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In re Lac Megantic Train Derailment Litigation

United States District Court, D. Maine

September 28, 2016

IN RE LAC MEGÁNTIC TRAIN DERAILMENT LITIGATION

          ORDER ON CANADIAN PACIFIC RAILWAY COMPANY'S AMENDED MOTION TO DISMISS

          JON D. LEVY U.S. DISTRICT JUDGE.

         In July of 2013, a freight train operated by the Montreal Maine & Atlantic Railway, Ltd. (“MMA”), including its 72 carloads of crude oil, derailed in the town of Lac-Megántic, Quebec, leading to a series of explosions that destroyed part of the downtown area and killed 47 people. The next month, MMA filed a chapter 11 Bankruptcy proceeding in this District and simultaneously sought similar protection in Canada. The derailment also spawned litigation in both Illinois and Texas, with multiple plaintiffs (the “Plaintiffs”) asserting claims for negligence and wrongful death against a multitude of defendants, all but one of whom, Canadian Pacific Railway Company (“CP”), have since settled.

         The cases which comprised the Illinois and Texas litigation are all now before this court, having been ordered transferred to the District of Maine by me pursuant to the authority established in 28 U.S.C. § 157(b)(5). Two cases that were originally filed in the Circuit Court of Cook County, Illinois, Roy v. Western Petroleum Co., et al., 1:14-cv-00113, and Grimard v. Rail World, Inc., et al., 1:15-cv-00250, were removed to the U.S. District Court for the Northern District of Illinois before being transferred to the District of Maine in 2014. Another 35 cases followed the same trajectory from the Circuit Court of Cook County to the Northern District of Illinois before being transferred to the District of Maine in 2016, [1] along with two cases from the U.S. District Court for the Northern District of Texas. See Audet, et al. v. Devlar Energy Marketing, LLC, et al., 1:16-cv-00105-JDL; Boulanger, et al. v. Arrow Midstream Holdings, LLC, et al., 1:16-cv-00106-JDL. All 39 cases were eventually consolidated into the instant case in April 2016. See ECF No. 1.[2]

         In December 2015, CP filed an Amended Motion to Dismiss the claims brought by the Plaintiffs in Roy and Grimard. 1:14-cv-00113, ECF No. 244; 1:15-cv-00250, ECF No. 79. CP's Amended Motion to Dismiss, along with the Roy and Grimard plaintiffs' response and CP's reply, were subsequently deemed filed in the consolidated case and deemed applicable to all the Plaintiffs by agreement of all of the parties. ECF No. 1 at 2.

         Oral argument on the Amended Motion to Dismiss took place on July 13, 2016. In addition to the Plaintiffs and CP, Robert J. Keach, the Estate Representative for the Postconfirmation MMA Estate, made a provisional appearance at the hearing subject to the court's ruling on his Motion to Intervene (ECF No. 10). I have denied the Motion to Intervene by a separate order.

         CP raises four bases for dismissal: (1) lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2); (2) insufficient service of process pursuant to Federal Rule of Civil Procedure 12(b)(5); (3) the doctrine of forum non conveniens; and (4) federal preemption. For the reasons explained below, the Amended Motion to Dismiss is granted.

         I. LACK OF PERSONAL JURISDICTION

         CP contends that no United States court has jurisdiction over it because it owns no tracks in the U.S.; it is not incorporated in the U.S.; and it does not operate in the U.S., with the limited exception of bringing some trains a short distance over the U.S.-Canadian border to hand off the train to the U.S. employees of its U.S. affiliate. ECF No. 2 at 2. CP also asserts that these facts, combined with what it asserts is the lack of any U.S.-based causation to the accident in Lac Megántic, require dismissal of the Amended Complaint for lack of personal jurisdiction. Id.

         A. Burden of Production

         The plaintiff has the burden of establishing personal jurisdiction over a defendant. Boit v. Gar-Tec Prods., Inc., 967 F.2d 671, 674-75 (1st Cir. 1992) (citation omitted). When a defendant files a motion to dismiss for want of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), “a district court may choose from among several methods for determining whether the plaintiff has met its burden.” Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 2016 WL 3147645, at *3, ___ F.3d ___ (1st Cir. 2016) (quoting Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007) (internal quotation marks omitted); Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50-51 (1st Cir. 2002)). The “most conventional” of these methods is the prima facie method, which “permits the district court to consider only whether the plaintiff has proffered evidence that, if credited, is enough to support findings of all facts essential to personal jurisdiction.” Foster-Miller Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145 (1st Cir. 1995) (quoting Boit, 967 F.2d at 675) (internal quotation marks omitted). “The prima facie showing of personal jurisdiction must be based on evidence of specific facts set forth in the record, ” Boit, 967 F.2d at 675, and requires the plaintiff to “go beyond the pleadings and make affirmative proof[, ]” United States v. Swiss American Bank, Ltd., 274 F.3d 610, 619 (1st Cir. 2001) (quoting United Elec. Radio & Mach. Workers of Am. v. 163 Pleasant St. Corp., 987 F.2d 39, 44 (1st Cir. 1993); see also Foster-Miller, 46 F.3d at 145 (“To make a prima facie showing of this calibre, the plaintiff ordinarily cannot rest upon the pleadings, but is obliged to adduce evidence of specific facts.”).[3]

         B. Fifth Amendment Due Process

         There is no dispute that personal jurisdiction in this case is governed by the Due Process Clause of the Fifth Amendment because the court's alleged subject matter jurisdiction derives from a federal statute, 28 U.S.C.A. § 1452(a) (2016), insofar as it is “related to” the MMA bankruptcy. Swiss Am. Bank, 274 F.3d at 618; see also Auburn Mfg., Inc. v. Steiner Industries, 493 F.Supp.2d 123, 127 (D. Me. 2007). “[U]nder the Fifth Amendment, a plaintiff need only show that the defendant has adequate contacts in the United States as a whole, rather than with a particular state.” Swiss Am. Bank, 274 F.3d at 618 (citing United Elec., Radio & Mach. Workers, 960 F.2d at 1085).

         C. General and Specific Personal Jurisdiction

         Ever since the Supreme Court's opinion in International Shoe Co. v. State of Washington, 326 U.S. 310 (1945), courts have divided the personal jurisidiction analysis into two parts: “general” and “specific” personal jurisdiction. Donatelli v. Nat'l Hockey League, 893 F.2d 459, 462-63 (1st Cir. 1990) (citing Int'l Shoe, 326 U.S. 310). General jurisdiction exists when the defendant has engaged in “continuous and systematic activity” in the forum. Harlow v. Children's Hosp., 432 F.3d 50, 64 (1st Cir. 2005). Specific jurisdiction exists when “the cause of action . . . arises directly out of, or is related to, the defendant's forum-based contacts.” Id. at 60-61. For both categories of personal jurisdiction, the defendant must have sufficient “minimum contacts” with the forum; those contacts must be purposeful; and the exercise of jurisdiction must be reasonable under the circumstances. Id. at 57. See also Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).

         1. General Personal Jurisdiction

         A court may exercise general personal jurisdiction over a foreign corporation “only when the corporation's affiliations with the State in which suit is brought are so constant and pervasive as to render it essentially at home in the forum State.” Daimler AG v. Bauman, 134 S.Ct. 746, 751 (2014) (quotation omitted).[4] “[I]f such contacts do not exist in sufficient abundance, the general jurisdiction inquiry ends.” In re New Motor Vehicles Canadian Export, 307 F.Supp.2d 145, 150 (D. Me. 2004) (citing Donatelli, 893 F.2d at 465).

         The Amended Complaint alleges that CP is a “Canadian company, headquartered in Calgary, Alberta, Canada, with corporate offices in Minneapolis, Minnesota, and [which] operates trains throughout Canada and the United States[.]” Case No. 1:14-00113, ECF No. 182 at 5, ¶ 6.[5] The Amended Complaint also alleges that CP is a “transportation, logistics, and management company which maintains over 14, 000 miles of track extending throughout Canada and into the U.S. industrial centers of Chicago, Newark, Philadelphia, Washington, New York City, and Buffalo.” Id. at 38, ¶ 184.

         CP argues in its Motion to Dismiss that none of these pleaded facts render it “at home” in the United States. ECF No. 2 at 13. It notes that while the Amended Complaint correctly alleges that it is a Canadian company that is headquartered in Canada, “[a]llegations about CP having corporate offices in Minnesota, and operating trains throughout the United States, including the State of Illinois are simply false.” Id. (quotation marks omitted). CP also submitted the Affidavit of James Clements, its Vice President of Planning and Transportation Services, who states under oath that CP is the operating subsidiary of Canadian Pacific Railway Limited, which is also a Canadian corporation, and that “CP conducts almost no business in the United States.” ECF No. 2-3 at 1. Clements states that CP train crews do not operate trains in the United States, “except for limited operations . . . where CP crews dismount and turn the train over to crews employed by a U.S. subsidiary.” Id. at 2.

         In opposing CP's motion to dismiss, the Plaintiffs contend that the allegations contained in the Amended Complaint properly encompass the activities of both CP and its U.S. affiliates. ECF No. 2-11 at 3-4. They also accuse CP of engaging in a “shell game of identifying its affiliates as ‘doing business as CP.'” Id. at 3. Yet the Plaintiffs do not dispute the Clements Affidavit, nor offer evidence or legal authority to explain how the fact that CP and its affiliates do business under the same trade name is improper or renders CP “at home” in the United States. See ECF No. 2-11.

         The Plaintiffs' have fallen short of what is required to make a prima facie showing of general personal jurisdiction because they have failed to “adduce evidence of specific facts” and instead have simply rested upon the pleadings. Foster-Miller, 46 F.3d at 145; Swiss American Bank, 274 F.3d at 619; Boit, 967 F.2d at 675. The undisputed record evidence establishes that CP is a Canadian corporation without continuous and systematic activity in the United States. The undisputed record evidence establishes that CP is a Canadian corporation without continuous and systematic activity in the United States. Cf. Waldman v. Palestine Liberation Org., ___ F.3d ___, 2016 WL 4537369, at *12 (2d Cir. Aug. 31, 2016) (Record evidence demonstrated that defendants were not “at home” in the United States, where they were directed from and headquartered abroad). For this reason, I conclude that the Plaintiffs have not met the constitutional threshold for the court to exercise general personal jurisdiction over CP.

         2. Specific Personal Jurisdiction

         Specific jurisdiction allows a court to hear a particular case as long as “that case relates sufficiently to, or arises from, a significant subset of contacts between the defendant and the forum.” Phillips Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d 284, 288 (1st Cir. 1999) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)). To determine whether specific jurisdiction exists in a given case, the court first must determine whether the claim at issue in the litigation “directly relates to or arises out of the defendant's contacts with the forum[, ]” and if so, “whether those contacts constitute purposeful availment of the benefits and protections afforded by the forum's laws.” Swiss Am. Bank, 274 F.3d 610, 620-21 (1st Cir. 2001) (quoting Phillips Exeter, 196 F.3d at 288). If these two requirements are met, the court must then determine whether the exercise of specific jurisdiction would be reasonable “in light of a variety of pertinent factors that touch upon the fundamental fairness of an exercise of jurisdiction.” Id. at 621.

         As prima facie support for CP's contacts with the United States, the Plaintiffs point to the undisputed fact that the train that derailed in Lac Megántic travelled from North Dakota and through Illinois and other states before entering Canada. ECF No. 2-11 at 21. The Plaintiffs also cite the following statement that CP made before the Bankruptcy Court, in which it admitted that its U.S. subsidiaries operated the train: “CP subsidiaries, doing business as Canadian Pacific or Canadian Pacific Railway, conduct U.S. operations, including movement of the train that ultimately derailed from North Dakota to the Canadian border.” Id. (citing Keach v. World Fuel Svcs. Corp. (the “Adversary Proceeding”), Bankr. Case No. 14-01001; CP's Motion to Dismiss the Adversary Proceeding, ECF No. 140-1 at 4). Neither this statement nor the undisputed fact that the train passed through several U.S. states constitutes evidence that CP, as opposed to its subsidiaries, did or failed to do anything on U.S. soil, and thus, neither supports the Plaintiffs' prima facie argument that CP had sufficient U.S. contacts for specific jurisdiction to exist. In fact, CP's statement tends to weaken the Plaintiffs' argument because it asserts that it was CP's U.S. subsidiaries, and not CP, that operated the train in the United States. See Adversary Proceeding, Bankr. Case No. 14-1001, ECF No. 140 at 4.

         Finally, the Plaintiffs cite their allegation that CP “mislabeled the oil in the train or failed to take appropriate action in the United States to prevent the oil from exploding in the subsequent derailment[.]” ECF No. 2-11 at 21.[6] For the same reasons discussed above, this allegation in the Amended Complaint, standing alone, does not support specific jurisdiction because, under the prima facie method, a plaintiff opposing a motion to dismiss for want of personal jurisdiction must “go beyond the pleadings and make affirmative proof.” Swiss American Bank, 274 F.3d at 619; Boit, 967 F.2d at 675; see also Foster-Miller, 46 F.3d at 145. For this reason, I conclude that the Plaintiffs have not met their burden of production for establishing specific personal jurisdiction.

         3. Existence of Personal Jurisdiction in the Bankruptcy Court

         The Plaintiffs also argue that CP is subject to either or both general and specific jurisdiction in this case because the Bankruptcy Court “considered, and rejected” CP's personal jurisdiction arguments and ruled that CP was amenable to the exercise of personal jurisdiction in the Adversary Proceeding. ECF No. 2-11 at 20 (citing the Adversary Proceeding, Bankr. Case No. 14-01001, ECF No. 152; ECF No. 154). The Plaintiffs contend that because the Bankruptcy Court is a unit of the District Court pursuant to 28 U.S.C.A. § 151 (2016), the Bankruptcy Court's finding applies in this case “for the same reasons, and to the same extent[.]” Id.[7]

         CP concedes that personal jurisdiction was found to exist in the Adversary Proceeding, but maintains that the Bankruptcy Court never “considered and rejected” its personal jurisdiction arguments. ECF No. 2-15 at 2-3. CP also argues that the Bankrutpcy Court's analysis did not rely upon CP's alleged contacts with the United States. ECF No. 2-13 at 14. Instead, CP contends that the Bankruptcy Court ruled that it effectively consented to personal jurisdiction by participating in the Adversary Proceeding. ECF No. 2-15 at 3 (citing the Adversary Proceeding, Bankr. Case No. 14-1001, ECF No. 162 at 32-33). Consent to jurisdiction in one proceeding, CP argues, does not waive the right to assert lack of personal jurisdiction in another case. Id. (citing Akanani v. Aegis Defense Servs., LLC, 976 F.Supp.2d 13, 37 n.10 (D.D.C. 2014)).

         The Bankruptcy Court's personal jurisdiction determination in the Adversary Proceeding is not controlling in this case because the Bankruptcy Court concluded that specific jurisdiction existed based on CP having filed a proof of claim. Adversary Proceeding, Bankr. Case No. 14-1001, ECF No. 162 at 32. The Bankruptcy Court's order made no mention of the contacts alleged by the Plaintiffs in this case, i.e., that CP operates a railroad network throughout the United States and mislabeled the oil on board the train or otherwise failed to take appropriate action in the United States to prevent the oil from exploding. See Id. Furthermore, the Plaintiffs do not argue that CP's consent to jurisdiction in the Adversary Proceeding was a knowing and intelligent agreement to personal jurisdiction in this case, and they have not identified how such a conclusion should be implied by operation of law. See ECF No. 2-11.

         4. Judicial Estoppel

         The Plaintiffs also raise the doctrine of judicial estoppel as a basis for finding personal jurisdiction in this case.

         CP filed an Objection to the Trustee's July 15, 2015, Plan of Liquidation (the “Confirmation Objection”) in the MMA Bankruptcy, Bankr. Case No. 13-10670, ECF No. 1657, in which it argued that the proposed liquidation plan would “forcibly depriv[e] CP of the contractual indemnity and setoff rights” owed to it by Western ...


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