United States District Court, M.D. Pennsylvania
RAYMOND R. LASHER, Plaintiff
STATOIL USA ONSHORE PROPERTIES INC., f/k/a STATOILHYDRO U.S. ONSHORE PROPERTIES INC., Defendants
MALACHY E. MANNION, United States District Judge
before the court is the plaintiffs motion to remand. (Doc.
12). Based upon the court's review of the motion and the
materials related thereto, the plaintiff's motion will be
of relevant background, the plaintiff filed the instant
action on May 4, 2017 in the Susquehanna County Court of
Common Pleas. (Doc. 1, Ex. A). On May 23, 2017, the defendant
removed the action to this court on the basis of original
diversity jurisdiction under 28 U.S.C. §1332(a), arguing
that there is complete diversity between the parties and that
the amount in controversy exceeds $75, 000 exclusive of
interest and costs. (Doc. 1).
20, 2017, the plaintiff filed the pending motion for remand,
(Doc. 12), and filed a supporting brief on the following day,
(Doc. 13). The plaintiff does not challenge that there is
complete diversity between the parties. However, the
plaintiff argues that the defendant has failed to demonstrate
that the relief he seeks satisfies the amount in controversy
requirement when measured at the time of removal. The
defendant filed a brief in opposition to the motion for
remand on July 21, 2017. (Doc. 17). On August 18, 2017, the
plaintiff filed a reply brief in support of his motion for
remand. (Doc. 24).
federal district courts are courts of limited jurisdiction,
the removal statutes are strictly construed against removal,
e.g., American Fire & Casualty Co. v. Finn, 341
U.S. 6 (1951); Batoff v. State Farm Ins. Co., 977
F.2d 848, 851 (3d Cir.1992) (citations omitted);
LaChemise Lacoste v. Alligator Co., 506 F.2d 339 (3d
Cir.1974). If there are any doubts as to substantive and
procedural jurisdictional prerequisites, they must be
resolved in favor of remand, e.g., Abels v. State Farm
Fire & Casualty Co., 770 F.2d 26, 29 (3d Cir.1985);
Sterling Homes. Inc. v. Swope, 816 F.Supp. 319, 323
(M.D.Pa.1993). The removing defendant bears the heavy burden
of persuading the court to which the state action was removed
that it has jurisdiction under the removal statutes.
Batoff, 977 F.2d at 851; Boyer v. Snap-On Tools
Corp., 913 F.2d 108, 111 (3d Cir.1990), cert,
denied, 498 U.S. 1085(1991).
is strictly a statutory right and the statutory procedures to
effect removal must be followed precisely. Lewis v. Rego
Co., 757 F.2d 66, 68 (3d Cir.1985). Removability is to
be determined "only by reference to the plaintiffs
initial pleadings, " Swope, 816 F.Supp. at 323
(citations omitted), at the time of filing the petition for
removal. Abels, 770 F.2d at 29.
the basis for removal is diversity of citizenship under 28
U.S.C. §1332, as in this case, "the congressional
intent to restrict federal diversity jurisdiction [must be]
honored." Meritcare Inc. v. St. Paul Mercury Ins.
Co., 166 F.3d 214, 217 (3d Cir.1999) (citations
omitted). Further, where an action is removed on the basis of
diversity, the requisite diversity of citizenship and
jurisdictional amount ordinarily must appear on the face of
the complaint or the removal petition. See Levy v.
Weissman, 671 F.2d 766, 767 (3d Cir.1982). Although
"actual damages may not be established until later in
the litigation, the amount in controversy is measured as of
the date of removal, a practice similar to that in original
jurisdiction where the inquiry is directed to the time when
the complaint is filed . . . When it appears to a legal
certainty that plaintiff was never entitled to recover
minimum amount set for §1332, the removed case must be
remanded even if the jurisdictional deficiency becomes
evident only after trial." Meritcare, 166 F.3d
the complaint does not seek damages in a precise monetary
amount, the district court may look to the notice of removal,
and should make an independent evaluation of the claim from
the record before it, i.e., the state court records starting
with the complaint, and the removal notice. Angus v.
Shiley Inc., 989 F.2d 142, 146 (3d Cir.1993).
regard, the Third Circuit clarified the amount in controversy
test in Samuel-Bassett v. Kia Motors America. Inc.,
357 F.3d 392 (3d Cir. 2004). Any factual disputes necessary
to establish jurisdiction or the lack thereof must be
resolved by the district court if the complaint and removal
petition are insufficient to establish the amount with
certainty. Id. It is the defendant's burden to
demonstrate, by a preponderance of the evidence, facts upon
which the district court may find that the amount meets or
exceeds $75, 000. Id. at 397-98. In attempting to
establish its burden, estimations of the amounts recoverable
[under the state claims pleaded] must be realistic.
Id. at 403.
the relevant facts are not in dispute or findings have been
made by the district court, the Third Circuit recommended
that the court "adhere to the legal certainty test"
cited in Meritcare Inc. v. St. Paul Mercury Ins.
Co., 166 F.3d 214 (3d Cir.1999), and established by the
United States Supreme Court in St. Paul Mercury Indemnity
Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). In Red
Cab, the Supreme Court discussed the nature of a
defendant's burden of proof in a removal case and stated
that "the rule for determining whether the case involves
the requisite amount as whether from the face of the
pleadings, it is apparent, to a legal certainty, that the
plaintiff cannot recover the amount claimed, or if, from the
proofs, the court is satisfied to a like certainty that the
plaintiff never was entitled to recover that amount."
Samuel-Bassett, 357 F.3d at 397 (citing Red
Cab, 303 U.S. at 289).
plaintiff alleges that the instant action concerns the
defendant's miscalculation of royalties it owes him on
the sale of gas from his property pursuant to an oil and gas
lease which covers a small parcel of approximately 36 acres
of land in Susquehanna County, Pennsylvania. According to the
plaintiff, the oil and gas lease requires the defendant to
pay him royalties based on "sales proceeds actually
received by [the defendant]" for actual sales of gas.
The plaintiff alleges that the defendant breached the royalty
payment term by transferring gas from the plaintiffs property
to its affiliate Statoil Natural Gas LLC, ("SNG"),
and by improperly calculating the royalties based on the
price it assigns for bookkeeping for those transfers. In
turn, the plaintiff alleges that SNG sells the gas to end
users at significantly higher prices, with the profits
flowing to the defendant's and SNG's parent, Statoil
ASA, ("Statoil"). According to the plaintiff, the
reduced royalty payments were part of a scheme to benefit the
defendant's parent company at the plaintiff's
plaintiffs complaint further provides that the defendant has
not charged deductions for post-production costs against the
plaintiff's royalties and that an addendum to the lease
contains a Market Enhancement Clause, ("MEC"),
which prohibits deductions of post-production costs from
royalty payments. While the plaintiff has received royalty
payments, and while the defendant has not charged deductions
for post-production services or transportation against those
royalty payments, the plaintiff alleges that his royalty
payments have been less than what he was entitled to because
of the defendant's participation in the foregoing scheme
to benefit its parent company.
upon his factual allegations, the plaintiff sets forth three
counts in his complaint. The first count is for breach of
contract based on the defendant's alleged breach of its
obligation to calculate royalties based on sales proceeds
actually received from sales of the gas to third parties,
including end user markets. The plaintiff seeks actual
damages in this count based on the difference between
royalties calculated from the sales proceeds the defendant
and SNG actually received from the sale of the gas to third
parties and the allegedly artificial price the defendant used
to calculate royalties paid to the plaintiff.
second count of the plaintiffs complaint alleges breach of
the defendant's implied covenant to develop and operate
the leasehold for the mutual benefit of the plaintiff and
defendant and the implied duty to market. The plaintiff
alleges that these implied duties require his royalties to be
calculated on the actual proceeds of sales of the gas,
including to end users in the premium markets that the
defendant's parent, Statoil, touts to investors as the
most lucrative part of its gas marketing chain in North
America. The plaintiff alleges that the defendant's
breaches of these covenants resulting from its participation
in a scheme to benefit Statoil at the plaintiffs expense
similarly gives rise to a claim for his actual damages, which
is the difference between royalties ...