Alabama ex rel. Galanos v. Star Service & Petroleum Co.
Alabama ex rel. Galanos v. Star Service & Petroleum Co.
Opinion of the Court
ORDER
This case calls upon the Court to decide whether the state of Alabama is the real party plaintiff. If so, this case must be remanded to state court. If not, a plethora of legal conundrums arise. Fortunately, Pandora’s box remains shut, as this case is to be remanded.
Having thus stated the solution, the Court reveals the circumstances and reasoning behind this decision.
On July 18, 1985, Chris N. Galanos, the district attorney for Mobile County, Alabama, filed an action under the Alabama Motor Fuel Marketing Act, (the Act), codified at Ala.Code §§ 8-22-1 to 8-22-18 (1975). This Act is apparently designed to forestall “price wars” between retail gasoline dealers in Alabama. Section 8-22-16(b) authorizes any district attorney to sue to enforce the Act. Alleging violations thereof, the plaintiff has sued the defendant, Star Service & Petroleum Co., Inc., (Star), seeking injunctive relief as well as the civil penalty authorized by the statute.
Star has filed a removal petition with this Court under 28 U.S.C. § 1441(a), alleging diversity of citizenship, 28 U.S.C. § 1332(a)(1), as the ground for jurisdiction. Plaintiff promptly moved for remand to state court, thereby conjuring up this memorandum.
Star is incorporated under the laws of Illinois, with its principal place of business in Missouri, making it a citizen of both of those states. 28 U.S.C. § 1332(c) (1976). As Mr. Galanos is a citizen of Alabama, diversity appears to exist. However, the plaintiff maintains that Mr. Galanos is acting only on behalf of the state of Alabama, which is the real plaintiff. The defendant’s rejoinder to this is that Mr. Galanos is acting unconstitutionally, and hence only in his individual capacity. Thus, according to Star, the state is not the actual plaintiff.
Each party in this case has the benefit of resting its position on bedrock foundations in constitutional law. Thus, it is absolutely undisputed that a state, qua state, is not a citizen for purposes of the diversity statute. Ford Motor Co. v. Dept. of Treasury, 323 U.S. 459, 65 S.Ct. 347, 89 L.Ed. 389 (1945); State Hwy. Com’n v. Utah Constr. Co., 278 U.S. 194, 49 S.Ct. 104, 73 L.Ed. 262 (1928); Fitts v. McGhee, 172 U.S. 516, 19 S.Ct. 269, 43 L.Ed. 535 (1899); Postal Tel. Cable Co. v. State of Alabama, 155 U.S. 482, 15 S.Ct. 192, 39 L.Ed. 231 (1894). It is equally undisputed that the Eleventh Amendment does not bar suits in federal court against state officers who are acting unconstitutionally. Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). Moreover, when a state agency files an action in state court the out of state defendant may remove on the basis of diversity if the state is not the actual party plaintiff. Missouri, Kan. & Tex. Ry. v. Bd. of R.R. & Warehouse Com’rs., 183 U.S. 53, 22 S.Ct. 18, 46 L.Ed. 78 (1901). The proper analysis of this issue thus consists of first determining if the state is the plaintiff under the state statutory scheme. Then the Court must decide whether Ex Parte Young is applicable.
The basis of the motion to remand is that Mr. Galanos is representing the state, who is the real plaintiff. Alabama law expressly confers upon the district attorney the duty of prosecuting civil actions on behalf of the state. Ala.Code §§ 6-5-1, 12-17-184(3) (1975). As already mentioned, the Act confirms this authority with regards to this statutory scheme. Ala. Code § 8-22-16(b) (1975). The Act does not, however, set up any agency, department or commission to oversee and enforce the statutory scheme. Therefore, many of the cases enunciating the standard for determining whether a state is a party are not directly applicable. Those cases speak in terms of analyzing certain factors bearing on the state’s role. See, e.g., State of Louisiana ex rel Guste v. Fedders Corp., 524 F.Supp. 552 (M.D.La. 1981). When, as here, a state officer alone is involved, those factors may be relevant, but the Supreme
It is also contended, however, that the real party in interest is not the state, but certain independent dealers who made out affidavits in the state court. This contention is without merit. Whether other parties will benefit from this action does not affect the state’s valid interest in enforcing this statutory scheme. The defendant’s contention that this Court must accept as true the averments in the removal petition is erroneous. See, e.g., Horak v. Color Metal of Zurich, Switzerland, 285 F.Supp. 603 (D.N.J. 1968) (court must make independent determination of removability).
Nor can it be argued that the County of Mobile is the real party because any funds recovered go into the county treasury. Ala.Code § 8-22-16(b) (1975). The county is an arm of the state, and although it is a citizen for purposes of diversity, Moor v. County of Alameda, 411 U.S. 693, 721, 93 S.Ct. 1785, 1801-02, 36 L.Ed.2d 596 (1973), the mere fact of possible recovery of a penalty does not vitiate the state’s interest as parens patriae.
Having accomplished the first step of the analysis, the Court must decide whether Ex Parte Young mandates removal. This theory is based on the contention that the
Ex Parte Young, which has caused this problem, is a keystone of modern constitutional theory. See C. Wright, The Law of Federal Courts 292 (4th ed. 1983). In it, the Supreme Court held that the Eleventh Amendment does not bar a suit against a state officer who is acting unconstitutionally. If the act pursuant to which the officer is acting is unconstitutional, “the officer, in proceeding under such enactment, comes into conflict with the superior authority of [the] Constitution, and he is in that case stripped of his official or representative character and is subjected in his person to the consequences of his individual conduct.” Young, 209 U.S. at 159-60, 28 S.Ct. at 454. The Eleventh Amendment immunity does not then apply. This doctrine is pure fiction, C. Wright, supra, at 292, but is applied nonetheless. The defendant’s proposed extension, however, goes too far.
Star proffers two cases as supporting its interpretation: State of Ohio ex rel Seney v. Swift & Co., 270 F. 141 (6th Cir. 1921) and Mouton v. Sinclair Oil and Gas Co., 410 F.2d 717 (5th Cir. 1969). Seney involved a suit by a county prosecutor to enjoin violations of an Ohio anti-trust law. The court therein interpreted Young as presenting the issue of whether the state was a real party in interest. This interpretation is erroneous. Young dealt with the Eleventh Amendment, an issue that is distinct from the real party in interest issue that is central to the diversity jurisdiction problem. State of Louisiana ex rel. Guste v. Fedders Corp., 524 F.Supp. 552, 556 (M.D.La. 1981). Seney has been severely criticized by subsequent decisions. See Nuclear Eng’g Co. v. Scott, 660 F.2d 241 (7th Cir. 1981); Eure v. NVF Co., 481 F.Supp. 639 (E.D.N.C. 1979); State Tax Com’n v. Union Carbide Corp., 386 F.Supp. 250 (D. Idaho 1974); Olsen v. Doerfler, 225 F.Supp. 540 (E.D.Mich. 1963). According to Scott, supra, “[t]he fiction of Ex Parte Young, which merits that decision being considered a landmark in constitutional law, was created to further important interests wholly inapposite to Congress’ grant of federal jurisdiction pursuant to 28 U.S.C. § 1332.” 660 F.2d at 251 (citations and footnotes omitted). While admitting that this interpretation of Young results in an anomaly, that state officers are “state actors” for some purposes but not for others, the court pointed out that Young itself sanctioned such a paradoxical effect. Under Young state officials do not act pursuant to state authority for Eleventh Amendment purposes, even though they do so act for Fourteenth Amendment purposes. 660 F.2d at 251. This Court bears in mind the requirement that the removal statutes are to be construed narrowly, and against federal jurisdiction. Shamrock Oil Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). See also C. Wright, supra, at 219. This is especially true when dealing with diversity cases. Mielke v. Allstate Ins. Co., 472 F.Supp. 851 (E.D.Mich. 1979). Remembering this axiom, the Court declines to apply Young, but instead follows the better reasoned authority that counsels remand.
One obstacle to this decision must still be disposed of, however. This is the Mouton case cited above as supporting the defendant’s contentions. Actually, the defendant argues that it requires this Court to deny remand. Unfortunately for the defendant, Mouton is completely distinguishable.
To understand Mouton one must first understand its predecessor, Mississippi River Fuel Corp. v. Cocreham, 382 F.2d 929 (5th Cir. 1967). In Cocreham the plaintiff corporation sued the Louisiana Collector of Revenue to obtain a refund of a severance tax imposed on oil and gas produced by the corporation on lands leased from the United States. Finding that Louisiana law expressly authorized such an action, the Fifth Circuit declined to decide whether the Eleventh Amendment barred
In summary, the Court holds that .the real party in interest in this case is the state of Alabama, represented by the district attorney. The Court further holds that Ex Parte Young does not mandate treating the district attorney as the individual plaintiff, thus allowing removal. Therefore, this Court is without jurisdiction, and this case must be remanded to the state court. It is therefore ORDERED pursuant to 28 U.S.C. § 1447(c) that this ease be, and it is, REMANDED to the Circuit Court of Mobile County, Alabama, removal having been improvidently granted.
Reference
- Full Case Name
- STATE OF ALABAMA ex rel. Chris N. GALANOS v. STAR SERVICE & PETROLEUM CO., INC.
- Cited By
- 5 cases
- Status
- Published