United States District Court, E.D. Kentucky, Southern Division, Pikeville
MEMORANDUM OPINION AND ORDER
AMUL R. THAPAR, District Judge.
Plaintiffs EQT Gathering, LLC ("EQT Gathering") and EQT Production Co. ("EQT Production") brought this diversity action against Jeremy and Miranda Webb, seeking various relief under state law for interference with the companies' natural gas pipeline. R. 1. The Webbs moved to dismiss, R. 11, challenging jurisdiction based on the amount in controversy, and alternatively attacking the complaint on the merits for failure to state a claim. Because neither challenge sticks, the Court will deny the Webbs' motion.
The Webbs own the surface of the land surrounding the plaintiffs' pipeline. R. 1 ¶ 3. Some time ago, the prior owners of that land deeded various gas and mineral rights to EQT Production's predecessor. Id. ¶¶ 6-7. According to the handwritten deed (henceforth, "the Deed"), the grantee-and hence EQT Production-received rights to "all the coal, gas, salt water, oil, and minerals of every description in, upon, and under" the property, as well as "the full and complete rights and privileges of every kind for mining, manufacturing, and transporting such coal, gas, salt water, oil, and minerals on, through, and over the said premises whether contained on the said premises or elsewhere and for any other purpose whatsoever." R. 1-1 at 1-2. This language, the plaintiffs say, gives them the right to construct and operate pipelines on the Webbs' land to transport their natural gas. R. 1 ¶ 8.
The plaintiffs allege the Webbs are violating that right in two ways: by maintaining a building atop the plaintiffs' pipeline that makes the line unsafe to operate, and by siphoning gas from that pipeline, without permission, for domestic use (or by authorizing others to do so). Id. ¶¶ 9-10, 13. Because the Webbs' building forced the plaintiffs to shut down their pipeline, the plaintiffs claim these violations have already caused them damages and threaten further harm to the tune of well over $75, 000 due to service interruptions and potentially escaped gas. Id. ¶¶ 16, 20. The plaintiffs therefore seek: (1) an injunction permitting them to enter the Webbs' property to relocate the pipeline, (2) a declaration that they have the right to enter for that purpose, and (3) an injunction prohibiting the Webbs from unlawfully tapping their gas (or allowing others to do so). Id. at 5. The plaintiffs may also seek money damages. Id. at 4-5 (describing harm "in an amount to be proved at trial" and requesting "all other relief, in law or equity, to which they are entitled") (emphasis added). But they do not request a specific sum, and they admit the Webbs most likely could not satisfy an ensuing judgment. Id. ¶ 18.
The Webbs moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b) for lack of subject-matter jurisdiction (challenging the amount in controversy), and for failure to state a claim. R. 11. The Court now denies the Webbs' motion in its entirety.
The Webbs muster various arguments, jurisdictional and otherwise, allegedly supporting dismissal in this case, but none of those arguments have merit. Indeed, contrary to the Webbs' assertions, the Court has jurisdiction, and the Webbs have failed to show that the plaintiffs are not entitled to the relief they seek.
I. The Amount in Controversy Requirement Is Satisfied
The jurisdictional calculus in this case is inherently forward-looking, by the very nature of the prospective relief the plaintiffs seek. The Webbs' attempt to narrow the amount in controversy to merely past harm misses this crucial point. See R. 11-1 at 3-4; R. 16 at 3-4. In suits for declaratory or injunctive relief, "the amount in controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). That value is generally calculated "from the perspective of the plaintiff, with a focus on the economic value of the rights he seeks to protect." Smith v. Nationwide Prop. & Cas. Ins. Co., 505 F.3d 401, 407 (6th Cir. 2007) (internal quotation marks omitted). The amount in controversy in declaratory judgment and injunction cases thus includes the plaintiff's potential future losses if relief is denied. Hunt, 432 U.S. at 348; McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 181 (1936) (valuing injunction by measuring "the loss... which would follow" from allegedly illegal conduct); Glenwood Light & Water Co. v. Mutual Light, Heat & Power Co., 239 U.S. 121, 126 (1915) (holding that the value of protection "now and in the future" determines the amount in controversy); see also Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 253 (6th Cir. 2011) ("Where a party seeks a declaratory judgment, the amount in controversy is... the value of the consequences which may result from the litigation." (internal quotation marks and alterations omitted)); Food Fair Stores v. Food Fair, 177 F.2d 177, 184 (1st Cir. 1949) ("It is not accurate to say that a finding of amount in controversy cannot be based upon future or contingent damages.").
The plaintiffs estimate that those losses for EQT Production will far exceed the jurisdictional threshold, due to "delay in the production of natural gas" caused by the Webbs' interference with their pipeline. R. 1 ¶ 16. Although the complaint also suggests EQT Gathering will suffer some loss, the plaintiffs do not specify that amount. Id. ("[T]he Webbs' actions will interfere with EQT Production's and EQT Gathering's production and transportation of natural gas...."); id. ¶ 19 ("EQT Production and EQT Gathering will suffer immediate and irreparable injury...."). Regardless, for the reasons described below, the allegations regarding EQT Production's future losses are sufficient to support subject-matter jurisdiction over that company's claims. Supplemental jurisdiction over EQT Gathering's claims then follows under 28 U.S.C. § 1367(a).
Satisfying the amount in controversy requirement is not particularly onerous. True, the plaintiffs have the burden to demonstrate subject-matter jurisdiction, since they invoke the Court's power. See Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986). But that burden is not nearly as high as the Webbs suggest, because the Webbs mistakenly assume that the same standard applied at removal also applies here. For cases originally brought in federal court, like this one, a plaintiff's good faith assessment of his claim's value controls. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938). Therefore, the Court may dismiss this case for failure to meet the jurisdictional threshold only if "it appears that the plaintiff's assertion of the amount in controversy was made in bad faith." Gafford v. Gen. Elec. Co., 997 F.2d 150, 157 (6th Cir. 1993) abrogated on other grounds by Hertz Corp. v. Friend, 559 U.S. 77 (2010). Put differently, dismissal based on the amount in controversy is improper unless it appears "to a legal certainty" that the plaintiff's claim does not meet the jurisdictional threshold. St. Paul, 303 U.S. at 289; see also Rosen v. Chrysler Corp., 205 F.3d 918, 920-21 (6th Cir. 2000). This "legal certainty" or "good faith" test is a lower bar than the defendant's burden on removal to prove jurisdiction by a preponderance of the evidence, see Gafford, 997 F.2d at 158, and thus the Webbs' reliance on removal cases is misguided. Equitable claims also make no difference: the legal certainty test applies alike to actions for money damages and to suits for declaratory or injunctive relief. See Hunt, 432 U.S. at 348 (finding the jurisdictional minimum satisfied because the Court could not say "to a legal certainty" that the plaintiff's losses absent an injunction would be less than that amount); 14AA Charles Alan Wright, et al., Federal Practice and Procedure § 3708 (4th ed.) (explaining that in proceedings for injunctive and declaratory relief "the plaintiff's jurisdictional amount allegation... will be accepted unless it appears to a legal certainty that the amount cannot be recovered").
Here, the defendants have not demonstrated "to a legal certainty" that the value to EQT Production of declaratory or injunctive relief is $75, 000 or less. Pointing out the lack of proof regarding the amount of escaping gas and future gas production, the Webbs raise general doubts about the size of EQT Production's potential losses. See R. 16 at 4, 7. But they offer no facts of their own contesting the plaintiffs' alleged expected losses, nor do they ever affirmatively deny that the value of an injunction to the plaintiffs exceeds the jurisdictional floor. This dooms the Webbs' argument. Generalized claims that the asserted amount in controversy is unverified or unproven are not enough to show "to a legal certainty" that the value of relief is below the jurisdictional amount. See EQT Gathering, LLC v. A Tract of Prop. Situated in Knott Cnty., Ky., No. 12-58-ART, 2012 WL 4321119, at *2 (E.D. Ky. Sept. 18, 2012). And unless the Webbs actually contest the plaintiffs' jurisdictional allegations, the Court is free to assess the amount in controversy based solely on the complaint, for absent a direct factual challenge the plaintiffs are not obligated to support their valuation with "competent proof." See Stern v. Beer, 200 F.2d 794, 795-96 (6th Cir. 1952) (citing KVOS, Inc. v. Associated Press, 299 U.S. 269, 277-78 (1936)). The Court therefore accepts the plaintiffs' asserted future losses as true because there is no genuine factual dispute, and there is no sign that EQT Production's assertion was made in bad faith. See Nichols v. Muskingum Coll., 318 F.3d 674, 677 (6th Cir. 2003) ("[W]here a defendant argues that the plaintiff has not alleged sufficient facts in her complaint to create subject matter jurisdiction, the trial court takes the allegations in the complaint as true."); Fein v. Selective Serv. Sys. Local Bd. No. 7, 430 F.2d 376, 384 (2d Cir. 1970) aff'd on other grounds, 405 U.S. 365 (1972) (holding that "[i]n the absence of bad faith or a legal certainty that the allegation is groundless, we must credit" the plaintiff's alleged losses without injunctive relief). As a result, the company's claims meet the jurisdictional threshold.
But what of EQT Gathering's claims? The plaintiffs suggest EQT Gathering will also suffer losses on account of the Webbs' continued obstruction, see R. 1 ¶ 16, but they do not offer an estimate of the company's potential harm without relief. No matter. Those claims are undoubtedly part of the same case or controversy under Article III because they "derive from a common nucleus of operative fact, " and one would ordinarily expect them to be handled in the same judicial proceeding. United Mine Workers of Am. v. Gibbs, 383 U.S. 715, 725 (1966). As a result, whatever the amount in controversy between EQT Gathering and the Webbs, the Court has supplemental jurisdiction over the company's claims pursuant to 28 U.S.C. § 1367(a). See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 559 (2005) (holding that where one plaintiff's claim satisfies the amount in controversy requirement, a district court under § 1367(a) may exercise supplemental jurisdiction over the jurisdictionally insufficient claims of another plaintiff, provided those claims are part of the same ...