After Defendant Files Second Asbestos-Injury Claim, Federal Court Grants Defendant’s Motion to Dismiss Plaintiff CSX’s Declaratory Judgment Action for Lack of Jurisdiction U.S. District Court for the Northern District of West Virginia, December 29, 2015

Plaintiff CSX Transportation asserted a claim for declaratory relief, after the defendant filed an injury claim for lung cancer, which he claimed was asbestos-related. The defendant had settled a claim against CSX for an asbestos-related injury in 2003, and under the 2003 settlement agreement, he allegedly released CSX from future claims involving asbestos and cancer. The agreement included an indemnity provision, which CSX invoked in requesting defendant to indemnify it for the 2015 state court action. The agreement also released CSX from all claims which might form the basis of any action under the Federal Employers’ Liability Act (FELA).  The defendant filed a motion to dismiss for lack of subject matter jurisdiction and for failure to state a claim, which the court granted.

Although CSX invoked the Declaratory Judgment Act for relief, this Act does not provide subject matter jurisdiction. While the parties were diverse, the amount in controversy was in dispute. This amount cannot be based on speculation. Other than CSX’s prayer for relief, CSX presented no evidence that indemnification for the 2015 state court action would exceed $75,000. Thus at this stage, subject matter jurisdiction was lacking. The court further held that even if subject matter jurisdiction existed, the court would apply the doctrine of abstention.

In determining whether to abstain from exercising jurisdiction, federal courts should consider four factors, none of which is dispositive on its own: (1) the strength of the state’s interest in having the issues raised in the federal declaratory action decided in the state courts; (2) whether the court in which the state action is pending can more efficiently resolve the issues raised in the federal action; (3) whether permitting the federal action to go forward would result in unnecessary entanglement between the federal and state court systems, because of the presence of overlapping issues of fact or law; and (4) whether the declaratory judgment action is being used merely as a device for procedural fencing.  Viewed together, the factors favored abstention; no novel issues of law are presented, ruling on CSX’s request for a declaratory judgment would be duplicative, and the record was unclear regarding procedural fencing.

Further, CSX’s claims were not ripe for review. The court quoted the rationale of ripeness: “[T]o prevent the courts, through avoidance of premature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties. The problem is best seen in a two fold aspect, requiring us to evaluate both the fitness of the issues for judicial decision and the hardship to the parties of withholding court consideration.” This claim involved uncertain and future events that might not occur at all.

Read the full decision here.


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