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Stibitz v. General Public Utilities Corp.

October 24, 1984

STIBITZ, DONALD A., NEW FREEDOM LUMBER CO., INC., RICHARD K. BAADE AND SHIRLEY A. BAADE, HIS WIFE, ALBERT C. GEORGE AND M. ISABEL GEORGE, HIS WIFE, VICTOR HEBEL, P.G. ENGINEERING, CHANCEFORD MANOR VILLAGE SEWAGE CO., INC., CHANCEFORD MANOR VILLAGE WATER CO., INC., DOROTHY S. HOSTETTER, L. RICHARD HARNER AND LINDA HARNER, HIS WIFE, JAMES BARRON AND DIANE BARRON, HIS WIFE, MARGARET MARY JONAS, CUMBERLAND WOODCRAFT COMPANY, INC., POCONO BUSINESS FURNITURE, INC., FORGET-ME-NOT, INC., LARRY WELKER FORD, INC., DR. MAXINE C. BUSH, REV. ALVA TOMPKINS, MUSETTE DUGGAN, WELS I. ZIMMERMAN, HARRY WALLACH, MARY W. HUTCHINSON, STEPHEN M. YOUNG, FMG INVESTMENTS, INC., GETTYSBURG TOURS, INC., HERITAGE INNS, INC., L.E. SMITH WHOLESALE DISTRIBUTORS, INC., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, APPELLANTS
v.
GENERAL PUBLIC UTILITIES CORP., METROPOLITAN EDISON CO., JERSEY CENTRAL POWER AND LIGHT CO., PENNSYLVANIA ELECTRIC CO., BABCOCK & WILCOX CO., J. RAY MCDERMOTT & CO., CATALYTIC, INC., AND BURNS & ROE, INC., APPELLEES



Appeal from the United States District Court for the Middle District of Pennsylvania

Author: Seitz

Before: SEITZ, Circuit Judge, STEWART, Associate Justice (Retired),*fn* and ADAMS, Circuit Judge.

Opinion OF THE COURT

SEITZ, Circuit Judge.

This is an appeal from an order of the district court granting defendants' motion for summary judgment and entering judgment against plaintiffs. Appellate jurisdiction exists pursuant to 28 U.S.C. § 1291.

I.

On March 28, 1979, there was a nuclear accident at the Three Mile Island Power facility ("TMI") near Harrisburg. Reactor units I and II were shut down as a result of that incident. Subsequently, the Pennsylvania and New Jersey Public Utilities Commissions approved increased utility rates to cover the cost of repairing the TMI facility and replacing from other sources the lost power capacity.

Thirty-five individuals and business, all purchasers of electricity at the increased rates, filed a class action suit on behalf of themselves and all other similarly situated business and professional entities located more than 25 miles from TMI.*fn1 Plaintiffs seek compensatory and exemplary damages under contract and tort law for economic harm resulting from the increased utility rates, which pass part of the cost of the TMI accident on to plaintiffs. The defendants include utilities and other companies that were involved in the design, construction, maintenance, quality assurance, and start-up testing of TMI.

Plaintiffs allege that defendants acted negligently, recklessly, and in violation of standards of care for ultra-hazardous activities. In addition, plaintiffs allege that there were defects in the design, manufacture, construction, and installation of the nuclear reactor.

To the extent apposite, the district court presumably relied upon its prior opinion, In re Three Mile Island Litigation, 87 F.R.D. 433 (M.D. Pa. 1980), in assuming subject matter jurisdiction. This court raised sua sponte the issue of whether that exercise of jurisdiction was proper, and gave counsel the opportunity to respond at oral argument. It is to this issue that we now turn.

II.

None of the parties questioned federal subject matter jurisdiction. Indeed, they all argue affirmatively that there is jurisdiction. Counsel rely on the "arising under" language in 28 U.S.C. §§ 1331 and 1337, contending that plaintiffs' state-created causes of action "arose under" the Price Anderson Act. That Act, inter alia, provides for a system of indemnification and limited liability, under certain circumstances, in the event of a nuclear incident. It also requires defendants to waive certain defenses they might otherwise have under state law.

Counsel explained at oral argument*fn2 that the Congressional mechanism for compensation under the Price-Anderson Act would necessarily be implicated in this litigation. The scope of the Act would then have to be determined and its terms construed. In particular, counsel argued that this case could turn on the meaning of statutory terms such as "public liability" and "nuclear incident." Counsel concluded, therefore, that the great federal interest in the proper application and construction of the Price-Anderson Act provides a basis for federal subject matter jurisdiction under §§ 1331 & 1337.

It is true that "there may be some room for finding federal jurisdiction though both the right and the remedy are state-created, if an important question of federal law is an essential element in the case." Wright, Federal Courts 96 (1983) (footnote omitted); Lindy v. Lynn, 501 F.2d 1367, 1369 (3d Cir. 1974). This is only true, however, if the "well-pleaded complaint rule" is satisfied. Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust for Southern California, et al., 463 U.S. 1, 103 S. Ct. 2841, 2846, 77 L. Ed. 2d 420 (1983). This rule provides that a claim is jurisdictional under the statutory "arising under" language only if "[a] right or immunity created by the Constitution or laws of the United ...


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