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State ex rel. Hood v. Entergy Mississippi, Inc.

United States District Court, S.D. Mississippi, Northern Division

April 4, 2019

STATE OF MISSISSIPPI ex rel. Jim Hood, Attorney General PLAINTIFF



         Federal courts “have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006) (citation omitted). This obligation helps the judiciary adhere to the principles of federalism enshrined in the Constitution. It exists no matter what the parties may prefer or how much time they have spent preparing their case for adjudication in federal court.[1]If “a federal court determines that it is without subject matter jurisdiction, the court is powerless to continue.” Amason & Assocs., Inc., v. Columbus Land Dev., LLC, No. 7:12-CV-2459-VEH, 2013 WL 12250379, at *3 (N.D. Ala. Feb. 28, 2013) (citing Wernick v. Mathews, 524 F.2d 543, 545 (5th Cir. 1975)).

         In this case, jurisdiction depends on the existence of a federal question in the complaint. Judge Southwick succinctly explained this strand of the law in Quinn v. Guerrero, when he recited that

The plaintiff's federal question must appear on the face of his well-pleaded complaint. The plaintiff need not specifically cite a federal provision such as Section 1983, but he must allege facts sufficient to establish a colorable issue of federal law. The plaintiff is the master of the claim, so he may confine his arguments to those arising under state law even if federal claims are available. If he so chooses, there is no basis for federal jurisdiction. Further, anticipation of a federal defense is insufficient to establish federal-question jurisdiction.

863 F.3d 353, 358-59 (5th Cir. 2017) (quotation marks, citations, and brackets omitted). This law is well-established. See Arkansas v. Kansas & Texas Coal Co., 183 U.S. 185, 188 (1901) (“[I]t has been settled that a case cannot be removed from a state court into the circuit court of the United States on the sole ground that it is one arising under the Constitution, laws, or treaties of the United States, unless that appears by plaintiff's statement of his own claim.”).

         This case is presently in its first week of trial. On day two, during examination of the plaintiff's first witness, counsel for Entergy urged the Court to apply Entergy Corporation v. Jenkins to our dispute. See 469 S.W.3d 330 (Tex. App. 2015). The Court took a close look at the decision.

         Jenkins is indeed similar to our case.[2] There, as here, the plaintiff(s) “filed suit against Entergy alleging that it had devised and operated an improper energy-purchasing scheme under which it had selected internally generated, higher-priced electrical power while rejecting less expensive, available third-party power, resulting in theft from . . . retail power customers in violation of” state law.[3] Id. at 335. There, as here, “Entergy removed the suit to federal court alleging federal question jurisdiction.” Id. So far, so good.

         In Jenkins, however, “[t]he federal court remanded the case to state court, concluding that the suit did not invoke federal law.” Id. The question then becomes, if Jenkins is so similar to this case and was resolved in state court, why is this case being heard in federal court? The trial was paused so the parties could provide supplemental briefing and argue this issue.

         In an earlier Order, the District Judge presiding over this case determined that jurisdiction was proper under the Class Action Fairness Act. See Docket No. 37. When an intervening U.S. Supreme Court decision revealed that conclusion to be incorrect and rendered CAFA unavailing as a source of jurisdiction, see Mississippi ex rel. Hood v. AU Optronics Corp., 571 U.S. 161 (2014), the District Judge pivoted and determined that jurisdiction was proper because there was a federal question buried in the complaint. He reasoned as follows:

Mississippi's complaint challenges EMI's [Entergy Mississippi's] failure to use its discretion to purchase the allegedly cheaper energy from third-party suppliers. Specifically, Mississippi accuses EMI and the other EOCs of failing to “make a purchase of electricity from a non-affiliate for its/their ‘own account.' Entergy Agreement, Sec. 402. Despite this ability to do so, EMI deliberately decided not to pursue less expensive non-affiliate supplies of electricity, and, instead, merely accepted transfers . . . of the expensive ESX electricity.” Mississippi's Complaint at 38.
Mississippi's challenge, then, requires an analysis of the Entergy Agreement. The Entergy Agreement is a FERC tariff, which applies with the force of federal law. See Carter v. Am. Tel. & Tel. Co., 365 F.2d 486, 496 (5th Cir. 1966). In essence, Mississippi is suing EMI for its failure to vindicate its federal power to initiate the process of buying energy from a third-party supplier. Mississippi's cause of action, therefore, derives from federal law; this court simply cannot adjudicate Mississippi's claim without determining the precise nature of the discretion vested in EMI by federal law. Whether EMI had the discretion to purchase energy from third-party suppliers-and failed to do so-within the meaning of the federal tariff is an essential element of Mississippi's claim.

Docket No. 68 at 11-12.[4]

         In the Jenkins federal court action, however, Judge Kent arrived at the opposite conclusion. He found no federal question jurisdiction on the face of the complaint.

None of the Texas common-law or statutory causes of action cited by Plaintiffs in their Petition require the violation of a federal tariff. Conduct that violates the tariff may also violate the [Texas statute] or other common-law duties, but a violation of the tariff is not an essential element to any of Plaintiffs' claims. . . . Defendants have tried to escape this result through very skillful briefing of the issues in this Motion, but the ...

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