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Pennsylvania General Energy Co., LLC v. Grant Township

United States District Court, W.D. Pennsylvania

March 31, 2017



          SUSAN PARADISE BAXTER United States Magistrate Judge.

         PGE and Grant Township have filed motions for summary judgment, which breakdown as follows: Plaintiff PGE seeks summary judgment on its own six remaining claims, as well as the counterclaim brought by Defendant Grant Township. For its part, Grant Township seeks summary judgment on its counterclaim. ECF No. 154; ECF No. 157.

         I. Relevant Procedural History

         Plaintiff Pennsylvania General Energy Company, LLC, ("PGE") filed this action challenging the constitutionality, validity and enforceability of an ordinance adopted by Grant Township that established a self-styled Community Bill of Rights Ordinance. Plaintiff seeks relief against Defendant Grant Township on the grounds that the Ordinance purports to strip Plaintiff of its constitutional rights. Plaintiff seeks to enforce its federal constitutional rights through 42 U.S.C. § 1983. Additionally, Plaintiff contends the Ordinance is in direct conflict with a number of Pennsylvania statutes and is therefore preempted. ECF No. 5.

         Defendant raises a counterclaim pursuant to 42 U.S.C. § 1983 and § 1988 against PGE, claiming that by bringing this lawsuit challenging the Ordinance, PGE is violating the rights of the people of Grant Township to "local community self-government" as secured by the American Declaration of Independence, the Pennsylvania Constitution, the federal constitutional framework, and the Community Bill of Rights Ordinance itself. ECF No. 10.

         Previously, PGE and Grant Township filed motions for judgment on the pleadings on some of their other claims. On October 14, 2015, this Court granted Plaintiff PGE's motion for judgment on the pleadings thereby invalidating six provisions of the challenged Ordinance.[1] ECF Nos. 113-114. Grant Township's motion was denied. Id. Two weeks later, on November 3, 2015, the people of Grant Township voted to repeal the Community Bill of Rights Ordinance and adopted a new Home Rule Charter. See ECF No. 180-2.

         Next, PGE and Grant Township filed the instant motions for summary judgment. At issue in Plaintiff PGE's present motion are Plaintiffs remaining federal constitutional claims. Specifically, Plaintiff PGE claims the Community Bill of Rights Ordinance violates the Supremacy Clause, the Equal Protection Clause, the Petition Clause of the First Amendment, the Contract Clause, and both the substantive and procedural components of the Due Process Clause of the United States Constitution and seeks to enforce all of these federal constitutional rights through 42 U.S.C. § 1983. PGE also seeks summary judgment in its favor on Grant Township's counterclaim.

         Grant Township filed a motion for summary judgment on its counterclaim that PGE violated its constitutional right to "local community self-government." Grant Township's motion for summary judgment seeks judgment on its counterclaim only. Grant Township has not moved for summary judgment on PGE's claims.

         Grant Township's and PGE's motions for summary judgment are fully briefed and are ripe for disposition by this Court.[2]

         II. Standard of Review on Motions for Summary Judgment

         Federal Rule of Civil Procedure 56(a) provides that summary judgment shall be granted if the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." When applying this standard, the court must examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

         The moving party has the initial burden of proving to the district court the absence of evidence supporting the non-moving party's claims. Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Andreoli v. Gates. 482 F.3d 641, 647 (3d Cir. 2007); UPMC Health System v. Metropolitan Life Ins. Co., 391 F.3d 497, 502 (3d Cir. 2004). The burden then shifts to the non-movant to come forward with specific facts showing a genuine issue for trial. Fed.R.Civ.P. 56(e); Williams v. Borough of West Chester. Pa., 891 F.2d 458, 460-461 (3d Cir. 1989) (the non-movant must present affirmative evidence - more than a scintilla but less than a preponderance -which supports each element of his claim to defeat a properly presented motion for summary judgment). The non-moving party must go beyond the pleadings and show specific facts by affidavit or by information contained in the filed documents (i.e., depositions, answers to interrogatories and admissions) to meet his burden of proving elements essential to his claim. Celotex, 477 U.S. at 322. See also Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).

         In determining summary judgment, a court uses a burden-shifting scheme: When the party moving for summary judgment would ultimately bear the burden of proof at trial, it must come forward with evidence which would entitle it to a directed verdict if the evidence went uncontroverted at trial. In contrast, when the nonmoving party bears the burden of proving the claim or defense, the moving party can meet its burden in two ways: (1) by presenting evidence to negate an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. See Celotex Corp., 477 U.S. at 323-24. If the moving party fails to meet its initial burden, summary judgment must be denied and the court need not consider the nonmoving party's evidence. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970).

         In a procedural situation where a plaintiff (or counterclaimant) is moving for offensive summary judgment, the movant must produce evidence sufficient to establish each element of a claim:

A summary judgment is neither a method of avoiding the necessity for proving one's case nor a clever procedural gambit whereby a claimant can shift to his adversary his burden of proof on one or more issues. To obtain a judgment in favor of a claimant pursuant to his complaint, counter-claim, or cross-claim, the moving party must offer evidence sufficient to support a finding upon every element of his claim for relief, except those elements admitted by his adversary in his pleadings, or by stipulation, or otherwise during the course of pretrial. A plaintiff seeking summary judgment who has failed to produce such evidence on one or more essential elements of his cause of action is no more 'entitled to a judgment' than is a plaintiff who has fully tried his case and who has neglected to offer evidence sufficient to support a finding on a material issue upon which he bears the burden of proof.

Duffy v. Anderson, 2011 WL 2148855, at *2 (D. Nev. June 1, 2011) quoting United States v. Dibble, 429 F.2d 598, 601 (9th Cir.1970) (citations omitted).

         When considering a motion for summary judgment, the court is not permitted to weigh the evidence or to make credibility determinations, but is limited to deciding whether there are any disputed issues and, if there are, whether they are both genuine and material. Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 255 (1986).

         III. Undisputed Facts

         Both PGE and Grant Township have provided scant material facts in support of their respective motions for summary judgment. The undisputed facts are as follows.

         PGE is a private corporation in the business of exploration and development of oil and gas. ECF No. 156, ¶ 1; ECF No. 185, ¶ 16. PGE currently owns and operates natural gas wells in Grant Township, Pennsylvania. ECF No. 185, ¶ 1. PGE's exploration and development activities include drilling and operating gas wells and managing brine and other produced fluids from operating wells. Id. at ¶ 2.

         In 1997, PGE's predecessor in interest put into production a deep gas well in Grant Township on property known as the Yanity Farm. Id. at ¶ 3. PGE intends to use the Yanity Well to inject produced fluids from its other oil and gas operations. Id. at ¶ 8. Based on its intention to convert the use of the Yanity Well to an injection well for disposal of produced fluids generated at other PGE oil and gas wells, PGE proceeded to obtain regulatory approval for such use. Id. at ¶3.

         On March 19, 2014, PGE received an initial permit from the United States Environmental Protection Agency to convert the Yanity Well into an injection well, and on September 11, 2014, the EPA issued a final permit in this regard. ECF No. 185, ¶ ¶ 5-6.

         On June 3, 2014, Grant Township adopted the Community Bill of Rights Ordinance. Id. at ¶ 13. The Community Bill of Rights Ordinance expressly prohibits any corporation from "engag[ing] in the depositing of waste from oil and gas extraction" and invalidates any "permit, license, privilege, charter, or other authority issued by any state or federal entity which would violate [this prohibition] or any rights secured by [the Ordinance], the Pennsylvania Constitution, the United States Constitution, or other laws." Id. at ¶ 14.

         IV. The Cross Motions for Summary judgment on Grant Township's Counterclaim

         Before turning to PGE's argument in favor of summary judgment, the Court will first take up the Township's request for summary judgment on its counterclaim. Grant Township's counterclaim alleges that by challenging the Community Bill of Rights Ordinance through the instant action, PGE is violating the rights of the people of Grant Township to local community self-government as secured by the American Declaration of Independence, the Pennsylvania Constitution, the federal constitutional framework, and the Community Bill of Rights Ordinance itself. ECF No. 10. Grant Township seeks to enforce this purported right to local community self-government through 42 U.S.C. § 1983.

         Grant Township now moves for summary judgment on this counterclaim and requests that this Court: "dismiss PGE's action with prejudice, find Plaintiff is liable to Defendant under § 1983 and § 1988, with further proceedings to determine the extent of the Plaintiffs liability to the Defendant." ECF No. 157-1. Conversely, Plaintiff PGE seeks summary judgment in its own favor on the counterclaim, requesting that this Court dismiss the counterclaim. ECF No. 154-1. The summary judgment standard "does not change when ., . the parties have filed cross motions for summary judgment." Valley Nat'l Bank v. Ford Motor Co., 2017 WL 1084524, at *4 (D.N.J. Mar.22, 2017) quoting Wimberly Allison Tone & Goo, Inc. v. Travelers Prop. Cas. Co. of Am., 559 F.Supp.2d 504, 509 (D.N.J. 2008). Cross motions for summary judgment "are not more than a claim by each side that it alone is entitled to summary judgment..." Id. quoting Transportes Ferreos de Venezuela II v. NKK Corp., 239 F.3d 555, 560 (3d Cir. 2001).

         A party may have a cause of action under § 1983 for certain violations of its constitutional rights. Section 1983 provides, in relevant part, that:

Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory ... subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress ....

Id. In order to "seek relief under the United States Constitution, a plaintiff must utilize the vehicle of a claim under 42 U.S.C. § 1983 and may not assert claims for relief under the United States Constitution directly." Providence Pediatric Medical Daycare, Inc. v. Alaigh, 112 F.Supp.3d 234, 247 (D.N.J. 2015) citing Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906-07 (3d Cir. 1997). "By itself, § 1983 does not create any rights, but provides a remedy for violations of those rights created by the Constitution or federal law." Morse, 132 F.3d at 907. See also Groman v. Township of Manalapan, 47 F.3d 628, 633 (3d Cir. 1995).

         At trial, it will be Grant Township's burden to prove both of the following elements of its § 1983 claim by a preponderance of the evidence:

1) That PGE acted under color of state law; and
2) While acting under color of state law, PGE deprived Grant Township of a federal or constitutional right.

Gomez v. Toledo, 446 U.S. 635, 640 (1980). See also Morrow v. Balaski. 719 F.3d 160, 165-66 (3d Cir. 2013) citing Nicini v. Morra, 212 F.3d 798, 806 (3d Cir. 2000) (To establish a claim under 42 U.S.C. § 1983, a plaintiff must demonstrate a violation of a right protected by the Constitution or laws of the United States that was committed by a person acting under the color of state law). In order to prevail on its motion for summary judgment on its counterclaim, Grant Township must satisfy both elements of the same test. Gomez, 446 U.S. at 640.[3]

         Whether PGE acted as a state actor or under color of state law "is a threshold issue; there is no liability under § 1983 for those not acting under color of state law." Groman, 47 F.3d at 638, citing Versarge v. Township of Clinton, N.J., 984 F.2d 1359, 1363 (3d Cir. 1993).

         Grant Township has produced no actual evidence to demonstrate that PGE is anything other than a private corporation. A private corporation is not a state actor. See Davis v. Noble, 2016 WL 4474004, at *4 (D.Del. 2016). Grant Township makes no real argument to the contrary, see Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374 (1995). Instead, despite the evidence that shows that PGE is a private corporation, Grant Township argues that PGE has acted under color of state law. Generally, a private corporation does not act under color of state law and a legal claim against such a private actor under § 1983 fails. See Rendell-Baker v. Kohn, 457 U.S. 830, 838 (1982). See also Filarsky v. Delia. 566 U.S. 377, 383 (2012) citing Lugar v. Edmondson Oil Co.. 457 U.S. 922, 937 (1982).

         The color of state law analysis is anchored on a basic requirement, "that the defendant in a § 1983 action [here, PGE has] exercised power 'possessed by virtue of state law and made possible only because the wrongdoer is clothed with the authority of state law.'" West v. Atkins, 487 U.S. 42, 49 (1988) quoting United States v. Classic, 313 U.S. 299, 326 (1941). This inquiry is fact-specific. Groman, 47 F.3d at 638.

         A private action is not converted into one under color of state law simply by some tenuous connection to state action. Id. The issue is not whether the state was involved in some way in the relevant events, but whether the action taken can be fairly attributed to the state itself. Id. The Supreme Court has instructed courts to inquire "whether the State provided a mantel of authority that enhanced the power of the harm-causing individual actor." NCAA v. Tarkanian, 488 U.S. 179, 192(1988).

         To support its argument that PGE is acting under color of state law, Grant Township theorizes:

in the instant case, depriving Grant residents of their constitutional right of local community self-government requires many hands - the hands of the state in the legal creation of the Plaintiff company, the action of the state in its permit and regulatory capacity to enable PGE to construct and operate its proposed frack wastewater injection well, and the hands of state and federal government to bestow certain legal and constitutional powers and rights onto the Plaintiff. Indeed, the instant action really was filed at the end of a long chain of state and federal events without which the action would not have been possible. So, the instant action is merely one of enforcement - PGE's enforcement of pre-existing rights and protections that have been created and recognized by both state and federal authority.
Thus, in addition to PGE being a creature of the state - a company whose form and very existence resulted from state action - the state has enabled and protected PGE to do what it seeks to do in the instant matter. That "overt" and "significant" state action thereby transforms what the law has generally treated as a "private" business entity into one almost completely dependent upon state power and authority to carry out projects harmful to the community in which it seeks to operate. For all intents and purposes, including for liability pursuant to § 1983, PGE therefore acts under the "color of state law" when it seeks to enforce its corporate constitutional "rights" against the people of Grant Township.

ECF No. 158, pages 23-24. The specific points of this argument require some precise extraction. Distilled down, Grant Township argues that PGE is a state actor because: 1) the state created it through its incorporation law; 2) the state granted permits to the company and regulates the construction and operations of its proposed injection well; and 3) the state and federal governments have given the corporation certain unnamed legal and constitutional rights. These arguments are insufficient to deem PGE a state actor.

         First, even if there was evidence that PGE was incorporated under Pennsylvania law, such an incorporation does not transform PGE into a state actor. Doug Grant, Inc. v. Great Bay Casino Corp., 232 F.3d 173, 189 (3d Cir. 2000) (mere fact of incorporation does not transform the entity into a state actor). Second, it is well settled that a private corporation is not a state actor simply because it is subject to state regulation. Blum v. Yaretsky, 457 U.S. 991, 1004, 1011 (1982) ("[The] mere fact that a business is subject to state regulation does not by itself convert its action into that of the State"); Jackson v. Metro. Edison Co., 419 U.S. 345, 350 (1974); Rendell- Baker, 457 U.S. at 841 (finding that state regulation, no matter how extensive, does not make an organization's actions state actions); Doug Grant, 232 F.3d at 173 (regulation and licensing of casino activities did not transform casinos into state actors for purposes of § 1983); Bethel v. Jendoco Constr. Corp., 570 F.2d 1168 (3d Cir. 1978) (the fact that construction companies were protected and regulated as "legal entities" of the State was insufficient to bring the conduct of these companies within the purview of § 1983, even if these companies received a portion of their income from projects financed, in whole or in part, by state governmental agencies). See also White v. St. Joseph's Hosp.. 369 Fed.Appx. 225, 226 (2d Cir. 2010) (licensing by the state alone does not render the licensee a state actor); Gipson v. Rosenberg, 797 F.2d 224, 225 (5th Cir. 1986), cert, denied, 481 U.S. 1007 (1987) (business does not become a state actor because it is granted a license by the state).

         Third, Grant Township alleges that PGE is a state actor because both the federal and state governments have given certain unidentified legal and constitutional powers and rights to the corporation. The Township offers no specifics here, failing to explain which powers and rights it sees as establishing state action. The determination whether a private entity like PGE qualifies as a state actor "hinges on whether there is such a close nexus between the State and the challenged action that seemingly private behavior may be fairly treated as that of the State itself." Glunk v. Noone, 186 F.Supp.3d 453, 460 (E.D. Pa. 2016) citing Kach v. Hose, 589 F.3d 626, 646 (3d Cir. 2009). Grant Township's nearly bald assertions that unspecified laws or enactments by the Commonwealth of Pennsylvania cannot establish this close nexus and, therefore, are insufficient to establish PGE as a state actor.

         Thus, all of Grant Township's arguments in favor of state action are contrary to established law. See Angelico v. Lehigh Valley Hosp., Inc.. 184 F.3d 268, 277 (3d Cir. 1999), quoting Lugar, 457 U.S. at 937 (noting that "[w]ithout a limit such as this [the precedent on acting under color of state law], private parties could face constitutional litigation whenever they seek to rely on some state rule governing their interactions with the community surrounding them."). Since the Township offers no other basis on which this Court could conclude that PGE acted under color of state law, the Township's § 1983 claim for a violation of its "rights to local self-government" fails as a matter of law.[4]

         Accordingly, Grant Township's motion for summary judgment will be denied and PGE's motion for summary judgment will be granted on this counterclaim. Such a judgment is appropriate "as a matter of law" when the non-moving party has failed to make an adequate showing on an essential element of his or her case, as to which he or she has the burden of proof. See Celotex Corp., 477 U.S. at 322-23.

         V. PGE's Motion for Summary Judgment

         The Court now takes up PGE's motion for summary judgment on all six of its federal constitutional claims and its request for a trial on damages.

         A. Comprehensive Arguments in opposition to PGE's motion ...

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