extraordinary nuclear occurrence," in turn, "presents a classic case for application of the 'normal rule of statutory construction that identical words used in different parts of the same act are intended to have the same meaning.'" Commissioner v. Lundy, 516 U.S. 235, 250, 116 S. Ct. 647, 133 L. Ed. 2d 611 (1996) (quoting Sullivan v. Stroop, 496 U.S. 478, 484, 110 L. Ed. 2d 438, 110 S. Ct. 2499 (1990)); United States v. Nippon Paper Ind. Co., Ltd., 109 F.3d 1, 4 (1st Cir. 1997), cert. denied, U.S. , 139 L. Ed. 2d 632, 118 S. Ct. 685 (1998). As a matter of statutory construction, therefore, the occurrence which underlies a "nuclear incident," can only be an event at "the location" or "the contract location" as that term is defined in an indemnity agreement entered into under § 2210. Such a construction also makes eminent sense in light of Price-Anderson's statutory framework. To understand that framework, and to understand why the existence of an indemnification agreement defining "the location" is a necessary prerequisite to asserting a cause of action under Price-Anderson, requires a discussion of the history behind Price-Anderson's enactment and amendment.

 The history behind Price-Anderson begins with the passage of Atomic Energy Act of 1946, ch. 724, 60 Stat. 755 (1946), which "contemplated that the development of nuclear power would be a Government monopoly." Duke Power Co. v. Carolina Environ. Study Group, Inc., 438 U.S. 59, 63, 57 L. Ed. 2d 595, 98 S. Ct. 2620 (1978). Soon after the passage of the 1946 Act Congress recognized, "that it would be in the national interest to permit private sector involvement in [the nuclear] industry under a system of federal licensing and regulation." In re TMI Lit. Cases Consol. II, 940 F.2d 832, 852 (3d Cir. 1991), cert. denied sub nom. Gumby v. General Pub. Util. Corp., 503 U.S. 906, 117 L. Ed. 2d 491, 112 S. Ct. 1262 (1992) ("TMI II"). Congress thus enacted the Atomic Energy Act of 1954 ("AEA"), 68 Stat. 919 (1954) (codified as amended at 42 U.S.C. §§ 2011-2281), which provided for the "licensing of private construction, ownership, and operation of commercial nuclear power reactors for energy production under strict supervision by the Atomic Energy Commission (AEC)." Duke Power, 438 U.S. at 63; see 42 U.S.C. §§ 2133, 2134 & 2235.

 Private industry, however, viewed the opportunity to participate in this young field with guarded concern, for "it soon became apparent that profits from the private exploitation of atomic energy were uncertain and the accompanying risks substantial." Duke Power, 438 U.S. at 63-64. As the Supreme Court explained,

 
although the AEC offered incentives to encourage investment, there remained in the path of the private nuclear power industry various problems - the risk of potentially vast liability in the event of a nuclear accident of a sizable magnitude being the major obstacle. Notwithstanding comprehensive testing and study, the uniqueness of this form of energy production made it impossible totally to rule out the risk of a major nuclear accident resulting in extensive damage. Private industry and the AEC were confident that such a disaster would not occur, but the very uniqueness of nuclear power meant that the possibility remained, and the potential liability dwarfed the ability of the industry and private insurance companies to absorb the risk. [ 438 U.S. at 64].

 Indeed, the risks were substantial enough that "spokesmen for the private section informed Congress that they would be forced to withdraw from the field if their liability were not limited by appropriate legislation." 438 U.S. at 64.

 In 1957, Congress responded by enacting the Price-Anderson Act, Pub. L. No. 85-256, 71 Stat. 576 (1957) (codified as amended at 42 U.S.C. § 2210 (1996)), for the purpose of "protecting the public and . . . encouraging the development of the atomic energy industry." TMI II, 940 F.2d at 852 (quoting 42 U.S.C. § 2012). Price-Anderson mandated that an assured "pool" of available funds be established to cover certain liabilities which might arise out of activities related to licenses issued under the AEA for the construction and operation of nuclear power plants. For each such license, the pool was constituted in the following manner: The first-tier contributor to the pool was the licensee, which was required as a condition of its license to maintain "financial protection," *fn4" consisting of either "private insurance, private contractual indemnities, self insurance, [or] other proof of financial responsibility." Price-Anderson Act, sec. 4, §§ 170(a) & (b) (codified as amended at §§ 2210(a) & (b)), reprinted in 1957 U.S.C.C.A.N. 629, 630. The amount of financial protection the licensee was required to carry, was set by AEC regulation, although the benchmark was "the amount of liability insurance available from private sources." Price-Anderson Act, sec. 4, § 170(b), reprinted in 1957 U.S.C.C.A.N. at 630.

 The second-tier contributor was the AEC itself. It was required to enter into an indemnification agreement with any licensee who was required by license to maintain financial protection. Price-Anderson Act, sec. 4, § 170(c) (codified as amended at § 2210(c)), reprinted in 1957 U.S.C.C.A.N. at 630-31. *fn5" The indemnification agreement was required to provide, in turn, that in the event the amount of financial protection held by the licensee became exhausted by liability for damages arising from an accident, the AEC would step in and contribute an additional $ 500 million to cover the liability that remained. Once both the licensee's financial protection and the AEC indemnification were exhausted, Price-Anderson provided for a "limitation of liability" that capped the remaining liability flowing from an accident. Price-Anderson Act, sec. 4, § 170(e) (codified as amended at § 2210(e)), reprinted in 1957 U.S.C.C.A.N. at 631.

 Licenses for the construction and operation of nuclear power facilities, however, were not the only licenses authorized under the AEA. The AEA also authorized the AEC to license the production and possession of nuclear materials, such as source, special nuclear, *fn6" and byproduct materials. See 42 U.S.C. §§ 2073, 2093 & 2111. While Price-Anderson did not mandate, as it did with plant licenses, that assured pools of coverage be established and maintained in regard to liabilities arising from activities involving these materials licenses, it did provide that the AEC could subject materials licences to Price-Anderson at AEC's discretion. Price-Anderson Act, sec. 4, § 170(a), reprinted in 1957 U.S.C.C.A.N. at 630. *fn7" In granting the AEC this discretion, however, Congress warned that

 
it is not expected that ordinarily the Commission will use the authority given it with respect to these . . . three types of materials. However, there may be rare instances in which the licensee, without at the same time being a licensee of a facility, may have such large quantities of materials or such quantities of especially dangerous or hazardous materials as to warrant the imposition of the provisions of this bill. [S. Rep. No. 85-296 (1957), reprinted in 1957 U.S.C.C.A.N. 1803, 1820].

 Price-Anderson also added four definitions, along with that for "financial protection," to the AEA. Together, the four defined phrases served to identify which persons were entitled to claim against, and which claims were compensable from, a Price-Anderson pool of assured funds. First, the Act defined the phrase "licensed activity" to mean "an activity licensed pursuant to [the AEA] and covered by the provisions of section 170a [requiring the maintenance of financial protection]." Price-Anderson Act. sec. 3, § 11(n) (codified as amended at 42 U.S.C. § 2014(p)), reprinted in 1957 U.S.C.C.A.N. at 629; S. Rep. No. 85-296, reprinted in 1957 U.S.C.C.A.N. at 1817 ("'licenced activity'. . . means any activity for which a license is issued . . . but for which the Commission requires financial protection under section 170a"). It was these activities which Congress or the AEC identified as carrying the risk of potentially wide-ranging liability which the pool of assured funds was intended to insure against.

 Next, the phrase "nuclear incident" pinpointed the "event" that would arise out of, or be connected with, the licensed activity and lead to the extensive liability-generating injuries Price-Anderson was intended to address. "Nuclear incident" was defined to mean

 
any occurrence within the United States causing bodily injury, sickness, disease, or death, or loss of or damage to property, or for loss of use of property, arising out of or resulting from the radioactive, toxic, explosive, or other hazardous properties of source, special nuclear, or byproduct material. [Price-Anderson Act, sec. 3, § 11(o) (codified as amended at 42 U.S.C. § 2014(q)), reprinted in 1957 U.S.C.C.A.N. at 629].

 As the Senate Report accompanying the Price-Anderson Act6 explained, "the occurrence which is the subject of this definition is that event at the site of the licensed activity, or activity for which the Commission has entered into a contract, which may cause damage." S. Rep. No. 85-296, reprinted in 1957 U.S.C.C.A.N. at 1817. *fn8"

 In turn, the phrase "public liability" identified the types of claims arising from a nuclear incident that would qualify to be compensated from the pool of ...


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