News

     In decisions issued today, the First and Ninth Circuits continued to adhere to prior decisions that held that no federal issue justified removal of state and municipal climate-change cases to federal court and holding that the cases should be returned to state court.

      The new decisions involved cases brought respectively by the state of Rhode Island and the city and county of Honolulu. In the Rhode Island case, the First Circuit denied the defendant oil companies' motion for rehearing, finding no reason to reconsider its decision from earlier this year. In the Honolulu case, a new panel heard the oil companies' arguments and found the case belonged in state court. Earlier Ninth Circuit panels had made similar rulings in cases brought by various California counties and cities.

      In both cases decided today, CCL filed amicus curiae briefs urging the result issued by the courts on behalf of the National League of Cities, the U.S. Conference of Mayors, and thee International Municipal Lawyers Association.

     In a unanimous 93-page decision, the U.S. Court of Appeals for the Fourth Circuit ordered the return of Baltimore's climate-change case against Big Oil to state court. CCL filed an amicus brief in support of Baltimore on behalf of the National League of Cities, U.S. Conference of Mayors, and the International Municipal Lawyers Association.

      Baltimore sued oil companies for misrepresenting the environmental impact of fossil fuels, which has resulted in damage to the city's infrastructure. Seeking compensation for the damage, Baltimore filed suit under various state law causes of action in state court. The oil companies removed the case to federal court, claiming that the case actually sounds in federal law. When the district court ordered the case remanded to state court, the oil companies appealed, relying on a federal statute that permits interlocutory appeals when a defendant claims to be acting as a federal officer. The Fourth Circuit affirmed the district court's decision, finding that the oil companies were not federal agents, but the Supreme Court subsequently held that the Fourth Circuit also needed to address the oil companies' other grounds for removal. 

     Today's decision undertook that analysis and held that no grounds existed that would require submission of the case federal jurisdiction. The holding maintains a consistent position from federal courts of appeal that these types of cases are not federal in character.

     CCL filed supplemental authority in support of its completed briefing in the Seventh Circuit, letting the court know of a new decision from the Fifth Circuit that agrees with CCL's arguments. 

      In Martin v. Petersen Health Operations, CCL is defending its victory in winning remand to state court in a federal district court in Illinois, where it argued that there was no federal jurisdiction over this nursing home death case because the facility was not acting as a federal agent and the federal PREP Act did not apply, either as a form of complete preemption or as a federal basis for adjudicating the case. In a decision last week, the Fifth Circuit, based in New Orleans, joined the Third Circuit (Philadelphia) and Ninth Circuit (San Francisco), in agreeing with CCL's argument. In addition, more than 100 federal district courts have now also agreed. 

      The defendant's reply brief is due March 21. Nonetheless, CCL suggested that the Seventh Circuit dispense with oral argument in view of the overwhelming consensus in the courts that the federal courts lack jurisdiction over a state law cause of action.

     Asking the U.S. Court of Appeals for the Seventh Circuit to affirm a district court ruling that the Public Readiness and Preparedness (PREP) Act does not completely preempt or displace a cause of action under the Illinois Nursing Home Care Act, CCL argued that the 2005 federal statute attempted to encourage the use of pandemic countermeasures and created immunity from liability when used. Here, however, the nursing home failed to use the countermeasures and cannot claim liability protections from the PREP Act.

     The case arises from the death of a nursing home resident. The lawsuit alleges that the nursing home failed to take basic safety measures to protect the decedent from COVID and worked against the residents' health by instructing staff to come to work, even if they had COVID symptoms. Once exposed, the decedent passed away quickly. 

     The defendant first argued that the case belongs in federal court because it was acting as a federal agent in helping address the COVID-19 pandemic. However, as the CCL brief shows, the nursing home had no contract or other indicia that it was working with the federal government. Instead, it attempted to comply with federal regulations -- and regulatory compliance does not transform a private party into a federal agent.

     The defendant then argued the PREP Act completely preempted the state cause of action, transforming it into a federal one. However, to do so, CCL explained, the PREP Act had to apply to the case. It doesn't because it does not cover the non-use of countermeasures.

      Finally, the defendants cursorily argued that the state cause of action was based on a violation of federal law, making it federal in nature. Yet, where the federal law does not apply, CCL said, it cannot be based on federal law.

     The defendant next has an opportunity to file a reply brief. The case is Martin v. Petersen Health Operations.

     In remarks delivered on the Senate floor on climate change, Senator Benjamin Cardin (D-Md.), referred to several statistics in the amicus brief filed on behalf of the National League of Cities (NLC) nd the U.S. Conference of Mayors (USCOM) by CCL in Baltimore's lawsuit against major oil companies for the effects its misrepresentations on the effects of fossil fuels have had on the city's infrastructure. 

     CCL has filed amicus briefs in several city, county, and state lawsuits on the issue on behalf of the NLC, USCOM, and the International Municipal Lawyers Association. In support of Baltimore's position that their case belongs in state court, CCL filed briefs in both the U.S. Supreme Court, where the brief was referenced twice in oral argument, and in the U.S. Court of Appeals for the Fourth Circuit, where it was recently re-argued.

     The Supreme Court denied a petition for a writ of certiorari today on an issue of preemption, where CCL represented the plaintiffs in opposing review. 

     In Edward D. Jones & Co., L.P. v. Anderson, No. 21-552, the financial management firm sought Supreme Court review of a Ninth Circuit decision that the plaintiffs' claims were not preempted by the federal Securities Litigation Uniform Standards Act (SLUSA), which was enacted to cover lawsuits based on the purchase or sale of a covered security. The Ninth Circuit had held that, when Edward D. Jones switched the plaintiffs from commissioned-based fees on their investments to an annual management fee arrangement, the complaint about the higher fees was unrelated to purchases or sales. The plaintiffs were "buy and hold" investors, which means that after making their original purchases they largely rode the market, rather than engage in frequent trading. As a result, their accounts generated very few commissions. The annual management fee, on the other hand, taxed clients a percentage of their investment, guaranteeing income to the firm.

     Lawyers for Edward D. Jones argued that the federal appellate circuits had split on whether the litigated issue had to "coincide with" or be "material to" a purchase or sale and asked the Supreme Court to settle that issue through this case. CCL's brief in opposition to certiorari argued that the issue in the case was utterly unrelated to a purchase or sale and thus provided no occasion for the Supreme Court to take up the issue. In representing the plaintiffs, CCL joined Franklin D. Azar & Associates, who had won the case in the Ninth Circuit. 

      Representing investors who sued Edward D. Jones (EDJ), the financial management company, a CCL brief urged the Supreme Court to deny certiorari after the Ninth Circuit held that the case could move forward. 

      As co-counsel with Franklin D. Azar and Associates, CCL represents a putative class of passive investors, who purchase stock and then hold it while its value appreciates. They held their investments at EDJ, which only charged commissions when the stocks held were traded. Because these investors rarely traded, EDJ did not make any profit on the funds held. To make these investments generate money, EDJ convinced the investors to switch to annual management-fee accounts that charged them for "advice" on maintaining or increasing their investments. Although no advice was ever given, the cost to investors was substantially greater.

     The investors then sued under state law, arguing that EDJ's failure to conduct a suitability analysis before pushing for the change in the accounts. EDJ countered by arguing that federal Securities Litigation Uniform Standards Act (SLUSA) preemptively barred any lawsuits. A federal district court sided with EDJ and dismissed all claims with prejudice. The Ninth Circuit, however, unanimously reversed, finding that the claims were not premised on the sale or purchase of a security, a requirement for application of SLUSA, but instead on fees charged for passive accounts.

      EDJ argues that the federal circuit courts are in disagreement about what constitutes a qualifying sale or purchase, with some relying on Supreme Court precedent that the basis of the lawsuit must merely "coincide" with a sale or purchase, while others rely on subsequent Supreme Court precedent that requires the complaint topic be "material" to a purchase or sale. In its opposing brief, CCL argues that the dispute between "coincide" or "material" is irrelevant to this case because the gravamen of the complaint has no connection at all with a sale or purchase. 

     An EDJ reply brief is expected in early January. Afterwards, the Supreme Court will review the case in conference to determine whether to take up the matter.

     In a case in which CCL assisted the Levin Perconti law firm, a federal judge in Illinois granted the plaintiffs' motion to remand the case to state court where the defendant nursing home had removed it to federal court. Martin v. Petersen Health was brought on behalf of a nursing home resident who died as a result of exposure to COVID-19. The defendant removed the case to federal court, claiming that it was acting on behalf of the federal government and that the federal PREP Act completely preempted the cause of action.

     In rejecting both claims, the federal court found that nursing homes were highly regulated but under Supreme Court precedent the homes cannot claim to be operating at the direction of a federal officer by complying with regulations. It further held that the PREP Act provides an exclusive remedy in federal court in Washington, DC for lawsuits based on the administration or use of approved countermeasures during a national health emergency. However, it does not provide a defense for the non-use of those countermeasures, as plaintiffs had pleaded. The court ordered the case returned to state court, where the defendant was free to assert any federal defenses it might have.

    CCL filed an amicus brief arguing that cities, no less than any other plaintiff, have a right to choose their causes of action and litigate in state court without being removed to federal court. The case, Mayor and City Council of Baltimore v. BP, is currently before the U.S. Court of Appeals for the Fourth Circuit on remand from the U.S. Supreme Court. The issue is whether any of the remaining grounds asserted by the defendant oil companies constitute a federal cause of action that should be heard in federal, rather than state, court. The Fourth Circuit had previously held that one ground, that the oil companies were acting at the direction of the federal government when they allegedly created a public nuisance and deceived the public about the climate-changing properties of fossil fuels, did not justify removing the case from state court. It further held that the statute that permitted that appeal, restricted the appeal to that issue.

     Subsequently, the Supreme Court ruled that all grounds for removal were subject to appeal when an order covers both federal officer removal justifications and other ones. 

     In its brief on behalf of the National League of Cities, U.S. Conference of Mayors, and International Municipal Lawyers Association, CCL argued that the oil companies were wrong to claim that the state law causes of action were a disguised form of federal common law, that the federal Clean Air Act explicitly did away with federal common law in this field and opened the door to state lawsuits seeking to remedy localized harms, and that the lawsuit did not seek to remedy climate change, but instead sought compensation for distinct effects that Baltimore suffered.

    The defendant oil companies will have an opportunity to file a reply to Baltimore's brief and all amicus briefs supporting it before the case is scheduled for oral argument.

     Arguing that state and local governments have the same rights as other plaintiffs to choose state, rather than federal court, a CCL amicus brief asserted that there was no legitimate basis for oil companies to remove a climate-change lawsuit brought by the State of Minnesota to federal court. The brief, on behalf of the National League of Cities, the U.S. Conference of Mayors, and the International Municipal Lawyers Association, focuses most heavily on the oil industries' argument that federal common law completely displaced the state causes of action asserted in the case. 

     In June, the U.S. Supreme Court held that a similar action brought by the City of Baltimore required lower courts to review all the claimed bases for federal-court jurisdiction when a defendant asserts that it was acting at the direction of a federal officer, even if that assertion fails as a matter of law. In the Minnesota case, the oil company defendants made that argument but did not seriously pursue it on appeal, emphasizing the other grounds that would permit it to be in federal, rather than state, court. 

     As for the "federal common law" argument, the amicus brief argued that the Clean Air Act displaced any federal common law and explicitly opened the door to state causes of action, such as the ones filed by Minnesota. The amicus brief was filed with the Law Offices of William Rossbach.