Devon Energy Production Co. v. Mosiac Potash Carlsbad, Inc. , 693 F.3d 1195 ( 2012 )

FILED
United States Court of Appeals
Tenth Circuit
August 22, 2012
PUBLISH Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
DEVON ENERGY PRODUCTION
COMPANY, L.P.,
Plaintiff-Appellant,
v. No. 11-2026
MOSAIC POTASH CARLSBAD,
INC., a Delaware Corporation,
Defendant-Appellee.
Appeal from the United States District Court
for the District of New Mexico
1:10-CV-00665-JAP-RLP
Harold L. Hensley, Jr., Hinkle, Hensley, Shanor & Martin, LLP, Midland, Texas,
for Plaintiff-Appellant.
Charles C. High, Jr., Kemp Smith LLP (Clara B. Burns and Jose A. Howard-
Gonzalez, Kemp Smith LLP, with him on the brief), El Paso, Texas, for
Defendant-Appellee.
Before O’BRIEN, GILMAN * and HOLMES, Circuit Judges.
HOLMES, Circuit Judge.
*
Honorable Ronald Lee Gilman, Circuit Court Judge, United States Court of
Appeals for the Sixth Circuit, sitting by designation.
Plaintiff-Appellant Devon Energy Production Company, L.P. (“Devon”), an
oil and gas production company, appeals from the judgment of the United States
District Court for the District of New Mexico, which dismissed Devon’s
declaratory-judgment action against Defendant-Appellee Mosaic Potash Carlsbad,
Inc. (“Mosaic”), a potash mining company, 1 for lack of subject-matter
jurisdiction. More specifically, under Federal Rule of Civil Procedure 57, Devon
sought a declaratory judgment that federal law completely preempted Mosaic’s
anticipated state-law claims emanating from Devon’s unauthorized drilling in a
federally managed area of New Mexico known as the “Potash Area,” and that the
only remedies available to Mosaic were derived from the federal administrative
and judicial remedies of the Administrative Procedure Act (“APA”) and certain
regulatory provisions of the U.S. Department of the Interior that govern oil, gas,
and potash leasing and development within the Potash Area. Devon alleged that
the district court had federal-question jurisdiction over its declaratory-judgment
action under 28 U.S.C. § 1331.
The district court concluded that there was no federal-question jurisdiction
to support Devon’s action and dismissed its complaint, and subsequently denied
1
“Potash” refers to potassium compounds that are used principally as an
element in fertilizer. Potash Ass’n of N.M. v. U.S. Dep’t of Interior, 367 F. App’x 960,
962 (10th Cir. 2010).
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Devon’s motion to alter or amend the judgment under Federal Rule of Civil
Procedure 59(e) (“Rule 59(e) motion”). We affirm.
I
We start by describing the Potash Area that is at the center of this dispute.
Eddy and Lea Counties in New Mexico contain vast amounts of subsurface potash
and also oil and gas reserves. The U.S. Department of the Interior’s Bureau of
Land Management (“BLM”) manages the Potash Area, which encompasses
approximately 497,000 acres in Eddy and Lea Counties. In an effort to allow for
the prospecting, development, and production of potash and oil and gas resources
within the Potash Area, the BLM issues leases that allow various companies to
mine potash and to drill for oil and gas. 2 To accomplish this goal, the BLM has
implemented rules as outlined in the BLM’s “1986 Secretarial Order,” which was
issued under the Mineral Leasing Act of 1920 (“MLA”), 30 U.S.C. §§ 181–196.
See Oil, Gas and Potash Leasing and Development Within the Designated Potash
Area of Eddy and Lea Counties, New Mexico, 51 Fed. Reg. 39,425 (Oct. 28,
1986), corrected 52 Fed. Reg. 32,171 (Aug. 26, 1987) (the “1986 Order”).
2
As a panel of this Court described in Potash Association of New Mexico, in
the Potash Area, some of the oil and gas fields are located near or below potash deposits.
367 F. App’x at 962. Drilling for oil or gas resources near potash deposits can render
those potash deposits inaccessible and also raises certain safety concerns. See id. For
these reasons, potash producers and the oil and gas industry “have long been at odds over
the proper development of the Potash Area.” Id.
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The 1986 Order contains provisions addressing the issuance of both potash
and oil and gas leases. See 1986 Order § 3(III)(A), (C). Most relevant to this
appeal are certain conditions imposed, by stipulation, on the recipients of oil and
gas leases. The 1986 Order states that “[d]rilling for oil and gas shall be
permitted only in the event that the lessee establishes . . . that such drilling will
not interfere with the mining and recovery of potash deposits, or the interest of
the United States will best be served by permitting such drilling.” Id.
§ 3(III)(A)(1). Further, under the 1986 Order, “[n]o wells shall be drilled for oil
or gas at a location which . . . would result in undue waste of potash deposits or
constitute a hazard to or unduly interfere with mining operations being conducted
for the extraction of potash deposits.” Id. § 3(III)(A)(2).
In March of 2005, Devon submitted an Application to Permit Drilling
(“APD”) to the BLM to drill a new well in the Postash Area, which was labeled
the “Apache Well.” Aplt. App. at 127 (Dist. Ct. Mem. Op. & Order, filed Oct.
19, 2010). The BLM denied the APD because of “mining impact,” 3 but it
informed Devon that it would approve the well if it were moved to a location
3
The district court stated that the BLM “denied” Devon’s APD, Aplt. App. at
127, but Devon asserts that the BLM only “advise[d] Devon that the well would be denied
at that location,” Aplt. Reply Br. at 9 (emphasis added); see also Aplt. App. at 5–6. This
is an unhelpful exercise in semantics. For our purposes, this purported distinction is
irrelevant because it is undisputed that, for a period of time, Devon drilled and operated
the site without the BLM’s approval and, in fact, the BLM had put Devon on notice that it
would not receive the BLM’s approval for that site.
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between two previously drilled wells. Id. at 5–6 (Compl., filed July 15, 2010);
see id. at 127–28. Devon agreed to move the Apache Well to the new location.
However, rather than drill at the approved location, Devon incorrectly placed the
well at the original location that the BLM had never approved.
In February 2006, Devon discovered its mistake and reported it to the
BLM. Thereafter, Devon requested approval of the Apache Well, as drilled, in
the original location. The next month, after performing an environmental
assessment, the BLM approved the Apache Well, as drilled. Upon learning of
Devon’s mistake, Mosaic contacted Devon to assert that it had wasted mineable
potash by drilling at the wrong location and caused Mosaic damages. The parties
attempted to negotiate their dispute, but eventually those discussions reached an
impasse.
In July 2010, Devon filed suit against Mosaic in the United States District
Court for the District of New Mexico seeking declaratory relief under Federal
Rule of Civil Procedure 57. In its complaint, Devon anticipated that Mosaic
would file suit against it for money damages under state law, and therefore it
sought a declaration that (1) “federal law has completely pre-empted all oil and
gas and potash operations and activities with regard to the location and drilling of
oil and gas wells and mining operations on the lands and leases involved in this
controversy,” and (2) “the only remedies available to Mosaic are the federal
administrative and judicial remedies under the Administrative Procedure Act and
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the Secretary of the Interior’s 1986 Order . . . , none of which include any
monetary claim for damages.” Aplt. App. at 1–2. Devon asserted that the court
had federal-question jurisdiction under 28 U.S.C. § 1331.
Mosaic responded by filing a motion to dismiss for lack of subject-matter
jurisdiction. Mosaic argued that the district court lacked jurisdiction over
Devon’s claim because, as relevant here, the Complaint “fail[ed] to assert a
federal question.” Aplt. App. at 27 (Def.’s Rule 12(b)(1) Mot. to Dismiss for
Lack of Subject Matter Jurisdiction, filed Aug. 11, 2010). Mosaic maintained that
any federal issue that may arise would be only by way of a defense asserted by
Devon, and that a defense was insufficient to support federal-question
jurisdiction.
The district court agreed with Mosaic and dismissed Devon’s complaint. It
first concluded that the lack of any private cause of action in the MLA precluded
a finding of complete preemption. It then rejected Devon’s argument that the
district court had “federal question jurisdiction because Mosaic’s claims
require[d] [it] to construe federal law.” Id. at 136 (quoting Dist. Ct. Doc. No. 11,
at 20 (Pl.’s Mem. in Resp. to Def.’s 12(b)(1) Mot. to Dismiss for Lack of Subject-
Matter Jurisdiction, filed Aug. 26, 2011)) (internal quotation marks omitted). The
district court noted that resolution of Mosaic’s claims would not require a court to
decide whether the BLM’s approval of the Apache Well, as drilled, was improper
because “approval is not an element of Mosaic’s cause of action as it at most is
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only a defense to Mosaic’s state law claims.” Id. at 136–37.
Following the district court’s dismissal of Devon’s complaint, Mosaic then
filed its own complaint in New Mexico state court, raising state-law claims for
trespass, negligence, and prima-facie tort. In response, Devon filed in federal
court a Rule 59(e) motion to alter or amend the judgment, arguing that the district
court should vacate its order because of two “new” pieces of evidence—namely,
Mosaic’s state-court complaint and documents that Devon had received from the
BLM through a Freedom of Information Act (“FOIA”) request which detailed the
agency’s decisionmaking process in approving the Apache Well site post-drilling.
In its motion, Devon argued (again) that federal-question jurisdiction attached in
that Mosaic’s state-law claims “require[]” a construction and application of
federal law because a court would have to “resolve the substantial federal
question of whether Devon’s entry onto the federally owned and managed land
was unauthorized by the United States” and whether Mosaic suffered lost potash
deposits as determined by federal law. Aplt. App. at 142 (Pl.’s Opposed Rule
59(e) Mot. & Br. to Alter or Amend the Court’s Order Dismissing Pl.’s Compl.,
filed Nov. 16, 2010).
The district court denied Devon’s motion. The court held that the
substance—if not the specifics—of Devon’s “new evidence” was already before
the court when it rendered its original decision, and therefore did not warrant
reconsideration. Further, it concluded that Devon’s legal argument—related to
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jurisdiction based on a substantial federal issue—was “improper under Rule
59(e)” because Devon was simply “attempting to ‘relitigate old matters, or to
raise arguments . . . that could have been raised prior to the entry of judgment.’”
Id. at 292 (Mem. Op. & Order Den. Devon Energy Prod. Co.’s Rule 59(e) Mot.,
filed Jan. 24, 2011) (quoting Exxon Shipping Co. v. Baker, 544 U.S. 471, 485 n.5
(2008)); see also id. (“Devon appears to merely be using Rule 59(e) to fully
develop an argument that it mentioned only in passing in its initial briefing on
this issue in its Response to Mosaic’s Motion to Dismiss.”).
In an abundance of caution, however, the district court went on to consider
the merits of Devon’s claim. It acknowledged that, as Devon argued, the
Supreme Court’s decision in Grable & Sons Metal Products, Inc. v. Darue
Engineering & Manufacturing, 545 U.S. 308 (2005), set forth the appropriate
jurisdictional test—namely, “does [the] state-law claim necessarily raise a stated
federal issue, actually disputed and substantial, which a federal forum may
entertain without disturbing any congressionally approved balance of federal and
state judicial responsibilities.” Aplt. App. at 293 (quoting Grable & Sons, 545
U.S. at 314) (internal quotation marks omitted). Further, the district court noted
that Mosaic’s state-court complaint “certainly references federal law and points to
a violation of federal law.” Id. at 294. However, the court concluded that “there
is no actual dispute over the meaning of the federal law such that [its] claims can
be said to arise under federal law,” id., in that “the BLM’s post-drilling approval
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of the Apache Well may provide [at most] a federal defense to Mosaic’s state-law
causes of action,” id. at 295. This timely appeal followed.
II
A
We review de novo a district court’s dismissal of a complaint for lack of
subject-matter jurisdiction. See Garman v. Campbell Cnty. Sch. Dist. No. 1, 630
F.3d 977, 983 (10th Cir. 2010); Montoya v. Chao, 296 F.3d 952, 954–55 (10th
Cir. 2002) (“We review a dismissal for lack of subject-matter jurisdiction de novo
. . . .”). Federal courts are “courts of limited jurisdiction,” possessing “only that
power authorized by Constitution and statute.” Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546, 552 (2005) (quoting Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377 (1994)) (internal quotation marks omitted); accord
United States v. Green, 405 F.3d 1180, 1184 (10th Cir. 2005). We “presume[]
that a cause lies outside this limited jurisdiction, and the burden of establishing
the contrary rests upon the party asserting jurisdiction.” Kokkonen, 511 U.S. at
377 (citation omitted); see Merida Delgado v. Gonzales, 428 F.3d 916, 919 (10th
Cir. 2005) (“Because the jurisdiction of federal courts is limited, there is a
presumption against our jurisdiction, and the party invoking federal jurisdiction
bears the burden of proof.” (quoting Marcus v. Kan. Dep’t of Revenue, 170 F.3d
1305, 1309 (10th Cir. 1999)) (internal quotation marks omitted)); see also Raley
v. Hyundai Motor Co., 642 F.3d 1271, 1275 (10th Cir. 2011) (“Where an
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appellant fails to lead, we have no duty to follow. It is the appellant’s burden, not
ours, to conjure up possible theories to invoke our legal authority to hear her
appeal.”).
We typically review a district court’s dismissal of a Rule 59(e) motion only
for abuse of discretion. See Ysais v. Richardson, 603 F.3d 1175, 1180 (10th Cir.
2010) (“We review a district court’s denial of a Fed. R. Civ. P. 59(e) motion for
reconsideration under an abuse of discretion standard.” (quoting Barber ex rel.
Barber v. Colo. Dep’t of Revenue, 562 F.3d 1222, 1228 (10th Cir. 2009)) (internal
quotation marks omitted)). However, “[t]he abuse of discretion standard includes
review to determine that the discretion was not guided by erroneous legal
conclusions.” ClearOne Commc’ns, Inc. v. Biamp Sys., 653 F.3d 1163, 1178
(10th Cir. 2011) (quoting Loughridge v. Chiles Power Supply Co., 431 F.3d 1268,
1275 (10th Cir. 2005)) (internal quotation marks omitted). Consequently, we are
obliged to review the merits of purely legal jurisdictional arguments de novo in
order to ensure that the district court did not abuse its discretion by making a
“clear error of judgment or exceed[ing] the bounds of permissible choice in the
circumstances.” Id. (quoting Loughridge, 431 F.3d at 1275) (internal quotation
marks omitted).
On appeal, Devon raises two overarching challenges. First, Devon argues
that the district court erred in dismissing its complaint for lack of subject-matter
jurisdiction. More specifically, it argues that federal jurisdiction exists under two
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different theories: (1) Mosaic’s state-law claims are completely preempted; and
(2) a disputed, substantial federal-law question is embedded in Mosaic’s state-law
claims. Second, and related to the first challenge, Devon argues that the district
court abused its discretion in denying Devon’s Rule 59(e) motion because Devon
presented “new and newly discovered crucial pieces of evidence” that bolstered
its claim that federal subject-matter jurisdiction existed in this case. Aplt.
Opening Br. at 37. Both challenges lack merit.
B
Devon is a plaintiff that seeks declaratory relief. However, the Declaratory
Judgment Act “does not confer jurisdiction upon federal courts, so the power to
issue declaratory judgments must lie in some independent basis of jurisdiction.”
Cardtoons, L.C. v. Major League Baseball Players Ass’n, 95 F.3d 959, 964 (10th
Cir. 1996) (citations omitted). Thus, “in the absence of any pleading that invokes
diversity jurisdiction, [ordinarily] the relevant basis is federal question
jurisdiction under 28 U.S.C. § 1331.” Id.
Under § 1331, federal district courts have “original jurisdiction of all civil
actions arising under the Constitution, laws, or treaties of the United States.” 28
U.S.C. § 1331. “To determine whether [a] claim arises under federal law, [courts]
examine the ‘well[-]pleaded’ allegations of the complaint and ignore potential
defenses . . . .” Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6 (2003); accord
Turgeau v. Admin. Review Bd., 446 F.3d 1052, 1060 (10th Cir. 2006). Under the
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“well-pleaded complaint” rule, “a suit arises under federal law ‘only when the
plaintiff’s statement of his own cause of action shows that it is based’ on federal
law.” Schmeling v. NORDAM, 97 F.3d 1336, 1339 (10th Cir. 1996) (quoting
Louisville & Nashville R.R. v. Mottley, 211 U.S. 149, 152 (1908)); see also Erwin
Chemerinsky, Federal Jurisdiction § 5.2.3, at 295 (6th ed. 2012) (“[I]t must be
clear from the face of the plaintiff’s complaint that there is a federal question.”).
This rule “makes the plaintiff the master of the claim.” Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987); accord Felix v. Lucent Techs., Inc., 387 F.3d
1146, 1154 (10th Cir. 2004). “By omitting federal claims from a complaint, a
plaintiff can [generally] guarantee an action will be heard in state court.” Qwest
Corp. v. City of Santa Fe, 380 F.3d 1258, 1264 n.1 (10th Cir. 2004); see also
Felix, 387 F.3d at 1154 (noting that federal-question jurisdiction exists when
properly pleaded in a plaintiff’s complaint).
The dynamics of the “well-pleaded complaint” rule change in the context of
a declaratory-judgment action like this one, where “the position of the parties
is . . . reversed[] [and] the plaintiff [Devon] asserts a defense to an anticipated
action by the declaratory judgment defendant [Mosaic].” Cardtoons, 95 F.3d at
964. In this situation, “[i]t is the character of [Mosaic’s] action, not [Devon’s]
defense, that determines whether there is federal question jurisdiction.” Id.; see
Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 19 & n.19
(1983) (“Federal courts have regularly taken original jurisdiction over declaratory
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judgment suits in which, if the declaratory judgment defendant brought a coercive
action to enforce its rights, that suit would necessarily present a federal
question.”). Keeping in mind that it is Mosaic’s action that we are concerned
with in this declaratory-judgment context, under the “artful pleading doctrine,”
Mosaic cannot thwart federal court jurisdiction by simply pleading only state-law
claims when “federal questions [] are essential elements of [its] claim[s].”
Turgeau, 446 F.3d at 1060–61 (quoting Schmeling, 97 F.3d at 1339) (internal
quotation marks omitted). However, to invoke federal-question jurisdiction,
Devon must meet its burden and show that at least one of two recognized
exceptions to the well-pleaded complaint rule is applicable—either (1) that
Mosaic’s state-law claims are completely preempted, 4 or (2) there is a substantial,
4
Given that this case implicates a somewhat Byzantine area of the law (i.e.,
preemption), we think it is important to be clear about what we are talking about going
forward. There are three forms of preemption that are frequently discussed in judicial
decisions—express preemption, conflict preemption, and field preemption. See, e.g.,
United Airways, Inc. v. O’Donnell, 627 F.3d 1318, 1324 (10th Cir. 2010) (defining
“express preemption,” “field preemption,” and “conflict preemption” (quoting Mount
Olivet Cemetery Ass’n v. Salt Lake City, 164 F.3d 480, 486 (10th Cir. 1998)) (internal
quotation marks omitted)). In discussing them, we have noted that “[f]ederal statutes can
preempt state statutes either by an express statement of preemption or by implication.”
Tarrant Reg’l Water Dist. v. Herrmann, 656 F.3d 1222, 1241 (10th Cir. 2011). “Express
preemption arises from explicit preemption language in the statute. Implied preemption
includes field preemption or conflict preemption.” Id. For our purposes, it is important to
distinguish these common forms of preemption from the doctrine of complete
preemption—the doctrine at issue here.
In previously making such a distinction, we have referred to the three common
forms of preemption as “ordinary preemption.” See Hansen v. Harper Excavating, Inc.,
641 F.3d 1216, 1221 (10th Cir. 2011); accord Geddes v. Am. Airlines, Inc., 321 F.3d
(continued...)
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disputed federal-law issue necessarily embedded in Mosaic’s state-law claims. 5
4
(...continued)
1349, 1352 (11th Cir. 2003). “[O]rdinary preemption may be invoked in both state and
federal court as an affirmative defense to the allegations in a plaintiff’s complaint. Such a
defense asserts that the state claims have been substantively displaced by federal law.”
Geddes, 321 F.3d at 1352; see Hansen, 641 F.3d at 1221 (noting that “ordinary
preemption” is “a federal defense to a state-law claim under the Supremacy Clause of the
Constitution”). Ordinary preemption “does not render a state-law claim removable to
federal court.” Hansen, 641 F.3d at 1221; see Schmeling, 97 F.3d at 1339 (rejecting the
notion that “a defendant’s assertion of a defense based on federal law, such as the federal
preemption of the state law on which a plaintiff’s claim is based, [is] a proper basis for
removal, even if both parties agree that the only issue for decision in a case is the validity
of a federal preemption defense” (citation omitted)); see also Blab T.V. of Mobile, Inc. v.
Comcast Cable Commc’ns, Inc., 182 F.3d 851, 854 (11th Cir. 1999) (“The presence of a
federal defense does not make the case removable, even if the defense is preemption and
even if the validity of the preemption defense is the only issue to be resolved in the
case.”). On the other hand, as explicated in text infra, complete preemption “makes a
state-law claim ‘purely a creature of federal law,’ and thus removable from state to
federal court from the outset.” Hansen, 641 F.3d at 1221 (quoting Felix, 387 F.3d at
1154–55); see S. Candice Hoke, Preemption Pathologies and Civic Republican Values,
71 B.U. L. Rev. 685, 748 n.295 (1991) (“The Supreme Court has emphasized that
defensively asserted claims of federal preemption cannot, in the absence of applicability
of the complete preemption doctrine, create federal question jurisdiction.”).
Finally, we note that at least one circuit court has suggested that the doctrines of
field preemption and complete preemption are conterminous. See Stuart Weitzman, LLC
v. Microcomputer Res., Inc., 542 F.3d 859, 864 n.4 (11th Cir. 2008) (noting that
“complete preemption” is “also called ‘field preemption’”). However, given that the
former ordinarily refers to a substantive defense and the latter refers to a ground for
removal, we are disinclined to endorse this view. See Sullivan v. Am. Airlines, Inc., 424
F.3d 267, 273 n.7 (2d Cir. 2005) (“[N]o Supreme Court case has ever held the two forms
of preemption to be equivalent. It is true that the defense of field preemption and the
doctrine of complete preemption both rest on the breadth, in some crude sense, of a
federal statute’s preemptive force. The two types of preemption are, however, better
considered distinct.”).
5
In addition to these common-law exceptions, Congress may authorize
specific exceptions to the well-pleaded complaint rule. See Verlinden B.V. v. Cent. Bank
(continued...)
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1
Devon argues that federal jurisdiction is appropriate here because Mosaic’s
claims are completely preempted by the interplay between the MLA, the 1986
Order, and the APA. Mosaic on the other hand argues that there cannot be
complete preemption because no federal statute provides the foundation for such
preemption in this action.
“The ‘complete preemption’ doctrine has been referred to as a corollary, or
an exception, to the well[-]pleaded complaint rule.” Schmeling, 97 F.3d at 1339
(citations omitted); see Caterpillar, 482 U.S. at 393; Hansen, 641 F.3d at 1220.
Ordinarily, “[n]either the plaintiff’s anticipation of a federal defense nor the
defendant’s assertion of a federal defense is sufficient to make the case arise
under federal law.” Turgeau, 446 F.3d at 1060; accord Rivet v. Regions Bank of
La., 522 U.S. 470, 475 (1998). However, “[w]hen the [complete-preemption]
doctrine is properly invoked, a complaint alleging only a state law cause of action
may be removed to federal court on the theory that federal preemption makes the
state law claim ‘necessarily federal in character.’” Schmeling, 97 F.3d at 1339
(quoting Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 63–64 (1987)); see Hansen,
5
(...continued)
of Nig., 461 U.S. 480, 494–95 (1983) (stating that the limitations imposed under § 1331
are not limitations on congressional power to confer jurisdiction on inferior federal courts
under Article III of the Constitution). For example, it has done so in the context of
federal officers or agencies sued or prosecuted in state court. See 28 U.S.C. § 1442; see
also Jefferson Cnty., Ala. v. Acker, 527 U.S. 423, 430–31 (1999) (describing operation of
§ 1442).
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641 F.3d at 1221 (noting that “complete preemption makes a state-law claim . . .
removable from state to federal court from the outset”); see also Black’s Law
Dictionary 324 (9th ed. 2009) (defining the “complete-preemption doctrine” as
“[t]he rule that a federal statute’s preemptive force may be so extraordinary and
all-encompassing that it converts an ordinary state-common-law complaint into
one stating a federal claim for purposes of the well-pleaded-complaint rule”).
“Complete preemption is a rare doctrine,” Cmty. State Bank v. Strong, 651
F.3d 1241, 1260 n.16 (11th Cir. 2011), one that represents an “extraordinary
pre-emptive power,” Taylor, 481 U.S. at 65. The circumstances are so rare in fact
that the Supreme Court has recognized complete preemption in only three areas:
§ 301 of the Labor Management Relations Act of 1947 (“LMRA”), § 502 of the
Employee Retirement Income Security Act of 1974 (“ERISA”), and actions for
usury against national banks under the National Bank Act. See Hansen, 641 F.3d
at 1221; see also Avco Corp. v. Aero Lodge No. 735, Int’l Ass’n of Machinists &
Aerospace Workers, 390 U.S. 557, 560–61 (1968) (LMRA); Taylor, 481 U.S. at
62–63 (ERISA), and Anderson, 539 U.S. at 3–4 (National Bank Act).
Consequently, the Supreme Court has warned that complete preemption should
not be “lightly implied.” Bill Johnson’s Rests., Inc. v. NLRB, 461 U.S. 731, 752
(1983) (Brennan, J., concurring); see also Schmeling, 97 F.3d at 1340 (noting that
the Supreme Court has extended this doctrine “reluctantly”). Further, for the
complete-preemption doctrine to apply, the challenged claims must “fall within
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the scope of federal statutes intended by Congress completely to displace all state
law on the given issue and comprehensively to regulate the area.” Hansen, 641
F.3d at 1221. That is, the asserted federal statute must “so pervasively regulate
[its] respective area[]” that it leaves no room for state-law claims. 6 Id.
In Schmeling, we explained that
[w]e read the term [“complete preemption”] not as a crude
measure of the breadth of the preemption (in the ordinary sense)
of a state law by a federal law, but rather as a description of the
specific situation in which a federal law not only preempts a state
law to some degree but also substitutes a federal cause of action
for the state cause of action, thereby manifesting Congress’s
intent to permit removal.
97 F.3d at 1342; see Anderson, 539 U.S. at 8 (“When the federal statute
completely pre-empts the state-law cause of action, a claim which comes within
the scope of that cause of action, even if pleaded in terms of state law, is in
6
We note that the MLA—the federal statute giving rise to the 1986
Order—does not, in itself, provide a “pervasive” regulatory scheme intended to occupy
the entire field of federal mineral lands regulation. See, e.g., Kirkpatrick Oil & Gas Co.
v. United States, 675 F.2d 1122, 1124 (10th Cir. 1982) (“Through the [MLA] . . . ,
Congress has prescribed limited, but not exclusive, controls over the leasing of federal
lands for oil and gas production.” (emphasis added)); Tex. Oil & Gas Corp. v. Phillips
Petroleum Co., 406 F.2d 1303, 1304 (10th Cir. 1969) (affirming the district court’s
conclusion that “nothing in the [MLA] indicat[es] a Congressional intent to assert
exclusive control of federal lands leased for oil and gas development”); see also Aplee.
Br. at 31–32 (collecting cases). Because the underlying federal statute does not occupy
the entire field—that is, because the MLA does not completely regulate all activities
related to mineral development on federal lands, including disputes between two private
parties, see Aplt. Reply Br. at 19 (“[T]he [MLA] generally does not govern dealings
between private lessees on federal lands[.]”)—it would seem to follow ineluctably that an
order promulgated pursuant to the MLA, such as the 1986 Order, cannot occupy the entire
field either.
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reality based on federal law.”); see also 14B Charles Alan Wright, Arthur R.
Miller, & Edward H. Cooper, Federal Practice and Procedure § 3722.2, at
403–09 (4th ed. 2009) (“In [the case of complete preemption], federal law does
not merely preempt a state law to some degree; rather, it substitutes a federal
cause of action for the state cause of action, thereby manifesting Congress’s
intent to permit removal.”).
Thus, we have held that a claim of complete preemption demands a
two-part analysis: first, we ask whether the federal regulation at issue preempts
the state law relied on by the plaintiff; and second, “whether Congress intended to
allow removal in such [a] case[], as manifested by the provision of a federal cause
of action to enforce the [federal] regulation[].” 7 Schmeling, 97 F.3d at 1342. We
7
In Anderson, the Supreme Court held that a state claim may be removed to
federal court in only two circumstances: (1) “when Congress expressly so provides”; or
(2) “when a federal statute wholly displaces the state-law cause of action through
complete pre-emption.” 539 U.S. at 8. In providing further guidance concerning the
requirements for complete preemption, the Court observed that “the proper inquiry
focuses on whether Congress intended the federal cause of action to be exclusive rather
than on whether Congress intended that the cause of action be removable . . . .” Id. at 9
n.5 (emphasis added); see id. at 9 (noting that “[o]nly if Congress intended” for the
statutory provision authorizing a federal claim for usury “to provide the exclusive cause
of action for usury claims against national banks would the statute be comparable to the
provisions” the Court previously had held effected complete preemption of state-law
claims (emphasis added)).
Anderson’s formulation of the complete-preemption test ultimately may require us
to reformulate the test we set out in Schmeling. See Briarpatch Ltd., L.P. v. Phoenix
Pictures, Inc., 373 F.3d 296, 304–05 (2d Cir. 2004) (“Given the Supreme Court’s
approach in Anderson, we conclude that it means to extend the complete preemption
doctrine to any federal statute that both preempts state law and substitutes a federal
(continued...)
-18-
have cautioned, however, that courts should begin their inquiry with the second
prong. Id. at 1343 (explaining that the interests of “comity and prudence” dictate
that courts avoid addressing needlessly the first prong, which will frequently
require a discussion of the merits of the preemption defense).
In this case, the district court applied the second prong of the Schmeling
complete-preemption test when it dismissed Devon’s complaint on the ground that
the lack of a substitute federal remedy precluded a finding of complete
preemption. Although on appeal Devon concedes that “Congress [did not]
provide[] Mosaic with a private remedy under the []MLA,” 8 Aplt. Opening Br. at
18, it nevertheless argues that “Congress . . . provided Mosaic with a private
7
(...continued)
remedy for that law, thereby creating an exclusive federal cause of action.”); Hoskins v.
Bekins Van Lines, 343 F.3d 769, 776 (5th Cir. 2003) (observing that Anderson “shift[ed
the] focus from Congress’s intent that the claim be removable, to Congress’s intent that
the federal action be exclusive”). However, we decline to do so here because the potential
substantive difference in the two analytical frameworks is not implicated. We are in
substantial agreement with the district court’s statement that “Congress’s intent to create a
federal cause of action is essential under both formulations of the rule,” and “[i]f
Congress did not create a federal cause of action, th[e]n it clearly did not intend that the
federal law be exclusive or removable.” Aplt. App. at 132 n.2 (emphasis added). As
discussed infra, Congress did not create a relevant federal cause of action here.
8
This certainly appears to be true under both the MLA and the 1986 Order
promulgated thereunder. We have previously held that two different provisions in the
MLA do not create a private right of action. See Cuba Soil & Water Conservation Dist. v.
Lewis, 527 F.3d 1061, 1062 (10th Cir. 2008) (concluding that § 191 of the MLA does not
create a private right of action to enforce its provisions regarding appropriation of MLA
monies); Pullman v. Chorney, 712 F.2d 447, 450 (10th Cir. 1983) (holding that § 42
allows private litigants only the right to seek the administrative remedy of cancellation of
leases awarded by the Secretary of the Interior). Likewise, we have never found that the
1986 Order provides a substitute federal remedy.
-19-
remedy of an appeal of the BLM’s decision under 43 C.F.R. and the APA, which
if Mosaic had been successful in such an appeal might have resulted in the
plugging and abandonment of the Apache Well,” id.; see also Aplt. App. at 93
(Pl.’s Mem. in Resp. to Def.’s 12(b)(1) Mot. to Dismiss for Lack of Subject-
Matter Jurisdiction, filed Aug. 26, 2010) (arguing that “Mosaic has a private
federal remedy under the APA against the BLM[, namely], appealing or protesting
the BLM’s approval of the Apache Well”). This argument is unavailing.
It is unquestioned that Mosaic had a right to challenge the BLM’s ultimate
approval of the Apache Well site. However, as the district court noted, “Devon
misconstrues the purpose of the private right of action element of the ‘complete
preemption’ doctrine. While Mosaic may have been able to appeal the BLM’s
approval of the Apache Well, the availability of an administrative remedy against
the BLM has no bearing on whether Mosaic’s state law claims against Devon have
been completely supplanted by a private federal cause of action.” Aplt. App. at
134 (emphases added).
Even though the APA “provide[s] [Mosaic] with a right of judicial review
of agency action,” Hamilton v. Gonzales, 485 F.3d 564, 568 (10th Cir. 2007)
(emphasis added); see Tewa Tesuque v. Morton, 498 F.2d 240, 243 (10th Cir.
1974) (“It is fundamental that a party suing under the APA must have suffered a
legal wrong because of agency action or inaction.”), Mosaic is not challenging
here any action or inaction by the BLM. Rather, Mosaic is “challenging Devon’s
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drilling of the well when it had no approval from the BLM to do so.” Aplee. Br.
at 29. As Mosaic explained, “[b]ecause the BLM prevented Devon from drilling
the Apache Well at the location where Devon drilled anyway, Mosaic has no
agency action to challenge. The only actions Mosaic contests are Devon’s.” Id.
Thus, even if pursuing relief through the APA might ultimately have resulted in
the Apache Well being plugged and abandoned, it would not have compensated
Mosaic for any damages stemming from Devon’s initial act of drilling at an
unapproved well site. Hence, the APA does not provide Mosaic with “a federal
cause of action to enforce the [federal] regulation[],” Schmeling, 97 F.3d at 1343,
and complete preemption is not available in this case. 9
Devon argues that this result is inconsistent with our observation in
Schmeling that, “although a federal cause of action is a prerequisite to removal
under the complete preemption doctrine, the federal cause of action need not
provide the same remedy as the state cause of action.” Id.; see also Aplt.
Opening Br. at 18. As Devon would have it, the remedies available under the
APA are sufficient, even if inferior, to those that might otherwise be available to
Mosaic through its state-law claims. We continue to observe that mirror-like
symmetry between the federal and state remedies is not required to support a
9
Nor does the collective interplay between the MLA, APA, and the 1986
Order alter this analysis and require complete preemption. See Aplt. Opening Br. at 8.
Just as Devon admitted that the MLA does not provide a federal remedy to Mosaic’s
state-law claims, neither the APA nor the 1986 Order provides a substitute federal
remedy.
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determination of complete preemption. See Schmeling 97 F.3d at 1343.
However, we believe that the federal remedy at issue must vindicate the same
basic right or interest that would otherwise be vindicated under state law. See Ry.
Labor Execs. Ass’n v. Pittsburgh & Lake Erie R.R., 858 F.2d 936, 942 n.2 (3d
Cir. 1988) (“The issue is not whether the federal law provides the same remedy
available to the plaintiff under state law, but rather whether there is some
vindication for the same interest.” (emphasis added)); cf. Caterpillar, 482 U.S. at
391 n.4 (noting that the “breadth or narrowness of the relief which may be
granted under federal law . . . is a distinct question from whether the court has
jurisdiction over the parties and the subject matter” (quoting Avco Corp., 390
U.S. at 561) (internal quotation marks omitted)). Mosaic seeks to assert state-law
claims that relate to a distinct interest—namely, an interest in being free from
harm from parties drilling without first obtaining the BLM’s approval. In our
view, this interest is too far removed from the interest that would be vindicated by
an APA proceeding—viz., an interest in ensuring (insofar as it impacts Mosaic’s
potash mining) that the BLM properly manages the Potash Area, including well
sites. Cf. Schmeling, 97 F.3d at 1343.
2
Devon also contends that even if we do not find that Mosaic’s claims are
completely preempted, federal-question jurisdiction should still attach here
because of substantial and disputed federal issues that are embedded in Mosaic’s
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state-law claims. 10 On the other hand, Mosaic argues that Devon is improperly
attempting to establish subject-matter jurisdiction by asserting what are nothing
more than federal defenses and that the Supreme Court’s decision in Grable &
Sons does not provide a basis for Devon to proceed in federal court. Ordinarily,
federal-question jurisdiction is invoked by plaintiffs pleading a cause of action
created by federal law. See Grable & Sons, 545 U.S. at 312. The Supreme Court,
however, has recognized “that in certain cases federal-question jurisdiction will
lie over state-law claims that implicate significant federal issues.” Id.; accord
Schmeling, 97 F.3d at 1339. Under this theory, federal jurisdiction may attach
10
Mosaic asserts that we should not consider Devon’s arguments on appeal
regarding the Supreme Court’s decision in Grable & Sons because Devon did not present
the case to the district court, or argue that it applied, until its Rule 59(e) motion. We do
not agree for at least two reasons. First, in its response to Mosaic’s motion to dismiss,
Devon argued that “[e]ven if the Court finds that complete preemption is not present in
this case, the Court still has federal question jurisdiction because Mosaic’s claims require
this Court to construe federal law.” Aplt. App. at 98. Further, Devon argued that by
reaching the merits of Mosaic’s claim, the district court “would have to determine
whether the BLM’s decision to approve of the Apache Well location as drilled was
improper.” Id. at 99. In sum and substance, this is an argument that federal-question
jurisdiction is proper under the principles of Grable & Sons. Second, “[f]ederal courts
have an independent obligation to determine whether subject-matter jurisdiction exists . . .
at any stage in the litigation,” 1mage Software, Inc. v. Reynolds & Reynolds Co., 459 F.3d
1044, 1048 (10th Cir. 2006) (quoting Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006))
(internal quotation marks omitted), and this jurisdictional argument cannot be resolved
properly without application and discussion of the Supreme Court’s controlling decision
in Grable & Sons, see Hicks v. Gates Rubber Co., 928 F.2d 966, 970 (10th Cir. 1991)
(noting that an exception to ordinary waiver principles applies “where the jurisdiction of a
court to hear a case is questioned”); cf. Finstuen v. Crutcher, 496 F.3d 1139, 1145 n.3
(10th Cir. 2007) (“[J]urisdictional issues are among the exceptional questions that we will
hear even though they were not raised below. To the extent OSDH’s new arguments
implicate our Article III jurisdiction, we will therefore address them.” (citation omitted)).
-23-
where a “state-law claim necessarily raise[s] a stated federal issue, actually
disputed and substantial, which a federal forum may entertain without disturbing
any congressionally approved balance of federal and state judicial
responsibilities.” Grable & Sons, 545 U.S. at 312 (emphases added); accord
Nicodemus v. Union Pac. Corp., 440 F.3d 1227, 1235–36 (10th Cir. 2006).
In other words, to establish federal-question jurisdiction under the Grable
& Sons test, a state-law claim (1) must necessarily raise a federal claim that is
both (2) actually disputed and (3) substantial; and (4) that may be resolved in a
federal forum without disturbing the balance of federal and state judicial
responsibilities. This formulation ensures that “[t]he presence of a federal issue
. . . is not necessarily ‘a password opening federal courts to any state action
embracing a point of federal law.’” Nicodemus, 440 F.3d at 1235 (quoting Grable
& Sons, 545 U.S. at 314). We ultimately conclude that Devon has not carried its
burden of establishing federal-question jurisdiction under Grable & Sons’s first
and second factors. Accordingly, we refrain from analyzing and ruling on the
other two factors.
Devon specifically argues that “the District Court clearly had federal
question jurisdiction over Devon’s Complaint because the essential elements of
Mosaic’s state claims . . . require[d] [it] to resolve the disputed and substantial
interpretation of the []MLA and the 1986 Order.” Aplt. Opening Br. at 22. In
particular, Devon posits that resolution of Mosaic’s claims will require a court to
-24-
decide “whether the BLM’s approval of Devon’s entry on the Secretary’s Potash
Area and its approval of the Apache Well w[ere] retroactive,” and whether “the
BLM ha[d] the authority to make such decisions retroactive under the []MLA and
the 1986 Order.” Id. Moreover, Devon suggests that this case brings into
question the BLM’s determination that no undue waste of potash has occurred. It
claims that the BLM is vested with the exclusive authority to determine whether
waste did, in fact, occur, and that Mosaic’s state-law claims amount to a collateral
attack on those determinations because its claims ultimately require a finding as
to damages. Devon contends that these issues mean that Mosaic’s case-in-chief
presents a “federal question regarding the correct interpretation of the []MLA and
the 1986 Order,” as well as the BLM’s authority vested thereunder. Id. at 33.
Devon’s argument is bootless, particularly because Mosaic’s contemplated
state-law causes of action do not present a disputed federal issue that a court
necessarily must decide. See Grable & Sons, 545 U.S. at 312–14. At the outset,
it is important to note that Devon does not (and cannot) dispute that its drilling in
the Potash Area in realtime was without the BLM’s permission and authorization.
See Aplt. Reply Br. at 4 (“[The] BLM . . . has the exclusive authority to
determine when and where one lessee may explore and produce his lease in
relation to . . . other lessee[s].”). Thus, even assuming arguendo that this federal
matter of the BLM’s drilling authorization would have been a necessary issue in
Mosaic’s lawsuit, it is not the subject of an actual dispute. And we hold that
-25-
Mosaic’s state-law claims do not otherwise present federal-law issues that a court
necessarily must resolve in adjudicating those claims. In particular, the district
court rightly operated on the premise that Mosaic’s claims would focus on
seeking redress from Devon for alleged harm caused by its drilling during the
time Devon lacked BLM authority to do so. Devon has failed to demonstrate that,
in prosecuting those claims, Mosaic necessarily must challenge the BLM’s
exclusive authority to authorize well sites in the Potash Area.
Further, Devon would have us believe that the BLM’s later approval of the
well site demonstrates that the BLM wished to signal that Devon did no wrong, or
at least that its wrongdoing was retroactively cured. However, even if this line of
argument were plausible, that would not mean that such federal matters relating to
BLM’s conduct necessarily would need to be addressed by a court in adjudicating
Mosaic’s state-law claims against Devon. They might serve as viable federal
defenses to Mosaic’s claims, but Devon has not demonstrated that they would be
more than that.
We recognize that a disputed federal issue could possibly be raised by
Mosaic’s claims. But that is not enough. In this regard, Devon argues that “[t]he
lawsuit would require the state court to find, contrary to the BLM’s approval of
the [well site,] that the drilling of the well would interfere with the mining and
recovery of potash deposits . . . and that the well would constitute a waste of
potash deposits.” Id. at 10. In order to find damages in this case, a factfinder
-26-
may well have to find that there was potash waste. Such a finding could possibly
contradict the BLM’s finding that Devon’s Apache Well site, as drilled, would not
“result in undue waste of potash deposits,” 1986 Order § 3(III)(A)(2) (emphasis
added), but we cannot say that it necessarily would.
Indeed, in this vein, it is unclear whether Mosaic’s suit could ever impinge
on the BLM’s “exclusive authority” to make determinations regarding undue
waste of potash deposits because the BLM does so only for the limited purpose of
granting or denying oil and gas development leases. See id. § 3(III). As a result,
a state court’s decision pertaining to Devon’s assumed trespass does not
necessarily draw into question the exclusivity of the BLM’s authority as it relates
to postash-waste determinations for this limited leasing purpose. Cf. Chuksa
Energy Co. v. Mobil Exploration & Producing N. Am., Inc., 854 F.2d 727, 731
(5th Cir. 1988) (“The regulatory scheme of the [Indian Mineral Leasing Act] only
pervades the actual alienation of the mineral rights from the Indian grantors. The
dispute between Chuska and Mobil is over the consequences of regulatory
requirements on their contract [and therefore no federal question is implicated].”
(emphasis added)). In any event, the important point is that these possible federal
issues are not necessarily raised by Mosaic’s claims. Such issues might well be
employed by Devon as federal defenses to Mosaic’s claims, but federal-question
jurisdiction does not lie as a result. See Turgeau, 446 F.3d at 1060 (holding that
the availability of a federal defense does not implicate federal-question
-27-
jurisdiction); accord Rivet, 522 U.S. at 475.
Our rejection of Devon’s argument for federal-question
jurisdiction—predicated here upon a substantial-federal-issue theory—is strongly
reinforced by an examination of the Supreme Court’s decision in Grable & Sons
and our precedent in Nicodemus. In both cases, federal-question jurisdiction was
found to be present under this theory, but these cases are clearly distinguishable
from what is now before us. First, in Grable & Sons, the Court was called upon
to determine the extent to which a federal-tax issue was embedded in a state-law
quiet-title claim. The Internal Revenue Service (“IRS”) seized the property of the
plaintiff, Grable & Sons, to satisfy a tax delinquency. The IRS then sold the
property to a third party and provided a quitclaim deed. Five years later, Grable
& Sons brought a quiet-title action against the third party in state court. Although
Grable & Sons conceded that it got actual notice of the seizure from the IRS, it
claimed that the third party’s record title was invalid because the IRS had not
strictly complied with its own applicable notice provisions. The third party
removed the case to federal court, arguing that the quiet-title claim, even though
created by state law, required the interpretation of the federal tax statute’s notice
provision—a substantial embedded federal issue.
In determining the outcome in Grable & Sons, as noted supra, the Court set
out a four-prong approach—viz., to establish federal-question jurisdiction, a
state-law claim: (1) must necessarily raise a federal claim; (2) that is actually
-28-
disputed; (3) that is also substantial; and (4) that may be resolved in a federal
forum without disturbing the balance of federal and state judicial responsibilities.
See Grable & Sons, 545 U.S. at 314. And, in employing this test, the Court held
that Grable & Sons’s quiet-title state cause of action met all four prongs. As
relevant here, regarding the first element of the test, the Court noted that the
federal tax issue was necessarily raised because state law required Grable & Sons
to specify the facts establishing the superiority of its title, and the only basis for
the plaintiff to claim a superior title would be that the IRS failed to give proper
notice under federal law. See id. at 315. And, as to the second element, the
Court noted that “the meaning of the federal [tax] statute is actually in dispute.”
Id.
Likewise, in Nicodemus, the plaintiffs had alleged, inter alia, a state-law
claim for unjust enrichment based upon the defendant railroad’s decision to enter
into licensing agreements with various telecommunications providers—from
which the defendant received revenue—that would permit the providers to use the
defendant’s right-of-way over the plaintiffs’ land for purposes of installing and
maintaining fiber-optic cables. The defendant’s right-of-way was a railroad right-
of-way granted pursuant to federal land-grant statutes. The plaintiffs alleged that,
by entering into the licensing agreements, the defendant had “exceeded the scope
of [its] rights under the federal land-grant statute[s].” 440 F.3d at 1234.
We concluded that federal-question jurisdiction was present in Nicodemus
-29-
under a substantial-federal-issue theory. Of relevance here, we rejected the
plaintiffs’ contention that “the federal issue only arises as a defense to their
claims and thus it is an inappropriate basis on which to assume federal-question
jurisdiction.” Id. To the contrary, we reasoned, “Plaintiffs’ specific allegations
of unjust enrichment are derived not from the alleged trespass, but from misuse of
the right-of-way.” Id. at 1235. We determined that “[t]o prove that [defendant]
acted unlawfully, Plaintiffs [had to] establish that the right-of-way prohibited the
use to which it was put. The federal issue, therefore, ar[ose] in Plaintiffs’ case-
in-chief, not by way of defense.” Id. Furthermore, we found it “clear that the
federal question [wa]s actually disputed. In fact, construction of the federal land
grant appear[ed] to be the only legal or factual issue contested in the case.” Id. at
1236.
The facts of this case stand in stark contrast to those in Grable & Sons and
Nicodemus. In both of those cases, it was necessary for the court to interpret a
disputed issue of federal-law in order for the plaintiffs to establish their state-law
claims. In the case of Grable & Sons, this involved interpreting the federal tax
code’s notice provisions, see Grable & Sons, 545 U.S. at 315, and in Nicodemus it
involved construing the right-of-way provisions of certain federal land-grant
statutes, Nicodemus, 440 F.3d at 1236–37. Here, as to the federal issues that
possibly could be in dispute, we discern no such necessary involvement—viz.,
they need not necessarily be addressed in resolving Mosaic’s contemplated state-
-30-
law claims. In particular, there is only a possibility that a federal issue might
arise relative to the BLM’s determination that there would be no undue potash
waste associated with the as-drilled Apache site. Such a possibility is not enough.
Simply put, Mosaic’s contemplated state-law claims do not necessarily raise a
disputed federal issue and thus do not fit into the “special and small category” of
cases that can trigger federal-question jurisdiction under the Grable & Sons’s test.
Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006); see
id. at 701 (reaffirming the Grable & Sons’s test and stating that cases achieving
jurisdiction under Grable & Sons fall into a “slim category”). Consequently, the
district court was correct in dismissing Devon’s complaint for lack of
subject-matter jurisdiction.
C
Devon’s final claim is that the district court erred in denying its Rule 59(e)
motion because Devon presented to the district court “manifest law” and “many
new . . . pieces of evidence,” including Mosaic’s actual state-court complaint and
the BLM’s file on the Apache Well. See Aplt. Opening Br. at 37. Further, Devon
argues that this manifest law and new evidence demonstrated that federal-question
jurisdiction was proper in this case. Mosaic argues that Devon’s Rule 59(e)
motion was improper because, by presenting this additional material, Devon was
simply attempting to relitigate matters that already had been decided by the
-31-
district court. 11
As noted, we review challenges to a district court’s denial of a Rule 59(e)
motion for an abuse of discretion, see ClearOne Commc’ns, Inc., 653 F.3d at
1178; so long as the district court did not make a “clear error of judgment” or
“exceed[] the bounds of permissible choice” in denying the motion, its decision
will be affirmed, id. (quoting Loughridge, 431 F.3d at 1275) (internal quotation
marks omitted). However, we are obliged to review the merits of Devon’s purely
legal jurisdictional arguments de novo. Id.
“Grounds warranting a [Rule 59(e)] motion to reconsider include (1) an
intervening change in the controlling law, (2) new evidence previously
11
Mosaic also contends in passing that arguments made by Devon in a
supplemental brief in support of its Rule 59(e) motion should be essentially barred as
untimely. See Aplee. Br. at 40 (“Devon tried for a third time to support its argument that
Mosaic’s claims raised a federal issue and jurisdiction existed when it filed it[s]
Supplemental Rule 59(e) motion. . . . [That motion] was untimely.” (emphasis added)).
This argument, however, reflects an improper characterization of Devon’s filing. That
filing was exactly what it was termed—viz., supplemental, supportive briefing for
Devon’s timely filed Rule 59(e) motion. It was not a separate motion. The district court
did not necessarily abuse its considerable discretion by taking into account the substance
of Devon’s supplemental arguments covering, generally speaking, some of the same
jurisdictional terrain as the timely filed Rule 59(e) motion already before it, especially
since Mosaic had an opportunity before the district court to respond to Devon’s
supplemental arguments and, in fact, did so, see Aplt. App. at 264 (Def.’s Resp. to Pl.’s
Opposed Rule 59(e) Mot. & Br. to Alter or Amend the Court’s Order Dismissing Pl.’s
Compl., filed Nov. 29, 2010) (“Even if the Court wishes to consider the Supplement [of
Devon], its arguments are incorrect and without merit.”). Cf. Christian v. Mattel, Inc.,
286 F.3d 1118, 1129 (9th Cir. 2002) (“The district court has considerable latitude in
managing the parties’ motion practice and enforcing local rules that place parameters on
briefing.”). And Mosaic has not come close to demonstrating that the district court
abused its discretion in this regard.
-32-
unavailable, and (3) the need to correct clear error or prevent manifest injustice.”
Servants of Paraclete v. Does, 204 F.3d 1005, 1012 (10th Cir. 2000); accord
Brumark Corp. v. Samson Res. Corp., 57 F.3d 941, 948 (10th Cir. 1995); see also
McDowell v. Calderon, 197 F.3d 1253, 1255 (9th Cir. 1999) (“A motion for
reconsideration under Rule 59(e) ‘should not be granted, absent highly unusual
circumstances, unless the district court is presented with newly discovered
evidence, committed clear error, or if there is an intervening change in the
controlling law.’” (emphasis omitted) (quoting 389 Orange St. Partners v. Arnold,
179 F.3d 656, 665 (9th Cir.1999))).
At the outset, we note our agreement with the district court’s assessment of
the legal arguments of Devon’s Rule 59(e) motion. Devon’s substantial-federal-
issue argument, which was predicated on Grable & Sons, evinced an attempt to
relitigate—in more expansive fashion—a legal position it had raised in its
response to the motion to dismiss and, as such, the argument was not properly
presented. See Aplt. App. at 292 (“Devon appears to merely be using Rule 59(e)
to fully develop an argument that it mentioned only in passing in its initial
briefing on this issue in its Response to Mosaic’s Motion to Dismiss.”). In any
event, for the reasons discussed in Part II.B.2, supra, the district court’s legal
conclusions were sound in rejecting this argument on the merits; therefore, the
court did not abuse its discretion.
Furthermore, we do not discern an abuse of discretion in the district court’s
-33-
rejection of Devon’s Rule 59(e) argument based upon “newly discovered”
evidence. The district court concluded that the substance of the evidence that
Devon offered in its Rule 59(e) motion was before it prior to ruling on the motion
to dismiss, even if the specifics were not. Devon disagrees, arguing that its
evidence reveals new and important facts, including (1) the extent to which
Mosaic would “rely on the 1986 Order for the basis of its claims and its damage
model,” Aplt. Opening Br. at 38; (2) the fact that “the BLM had been present as
the Apache Well was being drilled and took no steps to prevent the Apache
Well’s drilling and completion, which . . . adds further credence to the fact that
the Apache Well was indeed authorized retroactively to the date it was drilled,”
id.; and (3) the fact that “the BLM had contemplated and ultimately rejected the
plugging and abandonment of the Apache Well,” id. at 38–39. On this last point,
Devon claims that the BLM’s report “provided the District Court [with]
unequivocal evidence that Mosaic did have a remedy under the APA” and, if
Mosaic had properly pursued such a remedy, it at least had the opportunity to
have the Apache Well plugged and abandoned. Id. at 39.
However, reviewing Devon’s “newly discovered” evidence, it is patent that
the district court did not abuse its discretion. “Where a party seeks Rule 59(e)
relief to submit additional evidence, the movant must show either that the
evidence is newly discovered [or] if the evidence was available at the time of the
decision being challenged, that counsel made a diligent yet unsuccessful effort to
-34-
discover the evidence.” Somerlott v. Cherokee Nation Distribs., Inc., --- F.3d
----, No. 10-6157, 2012 WL 3055566, at *8 (10th Cir. July 27, 2012) (alteration in
original) (quoting Comm. for First Amendment v. Campbell, 962 F.2d 1517, 1523
(10th Cir. 1992)) (internal quotation marks omitted). Although Devon points to a
number of specific facts that it claims could not have been anticipated by the
district court, it does not adequately explain why this evidence should undermine
our confidence in the district court’s determination. We have indicated in an
analogous context that newly discovered evidence must be “of such a nature as
would probably produce a different result.” Kan. City S. Ry. v. Cagle, 229 F.2d
12, 15 (10th Cir. 1956); accord Joseph v. Terminix Int’l Co., 17 F.3d 1282, 1285
(10th Cir. 1994); Graham v. Wyeth Labs., 906 F.2d 1399, 1416 (10th Cir. 1990). 12
Similarly, in order to support a Rule 59(e) motion, we have required the
aggrieved party to demonstrate “how newly discovered evidence warranted relief
from dismissal.” Computerized Thermal Imaging, Inc. v. Bloomberg, L.P., 312
F.3d 1292, 1300 (10th Cir. 2002); see Comm. for First Amendment, 962 F.2d at
1523–24 (finding no abuse of discretion in the district court’s denial of a Rule
59(e) motion on the ground that, inter alia, the “proffered [new] evidence . . .
would not produce a different result”). Considering our analysis of the district
court’s ruling on the motion to dismiss, we cannot discern any basis upon which
12
New evidence will not support a different result where it is “merely
cumulative.” Joseph, 17 F.3d at 1285; accord Graham, 906 F.2d at 1416–17.
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Devon’s purportedly new evidence would produce a different result, and Devon
has not given us one. Thus, we conclude that the district court did not abuse its
discretion in denying Devon’s Rule 59(e) motion.
III
For the foregoing reasons, the district court’s dismissal of Devon’s
complaint and its order denying Devon’s Rule 59(e) motion are AFFIRMED.
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