Highlighting the discretion a federal court may exercise to allow a state court to hear state tort claims, a federal district court in Montana dismissed a former smelter operator’s claim for injunctive relief against plaintiffs where a related but separate tort action was pending in state court. See Atl. Richfield Co. v. Christian, 15-cv-00083 (D. Mont. Feb. 15, 2017). Even though the federal court acknowledged it had diversity jurisdiction, it found the state court was better situated to efficiently handle the matter.
The dispute came out of arsenic and lead emissions from a former smelter operated by Atlantic Richfield Company (ARCO) in Anaconda, Montana. After the smelter was closed and the surrounding area was designated as a Superfund site in the 1980s, the Environmental Protection Agency selected, and ARCO implemented, a cleanup plan for the site pursuant to the Comprehensive Environmental Restoration, Compensation, and Liability Act (CERCLA).
Owners of property within the Superfund site boundaries sued ARCO in Montana state court in 2008, alleging negligence, nuisance, trespass, constructive fraud, unjust enrichment, and wrongful occupation of property. Among other damages, the landowners sought compensation for restoration of natural resource damages (NRD). ARCO moved for summary judgment, arguing that CERCLA barred the landowners’ restoration damage claims because the landowners’ proposed plan was inconsistent with EPA’s selected plan. Then in 2015, while ARCO’s motion was pending in state court, ARCO sued the landowners in Montana federal district court, requesting declaratory relief based on the same argument that CERCLA barred the landowners’ tort claims for restoration damages. The landowners then moved to dismiss the federal case for lack of subject matter jurisdiction.
The federal court held that it had diversity jurisdiction over the case. But the court declined to exercise the jurisdiction based on the abstention doctrine because ARCO’s affirmative arguments in the federal case were virtually identical to its summary judgment arguments in state court. The court held that at least four factors weighed in favor of declining jurisdiction: that ARCO filed the federal case long after the commencement of the state court action, raising a forum shopping concern; that the same argument has been litigated in the state court; that prosecution in the federal court may lead to federal-state entanglement ; and that the federal case would only resolve the damages issue, not all aspects of the litigation. The court therefore granted the landowners’ motion to dismiss ARCO’s federal court action.