NO. 10-

In theIn theIn theIn theIn the

Supreme Court of the United StatesSupreme Court of the United StatesSupreme Court of the United StatesSupreme Court of the United StatesSupreme Court of the United States

CITY OF LOVELAND, OHIO,Petitioner,

v.

BOARD OF COMMISSIONERS OFHAMILTON COUNTY, OHIO, ET AL.

On Petition for Writ of Certiorari to the UnitedStates Court of Appeals for the Sixth Circuit

PETITION FOR WRIT OF CERTIORARI

Stephen P. Samuels Counsel of RecordNicole R. WoodsSCHOTTENSTEIN, ZOX &DUNN, CO., LPA250 West StreetColumbus, OH 43215T: (614) 462-2700ssamuels@szd.com

Counsel for Petitioner

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

January 25, 2011

Patricia A. MillettAKIN, GUMP, STRAUSS, HAUER

& FELD, LLP1333 New Hampshire Ave., NWWashington, DC 20036T: (202) 887-4450

R. Guy TaftFranklin A. Klaine, Jr.Joseph J. BraunSTRAUSS & TROY

Federal Reserve Building150 East Fourth StreetCincinnati, Ohio 45202T: (513) 621-2120

i

QUESTIONS PRESENTED

I. Whether a state law claim raises a substantialfederal question such that the action “arisesunder” federal law when the question does notrequire the determination of an important anddisputed point of federal law, but insteadentails only the application of settled federallaw to the specific facts of the state-law case.

II. Whether a state-court defendant can evade thewell-pleaded complaint rule, which prohibitsremoval based on a federal defense orcounterclaim, by filing an original declaratoryjudgment action in federal court after the state-court action has commenced seeking preemptiveadjudication of the federal defense orcounterclaim.

III. Whether the potential impact of adjudication ofa state-law claim on a federal court consentdecree constitutes a federal question sufficientto create federal jurisdiction under 28 U.S.C.§ 1331.

IV. Whether this Court should grant review todecide the question reserved in Taylor v.Sturgell, 553 U.S. 880 (2008): whether a non-party is bound by a federal judgment basedsolely on conduct that induced reliance byparties to that judgment.

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PARTIES TO THE PROCEEDINGS IN THE SIXTH CIRCUIT

Petitioner is the City of Loveland, Ohio, which wasthe defendant in district court and appellant in thecourt of appeals.

Respondents are the Board of Commissioners ofHamilton County, Ohio, which was a plaintiff indistrict court and appellee in the court of appeals. TheCity of Cincinnati, Ohio, was an intervenor-plaintiff inthe district court and appellee in the court of appeals.

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TABLE OF CONTENTS

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDINGS IN THESIXTH CIRCUIT . . . . . . . . . . . . . . . . . . . . . . . . ii

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . iii

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . vi

PETITION FOR A WRIT OF CERTIORARI . . . . . 1

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

RELEVANT STATUTORY PROVISIONS . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . 2

REASONS FOR GRANTING THE WRIT . . . . . . . 5

I. THE COURT OF APPEALS’ CREATION OFFEDERAL COURT JURISDICTIONCONFLICTS WITH THE DECISIONS OFOTHER CIRCUITS IN TWO RESPECTS ANDSCRIPTS AN END RUN OF THIS COURT’SL O N G S T A N D I N G R E M O V A LJURISPRUDENCE. . . . . . . . . . . . . . . . . . . . . . . 8

A. The Rule of Law Created By The SixthCircuit And Federal Circuit Conflicts WithThe Law Of The Ninth, Seventh, and FifthCircuits Regarding Whether MereApplication Of Federal Law To The Facts Of

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A State-Law Cause Of Action Presents ASubstantial Federal Question. . . . . . . . . . . . 9

B. The Sixth Circuit Has Decided anImportant Issue of Federal Law That HasNot Been, But Should Be, Settled By ThisCourt To Prevent The Wrongful IntrusionOf Federal Court Jurisdiction Into TheStates’ Domain. . . . . . . . . . . . . . . . . . . . . . 14

C. The Sixth Circuit’s Decision Contradicts TheLaw Of The Seventh Circuit RegardingWhether Federal Question JurisdictionExists When There Is An Adverse Impact OnA Federal Consent Decree. . . . . . . . . . . . . . 17

II. THE SIXTH CIRCUIT’S DECISIONPRESENTS AND WRONGLY RESOLVES AQUESTION RESERVED BY THIS COURTCONCERNING WHETHER DUE PROCESSPERMITS A NON-PARTY TO BE BOUND BYA FEDERAL JUDGMENT SOLELY BECAUSEITS CONDUCT ALLEGEDLY INDUCEDRELIANCE ON THAT JUDGMENT. . . . . . . . 20

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

APPENDIX

Appendix A: Opinion and Judgment, UnitedStates Court of Appeals for theSixth Circuit,(September 15, 2010) . . . . . . . . . 1a

v

Appendix B: Opinion and Judgment, UnitedStates District Court, SouthernDistrict of Ohio, WesternDivision,(January 14, 2010) . . . . . . . . . . 21a

Appendix C: Order, United States Court ofAppeals for the Sixth Circuit,(October 27, 2010) . . . . . . . . . . 36a

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TABLE OF AUTHORITIES

CASES

Air Measurement Techs., Inc. v. Akin GumpStrauss Hauer & Feld, LLP, 504 F.3d 1262 (Fed. Cir. 2008) . . . . . . . . . 12, 13

Bartels Trust v. United States, 88 Fed. Cl. 105 (2009) . . . . . . . . . . . . . . . . . . . 23

Bennett v. Sw. Airlines Co., 484 F.3d 907 (7th Cir. 2007) . . . . . . . . . . . . . . 11

Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987) . . . . . . . . . . . . . . . . . . . 6, 15

Christianson v. Colt Indus. Operating Corp., 486 U.S. 800 (1988) . . . . . . . . . . . . . . . . . . . . . 13

Corley v. Jackson Police Dep’t, 755 F.2d 1207 (5th Cir. 1985) . . . . . . . . . . . . . 23

Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) . . . . . . . . . . . . . . . . . 5, 6, 10

Firefighters Local No. 93 v. City of Cleveland, 478 U.S. 501 (1986) . . . . . . . . . . . . . . . . 7, 18, 19

Franchise Tax Bd. v. Constr. Laborers Vacation Tr.,463 U.S. 1 (1983) . . . . . . . . . . . . . . . . 6, 9, 14, 15

Grable & Sons Metal Prods., Inc. v. Darue Eng’g &Mfg.,545 U.S. 308 (2005) . . . . . . . . . . . . . . . . . . passim

vii

Gully v. First Nat’l Bank, 299 U.S. 109 (1936) . . . . . . . . . . . . . . . . . . . . . 10

Hansberry v. Lee, 311 U.S. 32 (1940) . . . . . . . . . . . . . . . . . . . . . . 20

Holmes Group, Inc. v. Vornado Air CirculationSys., Inc., 535 U.S. 826 (2002) . . . . . . . . . . . . . . . . 6, 15, 17

In re the Application of Cnty. Collector, 96 F.3d 890 (7th Cir. 1996) . . . . . . . . . . 7, 18, 19

Int’l Union of Operating Eng’rs v. Cnty. of Plumas,559 F.3d 1041 (9th Cir. 2009) . . . . . . . . . . . . . 11

Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) . . . . . . . . . . . . . . . . . . . . . . 9

Martin v. Wilks, 490 U.S. 755 (1989) . . . . . . . . . . . . . . . . . . 22, 23

Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804 (1986) . . . . . . . . . . . . . . . . . . . . . 10

MSOF Corp. v. Exxon Corp., 295 F.3d 485 (5th Cir. 2002) . . . . . . . . . . . . . . . 7

Public Svc. Comm’n v. Wycoff Co., 344 U.S. 237 (1952) . . . . . . . . . . . . . . . 15, 16, 17

Richards v. Jefferson Cnty., 517 U.S. 793 (1996) . . . . . . . . . . . . . . . . . . . . . 20

viii

Rivet v. Regions Bank of La., 522 U.S. 470 (1998) . . . . . . . . . . . . . . 6, 7, 14, 19

Singh v. Duane Morris LLP, 538 F.3d 334 (7th Cir. 2008) . . . . . . . . . . . . . . 12

Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667 (1950) . . . . . . . . . . . . . . . . . . 15, 17

Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28 (2002) . . . . . . . . . . . . . . . . . . . . . . 19

Taylor v. Sturgell, 553 U.S. 880 (2008) . . . . . . . . . . . . . . . . 8, 21, 23

United States v. ITT Cont’l Baking Co., 420 U.S. 223 (1975) . . . . . . . . . . . . . . . . . . . . . 19

STATUTES

28 U.S.C. § 1254(1) . . . . . . . . . . . . . . . . . . . . . . . . . 1

28 U.S.C. § 1331 . . . . . . . . . . . . . . . . . . . . . . . passim

28 U.S.C. § 1338 . . . . . . . . . . . . . . . . . . . . . . . . . . 13

28 U.S.C. § 1441 . . . . . . . . . . . . . . . . . . . . . . 1, 3, 14

28 U.S.C. § 1651 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

33 U.S.C. §§ 1251-1387 . . . . . . . . . . . . . . . . . . . 2, 20

42 U.S.C. § 2000e-2(n) . . . . . . . . . . . . . . . . . . . . . . 22

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REGULATIONS

68 Fed. Reg. 68651-02 (Dec. 9, 2003) . . . . . . . . . 2, 3

OTHER AUTHORITIES

Restatement (Second) of Judgments § 40 (1982) . 21

Restatement (Second) of Judgments § 62 (1982) . 22

Richard D. Freer, Of Rules and Standards:Reconciling Statutory Limitations on “ArisingUnder” Jurisdiction, 82 In. L.J. 309 (2007) . . 12

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PETITION FOR A WRIT OF CERTIORARI

The City of Loveland, Ohio, respectfully petitionsfor a writ of certiorari to review the judgment of theUnited States Court of Appeals for the Sixth Circuit inthis case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, 1a-20a) is reported at 621 F.3d 465. The district court’sopinion (App., infra, 21a-35a) is not reported.

JURISDICTION

The court of appeals entered its judgment onSeptember 15, 2010. A timely petition for rehearingwas denied on October 27, 2010 (App., infra, 36a-37a).This Court has jurisdiction pursuant to 28 U.S.C.§ 1254(1).

RELEVANT STATUTORY PROVISIONS

Section 1331 of Title 28 of the United States Codeprovides:

The district courts shall have originaljurisdiction of all civil actions arising under theConstitution, laws, or treaties of the UnitedStates.

Section 1441(b) of Title 28 of the United StatesCode provides:

(b) Any civil action of which the district courtshave original jurisdiction founded on a claim or

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right arising under the Constitution, treaties orlaws of the United States shall be removablewithout regard to the citizenship or residence ofthe parties. Any other such action shall beremovable only if none of the parties in interestproperly joined and served as defendants is acitizen of the State in which such action isbrought.

STATEMENT OF THE CASE

Around 1970, petitioner, the City of Loveland, Ohio,placed its wastewater treatment plant and sewers(collectively, the “Polk Run System”) into service.(App., infra, 3a.) In 1985, Loveland and the Board ofCommissioners of Hamilton County, Ohio (“Board”)entered into an agreement pursuant to which theBoard was to maintain, repair, and operate the PolkRun System (the “1985 Agreement”). (App., infra, 3a.)The 1985 Agreement does not have an explicittermination date.

In 2002, the United States EnvironmentalProtection Agency and two state regulators filed acomplaint against the Board and the City of Cincinnatiunder the federal Clean Water Act, 33 U.S.C. §§ 1251-1387, because of frequent overflows in the numeroussewer systems (including Polk Run) operated by theBoard. (App., infra, 3a-4a.) United States v. Bd. ofCounty Comm’rs, et al., No. 1:02-cv-00107 (S.D. Ohio)That action was resolved by a pair of consent decrees.(App., infra, 4a.) Loveland was not a party to thatlitigation or either of the resulting consent decrees.Notice of the lodging of the proposed decrees waspublished in the Federal Register on December 9,2003. 68 Fed. Reg. 68651-02 (Dec. 9, 2003). The

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Notice did not mention the Polk Run System, the 1985Agreement, Loveland, or any limitations on Loveland’sauthority over its sewer system. Id.

On October 29, 2008, Loveland notified the Boardit was terminating the 1985 Agreement effectiveDecember 31, 2009 (App., infra, 5a) because, inter alia,the Board planned to charge Loveland residents tensof millions of dollars to remediate other wastewatertreatment plants and sewer systems that provide noservices to Loveland residents. On the same date,Loveland filed a complaint against the Board in theCourt of Common Pleas for Clermont County, Ohio.(App., infra, 5a.) Loveland requested (1) a declaratoryjudgment that its notice of termination of the 1985Agreement was reasonable, and (2) an order that theBoard must return control and operation of the PolkRun System to Loveland no later than January 1,2010. (App., infra, 5a.)

The Board did not attempt to remove Loveland’saction to federal court under 28 U.S.C. § 1441.Instead, six weeks after Loveland initiated its state-court action, the Board filed a complaint againstLoveland in the United States District Court for theSouthern District of Ohio. (App., infra, 6a.) TheBoard’s complaint sought a declaratory judgment thatLoveland could not terminate the 1985 Agreement.(App., infra, 5a.) Although the complaint named theEPA and the two state regulatory agencies asdefendants, the complaint was explicit that “the Boardis not seeking relief from the Regulators.” (Dist. Ct.ECF Doc. No. 1, ¶ 20.)

The court denied Loveland’s motion to dismiss forlack of jurisdiction, holding that it had jurisdiction

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under both 28 U.S.C. § 1331 and the All Writs Act, 28U.S.C. § 1651. (App., infra, 6a.) On the Board’s andCincinnati’s motion, the district court thenconsolidated the Board’s action with the consentdecree case. (App., infra, 23a.) A month and a halflater, on July 27, 2009, the Board voluntarilydismissed the EPA and the Regulators withoutprejudice. (Dist. Ct. ECF Doc. No. 364.)

The district court subsequently granted the Boardand Cincinnati’s motion for judgment on the pleadings,holding that Loveland’s effort to terminate the 1985Agreement constituted a “collateral attack on theConsent Decrees.” (App., infra, 30a.) The court heldthat, although Loveland was not a party to either theconsent decrees or the litigation that produced them,Loveland was collaterally estopped from exercising itsstate law right to terminate a contract. (App., infra,32a.)

The court of appeals affirmed. (App., infra, 1a-20a.) The court first held that the district court hadjurisdiction because, in its view, the putative impactthat Loveland’s termination of the 1985 Agreementwould have on the consent decrees raised a federalquestion because the complaint “requests that thedistrict court enforce its consent decree.” (App. infra,12a.)

The court also held that the case raised asubstantial federal question within the meaning ofGrable & Sons Metal Products, Inc. v. DarueEngineering & Manufacturing, 545 U.S. 308 (2005).The court reasoned that Loveland’s state-law contractclaim, if granted, might require a modification of theconsent decrees. (App., infra, 13a.) The court then

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held that the potential impact of that hypothesizedruling transformed the state-law contract issue into adisputed federal question. (App., infra, 11a-12a.) Thecourt of appeals further held that the complaint raiseda substantial federal question because a federal agencywas a party to the consent decree and the consentdecree sought to enforce a federal statute. (App., infra,13a.) The court then concluded that the exercise ofjurisdiction would “not disturb any congressionallyapproved balance of federal and state judicialresponsibilities.” (App., infra, 14a.) “[S]ince federalconsent decrees are at issue,” the court explained, “itwould make sense to have that court also resolve anyissues that have a direct impact on theimplementation of those consent decrees.” (App.,infra, 14a.) Finally, the court held that “Loveland’scontention that it is not bound by the consent decree,while accurate, is immaterial” to the jurisdictionalquestion. Because Loveland had not commented onthe proposed decree when notice was published in thefederal register, “Loveland forfeited its right tochallenge” the effects of the consent decrees on it andthus similarly forfeited any state-law right toterminate its contract. (App., infra, 17a.)

REASONS FOR GRANTING THE WRIT

Five years after this Court characterized thedecisions in Empire Healthchoice Assurance, Inc. v.McVeigh, 547 U.S. 677 (2006) and Grable & SonsMetal Products, Inc. v. Darue Engineering &Manufacturing, 545 U.S. 308 (2005) as being polesapart, the circuit courts are in conflict over whichcases present Grable-like “nearly pure” questions offederal law appropriate for resolution by federalcourts, and which present Empire-like legal questions

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that are fact-specific, to be decided by state courts.Three circuits interpret Empire as having added glossto the substantial federal question analysis articulatedin Grable, and require the substantial federal questionto be one of interpretation. Other circuits, includingthe Sixth Circuit in this decision, do not so understandGrable and Empire, and have held that a “substantial”federal question is present any time a case requiresthe mere application of some federal law to the facts.

In addition, the Sixth Circuit’s decision is at warwith this Court’s longstanding limitations on federalcourt jurisdiction—limitations that are critical toenforcing the federalism balance and limited role ofArticle III courts prescribed by the Constitution. ThisCourt has long held that two basic canons limit theuniverse of state-court cases that can be removed tofederal court: (i) cases may be removed only if federalcourts could have exercised original jurisdiction overthe action; and (ii) courts will look only to the state-court plaintiff’s well-pleaded complaint to determine ifit presents a federal question. Rivet v. Regions Bankof La., 522 U.S. 470, 475 (1998); Caterpillar, Inc. v.Williams, 482 U.S. 386, 392 (1987). A federal defenseis not part of the complaint and, therefore, removal ofan action from state court may not be premised onsuch grounds. Franchise Tax Bd. v. Constr. LaborersVacation Tr., 463 U.S. 1, 7 (1983). Nor will an actualor anticipated federal counterclaim establish “arisingunder” jurisdiction. Holmes Group, Inc. v. Vornado AirCirculation Sys., Inc., 535 U.S. 826 (2002).

The Sixth Circuit has cast all of those limitationsaside by holding that, rather than remove a case, astate-court defendant can simply file a federal defenseas a declaratory judgment action, and that filing will

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create the federal court jurisdiction that this Court’sremoval jurisprudence forecloses. This Court’s reviewis needed to prevent that end run of longstandingfederalism-based constraints on federal courtjurisdiction.

Another question raised by the Sixth Circuit’sdecision is whether federal question jurisdiction can bepredicated on nothing more than the impact thatadjudication of a state-law claim mighthave—depending on how the state court rules—on afederal consent decree. In Rivet v. Regions Bank ofLouisiana, 522 U.S. 470 (1998), the Court held thatthe alleged preclusive effect of federal judgments onstate-court actions does not raise a federal question.This Court has recognized, however, that federalconsent decrees are different: sometimes considered a“judgment,” other times labeled a “contract.”Firefighters Local No. 93 v. City of Cleveland, 478 U.S.501, 519 (1986). This case raises the still-undecidedquestion, on which the circuits have adoptedirreconcilable positions, whether the potentialinterference of a state-law claim with a federal consentdecree raises a federal question for purposes of 28U.S.C. § 1331. The Seventh Circuit says it does not.In re the Application of County Collector, 96 F.3d 890(7th Cir. 1996). But the Sixth Circuit held here that itdid, and the Fifth Circuit appears to agree. MSOFCorp. v. Exxon Corp., 295 F.3d 485, 494 (5th Cir.2002).

Finally, this case squarely presents the questionthat the Court has “never had occasion to consider”:whether, and if so, under what circumstances, a non-party may be bound by a judgment in litigation towhich it was not a party “through conduct inducing

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reliance on others.” Taylor v. Sturgell, 553 U.S. 880,894 n. 7 (2008). In the present case, the Sixth Circuitruled that Loveland, although not a party to thelitigation that produced the consent decrees, wascollaterally estopped from exercising its state-law rightto terminate its contract with the Board because theBoard and the other parties to the decrees relied totheir detriment on Loveland’s silence after notice ofthe consent decrees was published in the FederalRegister.

I. THE COURT OF APPEALS’ CREATION OFFEDERAL COURT JURISDICTIONCONFLICTS WITH THE DECISIONS OFOTHER CIRCUITS IN TWO RESPECTS ANDSCRIPTS AN END RUN OF THIS COURT’SLONGSTANDING REMOVAL JURIS-PRUDENCE.

The Sixth Circuit’s decision presents threesignificant jurisdictional issues this Court needs toaddress. First, it adds to the split between the circuitswhether the application of federal law to a state lawcause of action is sufficient to confer federal courtjurisdiction. Second, the Sixth Circuit decided animportant question of federal law that has not been,but should be, settled by this Court: whether a statecourt defendant can create federal jurisdiction by filinga declaratory judgment action in federal court thatraises a federal defense to a currently-pending statelaw claim. Finally, the court’s holding that a federalconsent decree—and specifically, adverse impact onthe decree—provides a sufficient basis for federalquestion jurisdiction is in direct conflict with the lawof the Seventh Circuit.

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A. The Rule of Law Created By The SixthCircuit And Federal Circuit Conflicts WithThe Law Of The Ninth, Seventh, and FifthCircuits Regarding Whether MereApplication Of Federal Law To The FactsOf A State-Law Cause Of Action Presents ASubstantial Federal Question.

It is a fundamental principal that federal courts arecourts of limited jurisdiction. Kokkonen v. GuardianLife Ins. Co., 511 U.S. 375, 377 (1994). They possessonly the jurisdiction conferred on them by theConstitution or Congress, and it cannot be expandedby the judiciary. Id. A federal court is presumed to bewithout jurisdiction over an action, and the burden ofestablishing jurisdiction rests with the party wishingto enter federal court. Id.

Congress, under 28 U.S.C. § 1331, granted districtcourts jurisdiction over “all civil actions arising underthe Constitution, laws, or treaties of the UnitedStates.” One basis for federal question jurisdiction isthe presence of a “substantial federal question.”Franchise Tax Bd. v. Constr. Laborers Vacation Trust,463 U.S. 1, 8-9 (1983). A state-law cause of actionthat turns on a substantial question of federal lawpresents federal courts with subject-matterjurisdiction over the state-law claim. Id.

This Court has held that there is no “single,precise, all-embracing test” to be used in determiningwhether a state-law cause of action raises asubstantial federal question. Grable & Sons MetalProducts, Inc. v. Darue Eng’g & Mfg., 545 U.S. 308,314 (2005). However, woven through the fabric of thisCourt’s decisions is the understanding that “the mere

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presence of a federal issue in a state cause of actiondoes not automatically confer federal-questionjurisdiction.” Merrell Dow Pharm., Inc. v. Thompson,478 U.S. 804, 813 (1986). In order to “arise under” afederal law, a genuine and substantial controversymust exist regarding the meaning or interpretation ofa federal law. Gully v. First Nat’l Bank, 299 U.S. 109,112-13 (1936). A mere federal issue “lurking in thebackground” will not suffice. Id. at 117.

Grable and Empire are the latest pronouncementsby this Court on the subject. In Grable, the Courtarticulated the issue as whether “a state law claimnecessarily raise[s] a stated federal issue, actuallydisputed and substantial, which a federal forum mayentertain without disturbing any congressionallyapproved balance of federal and state judicialresponsibilities.” Grable, 545 U.S. at 314. Finding theonly contested issue in plaintiff’s state-law actioninvolved an interpretation of an important issue offederal law, the Court held the matter belonged infederal court. However, in Empire, as in Gully andMerrell Dow before it, the Court found federaljurisdiction lacking. Empire Healthchoice Assurance,Inc. v. McVeigh, 547 U.S. 677 (2006). Contrasting theissue presented in Empire with the “poles apart” onefound in Grable, the Court stated: “Grable presenteda nearly ‘pure issue of law,’” whereas Empire’ssituation was “fact-bound and situation-specific.” Id.at 700-01. Although that statement differentiatedthese two cases, circuit courts have issued conflictingrules of law for determining when the role of federallaw is “substantial” under those precedents.

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The Ninth, Seventh, and Fifth Circuits haveinterpreted the Court’s decisions as creating ajurisdictional distinction between state law claims thatrequire the determination of an important issue offederal law versus those that involve the application ofsettled federal law to the facts of the case. Twocircuits, including the Sixth Circuit in the decisionbelow, have held that Grable does not so limit federaljurisdiction. In these circuits, Grable does not standfor the proposition that only pure issues of law orclaims involving construction of federal law belong infederal court. These courts found federal jurisdictionexisted where a state law claim would involve themere application of federal law to facts.

The Ninth Circuit refused to find federaljurisdiction in a state-law cause of action involving afederally regulated collective bargaining agreement.Int’l Union of Operating Eng’rs v. County of Plumas,559 F.3d 1041 (9th Cir. 2009). The court explainedthat no substantial federal question existed becausethe case did “not turn on a construction of a federallaw. Rather, it [was] influenced by an application offederal law to the arbitration clause.” Id. at 1045.

The Seventh Circuit similarly denied jurisdictionover a state-law tort action involving the mereapplication of federal aviation regulations. Bennett v.Sw. Airlines Co., 484 F.3d 907 (7th Cir. 2007). Themeaning of federal statutes or regulations “play[ed]little or no role.” Id. at 909. Instead, the case involved“fact-specific application of rules that come from bothfederal and state law, rather than a context-freeinquiry into the meaning of a federal law.” Id. at 910.

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1 See also Richard D. Freer, Of Rules and Standards: ReconcilingStatutory Limitations on “Arising Under” Jurisdiction, 82 In. L.J.309 (2007).

Finally, the Fifth Circuit held federal jurisdictionwas lacking over a state-law claim for legalmalpractice filed in state court that arose out ofalleged malpractice in a federal trademark case.Singh v. Duane Morris LLP, 538 F.3d 334 (7th Cir.2008). In order to present a successful claim formalpractice, the plaintiff would have to prove hisunderlying (federal) cause of action would have beenmeritorious but for the malpractice. Id. at 337.However, because the case did not directly present aquestion involving the interpretation of federal law,but only one that required the application of federallaw to the underlying factual argument, the court heldthat no substantial federal question was presented.1

Id. at 340.

The Federal and Sixth Circuits have taken theopposite tack, one that would allow significantly morecases into federal court. Faced with facts almostidentical to those the Fifth Circuit confronted in Singh,the Federal Circuit came to a contrary conclusion. AirMeasurement Techs., Inc. v. Akin Gump Strauss Hauer& Feld, LLP, 504 F.3d 1262 (Fed. Cir. 2008). Opiningthat Grable did not stand for the proposition that onlypure issues of law or claims involving construction offederal law belonged in federal court, the court heldthat federal jurisdiction existed over a state-law legalmalpractice claim because it would involve theapplication of federal patent law to the facts of the

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2 The fact that federal court jurisdiction in Air Measurementderived from 28 U.S.C. § 1338 instead of § 1331 “is of no momentbecause in Christianson, the Supreme Court grafted § 1331precedent onto its § 1338 analysis and held that the phrase‘arising under’ has the same meaning in § 1338 as it does in§ 1331. . . .” Id. at 1271 (citing Christianson v. Colt Indus.Operating Corp., 486 U.S. 800, 808-09 (1988)).

predecessor case to determine whether malpracticehad been committed. Id. at 1269.2

The Sixth Circuit’s decision that federal jurisdictionexisted in this case is also predicated on nothing morethan the straightforward application of putativefederal law to the particular facts of this case.According to the court, the federal issue is whetherLoveland “may [] terminate the 1985 Agreement in itsentirety because of the consent decree.” (App., infra,11a.) Even granting the court’s assumption that theconsent decree is a federal law that presents a federalissue, the court’s statement makes clear that thequestion presented is not “what do federal consentdecrees mean,” or “what do Clean Water Act consentdecrees mean,” or even “how should a specificparagraph or section of a broad spectrum of CleanWater Act consent decrees be interpreted,” but howthis particular consent decree should be applied to thefacts of this case.

The split among the circuits is outcomedeterminative. Had the Sixth Circuit applied thethreshold determination whether the state law claiminvolves merely application of federal law, or asubstantial and disputed interpretation of federallaw—as the Fifth, Seventh, and Ninth Circuits do—it

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would have denied federal jurisdiction. This Court’sreview is required in order to resolve this conflict.

B. The Sixth Circuit Has Decided anImportant Issue of Federal Law That HasNot Been, But Should Be, Settled By ThisCourt To Prevent The Wrongful IntrusionOf Federal Court Jurisdiction Into TheStates’ Domain.

By upholding federal-court jurisdiction, the SixthCircuit has mapped out a jurisdictional end run of thisCourt’s precedent that would otherwise sharplyconstrain the ability of defendants to litigate theirfederal defenses to state-law claims in federal court.As discussed below, this Court has made clear thatneither a federal defense nor a federal counterclaimsupports federal removal jurisdiction. The SixthCircuit’s decision circumvents that law by invitingstate-court defendants to run into federal court withdeclaratory judgment actions that seek federal courtadjudication of their defenses to state-court actionsand federal foreclosure of the state-law claim.

The “jurisdictional structure at issue in this casehas remained basically unchanged for [more than a]century.” Franchise Tax Bd. v. Constr. LaborersVacation Tr., 463 U.S. 1, 7 (1983). An action filed instate court may be removed to federal court only iffederal courts could have exercised original jurisdictionover the action. 28 U.S.C. § 1441. Another key part ofthe jurisdictional structure is the well-pleadedcomplaint rule, which provides that federal jurisdictionexists only where a “federal question is presented onthe face of the plaintiff’s properly pleaded complaint.”Rivet v. Regions Bank of La., 522 U.S. 470, 475

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(quoting Caterpillar, Inc. v. Williams, 482 U.S. 386,392 (1987)). These two basic tenets of federaljurisdiction serve the important role of avoidingpotentially serious federal-state conflicts. FranchiseTax Bd., 463 U.S. at 9-10.

When determining whether a state court case maybe removed, a defense is not part of the properlypleaded complaint. Because a plaintiff is “master of thecomplaint,” the plaintiff can choose a state court forumby abandoning any federal causes of action.Caterpillar Inc., 482 U.S. at 398-99. Therefore, anaction cannot be removed on the basis of a federaldefense. Franchise Tax Bd., 463 U.S. at 10. An actualor anticipated federal counterclaim also cannot formthe basis of removal jurisdiction. Holmes Group, Inc.v. Vornado Air Circulation Sys., Inc., 535 U.S. 826(2002).

The well-pleaded complaint rule does not cease toapply because the action is one for declaratoryjudgment. Franchise Tax Bd., 463 U.S. at 16. Just asa case cannot be removed based on a federal defense toa state-law claim, a declaratory judgment actioncannot proceed based on a defense to an impending orthreatened state court action. Franchise Tax Bd., 463U.S. at 16 (citing Skelly Oil Co. v. Phillips PetroleumCo., 339 U.S. 667, 672 (1950)). “Federal courts will notseize litigations from state courts merely because one,normally a defendant, goes to federal court to begin hisfederal-law defense before the state court begins thecase under state law.” Public Svc. Comm’n v. WycoffCo., 344 U.S. 237, 248 (1952). Therefore, the well-plead complaint rule requires jurisdiction to bedetermined by looking at the nature of the underlyingclaim, not the declaratory judgment complaint. Id.

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The Sixth Circuit decision has circumvented that.In direct defiance of Wycoff, the court of appeals hasallowed the hijacking of state-court claims filed instate-court by “one [actually] a defendant” just becauseit went “to federal court to begin his federal-lawdefense [after] the state-court beg[an] the case.” Id.Permitting the Sixth Circuit decision to stand thuswould allow state defendants to create “arising under”jurisdiction out of their state-court defenses just byfiling a declaratory judgment action after the statelitigation has commenced. If a defendant cannotcreate “arising under” jurisdiction by raising a federalcounterclaim, surely the same defendant cannot createjurisdiction by filing that counterclaim as an originaldeclaratory judgment complaint after the state-lawaction has commenced. If, as the Sixth Circuit hasruled, nothing more than a reformulation or relabelingof paperwork suffices to create federal jurisdiction, itsdecision will emasculate this Court’s removaljurisprudence, which has long-stood as a substantivefederalism-rooted constraint on federal jurisdiction.

Here, simply put, Loveland wants to exercise itscontractual rights under the 1985 Agreement and theBoard wants to prevent it from doing so. Had theBoard sought to remove Loveland’s complaint tofederal court, the lack of federal jurisdiction wouldhave been self-evident under this Court’s precedent.Relabeling the removal petition as a declaratoryjudgment complaint should not change thejurisdictional answer. But by ignoring the pendingstate-court action that spawned the defensive federaldeclaratory judgment action, the Sixth Circuitbestowed federal court jurisdiction over ordinary state-law contract claims, and blew a hole in this Court’s

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careful balance of state and federal jurisdictionalinterests.

This case presents the Court with the opportunityto settle an important point of law unaddressed bySkelly Oil, Wycoff, and Franchise Tax Board: whethera defendant to a currently pending state court actioncan avoid the interplay between the well-pleadedcomplaint rule and removal requirements by filing itsfederal defense or federal counterclaim as an originalfederal declaratory judgment action in order tocircumvent this Court’s strict limitations on removaljurisdiction.

Absent this Court’s intervention, the jurisdictionalstructure providing protection to federal-state comitywill buckle under the Sixth Circuit’s significantexpansion of federal jurisdiction. Federal courts willstep on the toes of the “rightful independence of stategovernments,” Holmes Group, Inc., 535 U.S. at 831,extending federal judicial power well beyond thatwhich the Constitution, Congress, and this Court’sprecedent permit.

C. The Sixth Circuit’s Decision ContradictsThe Law Of The Seventh CircuitRegarding Whether Federal QuestionJurisdiction Exists When There Is AnAdverse Impact On A Federal ConsentDecree.

In this case, the Sixth Circuit found that possibleinterference with a prior federal consent decree createsfederal question jurisdiction. This holding directlycontradicts the Seventh Circuit and necessitates thisCourt’s review. The Sixth Circuit’s opinion assumes

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both that a federal consent decree is a “federal law” forpurposes of 28 U.S.C. § 1331, and that the impact of astate-law claim on a consent decree raises a federalquestion. Neither of these questions has been directlyaddressed by this Court.

In In re the Application of County Collector, 96 F.3d890 (7th Cir. 1996), the plaintiffs filed a complaint instate court against a school district, claiming theschool district levied taxes against plaintiff’s propertyin violation of state law. The taxes were levied as aresult of a consent decree entered in a prior federallawsuit involving the school district. The consentdecree permitted the school district to levy taxes inorder to fund remedial measures aimed at the schoolboard’s prior segregation and discrimination. Theschool district removed plaintiffs’ complaint, arguingthe complaint presented a federal question because theaction could “effectively frustrate the school district’simplementation of the consent decree” by drying up itssources of funds. Id. at 892.

The Seventh Circuit disagreed. “Contrary to theschool district’s position, a state law claim does notpresent a federal question merely because it impactsthe terms of a federal consent decree.” Id. at 897.Moreover, no federal question jurisdiction existedmerely because the taxes at issue were levied pursuantto and in compliance with the decree. Id. at 899.Consent decrees are part judgment and part contract,so “it is the agreement of the parties, rather than theforce of law upon which the complaint was originallybased, that creates the obligations embodied in aconsent decree.” Id. (quoting Firefighters Local No. 93v. City of Cleveland, 478 U.S. 501, 522 (1986)) (originalemphasis removed). Therefore, even though the

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3 In Syngenta Crop Protection, Inc. v. Henson, 537 U.S. 28, 31(2002), the Court determined that a federal question is notpresented when a party to a state-court action violates the termsof a settlement agreement it entered into in a prior federal case.Additionally, the assertion that state-court claims brought by anon-party to the previously litigation are completely precludeddue to a prior federal judgment does not present a federal questioneither. Rivet, 522 U.S. at 476.

litigation leading to the consent decree was clearlybased on federal law, the consent decree did not itselfbecome a federal law. Id.

Although this Court has addressed related issues inconnection with settlement agreements and federaljudgments since County Collector, it has yet to decidewhether an adverse impact on a federal consent decreepresents a federal question.3 Such decrees are neithercontracts nor judgments; they contain attributes ofboth, which has resulted in them being treateddifferently for different purposes. Firefighters LocalNo. 93, 478 U.S. at 519 (quoting United States v. ITTContinental Baking Co., 420 U.S. 223, 237 n. 10(1975)). Remaining unanswered by the Court iswhether, in light of the hybrid nature of consentdecrees, an adverse impact on them confers federaljurisdiction.

This case squarely presents that issue to the Court.The Sixth Circuit found federal question jurisdictionbecause Loveland attempted to terminate the 1985Agreement, which would allegedly impact the consentdecrees due to the “removal of property, the Polk RunSegment, from the consent decree obligations.” (App.,infra, 11a.) The consent decree was created byagreement between the Board and the other parties to

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the consent decree; it was not created by the CleanWater Act. Therefore, although the litigation thatbegat the consent decree was based on federal law, theconsent decree itself is not a federal law upon whichthe district court could predicate federal questionjurisdiction. By the same token, the potential that ajudgment in Loveland’s state court action might havean adverse impact on the consent decree does not raisea federal question.

The Sixth Circuit’s decision cannot be reconciledwith the Seventh Circuit. Given the conflict betweenthe two circuits concerning the jurisdictional effect ofan adverse impact on a federal consent decree, thisCourt’s review is required to ensure uniformity infederal law. Doing so will enforce proper federalismconstraints on federal court jurisdiction andinterference with pending state court litigation.

II. THE SIXTH CIRCUIT’S DECISIONPRESENTS AND WRONGLY RESOLVES AQUESTION RESERVED BY THIS COURTCONCERNING WHETHER DUE PROCESSPERMITS A NON-PARTY TO BE BOUND BYA FEDERAL JUDGMENT SOLELY BECAUSEITS CONDUCT ALLEGEDLY INDUCEDRELIANCE ON THAT JUDGMENT.

Generally, “one is not bound by a judgment inpersonam in a litigation in which he is not designatedas party or to which he has not been made a party byservice of process.” Hansberry v. Lee, 311 U.S. 32(1940). See also, Richards v. Jefferson County, 517U.S. 793 (1996). This rule, however, is tempered byexceptions, one of which is that “a person who agreesto be bound by the determination of issues in an action

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4 The Restatement lists: whether the non-party could have been,or should have been, made a party to the earlier action—which isthe procedure the Wilks Court suggested the original litigantsshould have followed to bind the Wilks plaintiffs (and therebypreclude the subsequent litigation); whether and to what extentthe non-party may be responsible for the fact the earlier action

between others is bound in accordance with the termsof his agreement.” Taylor v. Sturgell, 553 U.S. 880,893 (2008) (quoting Restatement (Second) ofJudgments § 40 (1982)). In Taylor, this Court reservedthe question about the scope of this “agreement,”specifically whether and under what circumstances a“nonparty may be bound [by a judgment in litigation towhich he was not a party] . . . through conductinducing reliance on others.” Id. at 894 n.7. The SixthCircuit’s decision now squarely presents that questionfor this Court’s review.

In the instant case, the Sixth Circuit cited thefollowing “facts” as being sufficient to precludeLoveland from bringing an action to terminate the1985 Agreement: Loveland’s putative knowledge of theprevious litigation and consent decrees, Loveland’sfive-year delay (after the consent decrees wereentered) in filing its complaint in state court, theBoard’s (and other parties to the original litigation)purported reliance on Loveland’s silence, and theadverse impact on the consent decrees if Loveland’scontact claim was successful.

There are any number of parameters that courtsmight select from in determining whether a non-party’s conduct should preclude it from asserting aclaim relating to the subject matter of the action. TheRestatement enumerates eight possibilities,4 and this

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went to judgment without the non-party’s claim being madeknown; whether the assertion of the claim will disrupt theresolution of the controversy apparently achieved by the judgmentbetween others; whether the delay by the non-party in assertingits claim would work unjust hardship on a person who has alreadylitigated related issues with another party; whether the non-party’s conduct has justifiably led to the supposition that the non-party has no claim or will govern its conduct according to theoutcome of the litigation between others; what the relationship isamong the parties; whether and to what extent there is anidentity of interests between the non-party and the previouslitigants; what the purpose and effect was of the prior litigation;and what opportunity and duty the non-party had to clarify anyambiguity about its position. Restatement (Second) of Judgments§ 62 (1982).

Court identified two others in Martin v. Wilks, 490U.S. 755 (1989) superseded by statute on other grounds,42 U.S.C. § 2000e-2(n). In Wilks, the Court observed,“questions about the adequacy and timeliness of [thenon-party’s] knowledge [of the previous suit] wouldinevitably crop up.” Id. at 768. This case raises twoimportant questions: is reliance-inducing conduct abasis for non-party claim preclusion and, if so, whatare the criteria on which the courts should base theirdecision.

These questions are lurking behind significantnumbers of consent decrees, and pose a potentialobstacle to myriad persons whose rights are affectedby the implementation of those decrees. Until Wilks,the ability of such persons to have their own day incourt to vindicate their legal rights was, for the mostpart, summarily denied by the federal courts on theground that suits by such persons constituted

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5 See Wilks, 490 U.S. at 762 n.3.

6 See, e.g., Corley v. Jackson Police Dep’t, 755 F.2d 1207, 1209 (5thCir. 1985)(“[T]o allow plaintiff to attack the decree at this latepoint would severely undercut important notions of judicialefficiency and finality of judgment, and would unfairly prejudiceother parties and nonparties.”)

“impermissible collateral attack[s]” on the decrees.5 Id.at 762. Because of that broad brush, the courts did notneed to analyze the circumstances of the individualswho were bringing the suits or the effects of the newlitigation on the parties to the decrees to determinewhether collateral estoppel should apply, but anexamination of those cases reveals that the questionsidentified in the Restatement and in Wilks are presentin many of them.6

More recently, the Court of Claims interpreted theCourt’s footnote in Taylor as holding that “[t]he partyneed not have an express agreement to be bound;implied agreement and conduct inducing reliance arealso sufficient to constitute an agreement for thepurposes of this type of non-party preclusion,” andobserving that “[t]his type of nonparty preclusion iswell-established and is common in the federal courts.”Bartels Trust v. United States, 88 Fed. Cl. 105, 113(2009). Thus, the Sixth Circuit’s decision, if allowedto stand, will have far-reaching adverse consequenceson persons who, although not parties to priorlitigation, will be barred from having their own day incourt nevertheless. This case presents a dramaticexample of why this Court needs to take up thereserved question now.

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CONCLUSION

For the foregoing reasons, the petition for a writ ofcertiorari should be granted.

Respectfully submitted,

Stephen P. SamuelsCounsel of Record

Nicole R. WoodsSCHOTTENSTEIN, ZOX & DUNN, CO., LPA250 West StreetColumbus, OH 43215T: (614) 462-2700ssamuels@szd.com

Patricia A. MillettAKIN, GUMP, STRAUSS, HAUER & FELD, LLP1333 New Hampshire Ave., NWWashington, DC 20036T: (202) 887-4450

R. Guy TaftFranklin A. Klaine, Jr.Joseph J. BraunSTRAUSS & TROYFederal Reserve Building150 East Fourth StreetCincinnati, Ohio 45202T: (513) 621-2120

APPENDIX

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APPENDIX

TABLE OF CONTENTS

Appendix A: Opinion and Judgment, UnitedStates Court of Appeals for theSixth Circuit,(September 15, 2010) . . . . . . . . . 1a

Appendix B: Opinion and Judgment, UnitedStates District Court, SouthernDistrict of Ohio, WesternDivision,(January 14, 2010) . . . . . . . . . . 21a

Appendix C: Order, United States Court ofAppeals for the Sixth Circuit,(October 27, 2010) . . . . . . . . . . 36a

1a

APPENDIX A

RECOMMENDED FOR FULL-TEXTPUBLICATION

Pursuant to Sixth Circuit Rule 206

UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

No. 10-3116

[Filed September 15, 2010] UNITED STATES OF AMERICA, )

Plaintiff, ))

BOARD OF COMMISSIONERS OF )HAMILTON COUNTY, OHIO, )

Plaintiff-Appellee, ))

CITY OF CINCINNATI, OHIO, )Intervenor Plaintiff-Appellee, )

)v. )

)CITY OF LOVELAND, OHIO, )

Defendant-Appellant. ) )

Appeal from the United States District Courtfor the Southern District of Ohio at Cincinnati.Nos. 02-00107; 09-00029—S. Arthur Spiegel,

District Judge.

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* The Honorable Joseph M. Hood, Senior United States DistrictJudge for the Eastern District of Kentucky, sitting by designation.

Argued: August 6, 2010

Decided and Filed: September 15, 2010

Before: GUY and GRIFFIN, Circuit Judges;HOOD, Senior District Judge.*

_________________

COUNSEL

ARGUED: Stephen P. Samuels, SCHOTTENSTEIN,ZOX & DUNN CO., LPA, Columbus, Ohio, forAppellant. Anthony L. Osterlund, VORYS, SATER,SEYMOUR AND PEASE LLP, Cincinnati, Ohio, LouisL. McMahon, McMAHON DeGULIS LLP, Cleveland,Ohio, for Appellees. ON BRIEF: Stephen P. Samuels,Alan G. Starkoff, Kevin L. Murch, SCHOTTENSTEIN,ZOX & DUNN CO., LPA, Columbus, Ohio, R. GuyTaft, Joseph J. Braun, STRAUSS & TROY, Cincinnati,Ohio, for Appellant. Anthony L. Osterlund, Mark A.Norman, VORYS, SATER, SEYMOUR AND PEASELLP, Cincinnati, Ohio, Louis L. McMahon, McMAHONDeGULIS LLP, Cleveland, Ohio, for Appellees.

_________________

OPINION_________________

GRIFFIN, Circuit Judge. Defendant City ofLoveland appeals the district court’s grant of judgmenton the pleadings in favor of plaintiff Hamilton County

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Board of Commissioners, effectively preventingLoveland from terminating a 1985 sewage treatmentagreement. Loveland argues that the district courtlacked subject-matter jurisdiction and erred bygranting judgment on the pleadings. We disagree andtherefore affirm.

I.

The City of Loveland, Ohio, is located in the greaterCincinnati metropolitan area. In 1970, Loveland putinto operation its Polk Run Waste Water TreatmentPlant and sewer system (the “Polk Run System” or“Polk Run Segment”), which provides services toresidents in three counties, including HamiltonCounty. Loveland operated the Polk Run System from1970 until 1985. In 1985, the City of Loveland and theBoard of County Commissioners of Hamilton County,Ohio (the “Board”) entered into an agreement (the“1985 Agreement”) by which the Board, through aseparate agreement with the Metropolitan SewerDistrict of Greater Cincinnati (“MSD”), would“maintain, repair and operate” the Polk Run System.However, Loveland continued to own the “existingfacilities and improvements” constituting the Polk RunSystem as of the execution date of the 1985Agreement. Pursuant to the 1985 Agreement, “[t]herates to be billed for sewerage service shall be thoserates . . . established by the Board, which rates may bemodified by said Board from time to time” and “[t]herates for sewerage service shall be uniform throughoutthe service area of the [MSD].”

In 2002, the United States, on behalf of theEnvironmental Protection Agency, sued the Board andthe City of Cincinnati for violations of the Federal

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Clean Water Act. See United States v. HamiltonCounty Bd. of Comm’rs, No. 1:02-cv-00107 (S.D. Ohio)(the “consent decree case”). The State of Ohio joinedthe federal action as a plaintiff, alleging violations ofcounterpart state laws. The parties entered into apartial settlement, which required the elimination oflongstanding and substantial sewage discharge fromthe MSD-operated sewer system. Thereafter, theSierra Club sued the Board, claiming that the partialsettlement did not satisfactorily address the healthand environmental problems caused by the sewersystem. In June 2004, the Sierra Club lawsuit and theoriginal lawsuit were resolved by two consent decreesapproved by the United States District Court for theSouthern District of Ohio (collectively, the “consentdecree”). The consent decree requires the Board andthe City of Cincinnati to address capacity andpollution problems within the MSD-operated sewersystem, which includes the Polk Run Segment, byimplementing infrastructure improvements throughthe year 2022.

The entry of the consent decree was theculmination of lengthy and complicated litigation. Thenotice of the proposed consent decree, which includedan invitation for public comment, was published in TheFederal Register. Thereafter, the district courtreviewed all public comments and held a hearing onthe proposed settlement. Following the hearing, thedistrict court entered the consent decree after rulingthat the settlement was fair, adequate, and incompliance with the Clean Water Act. Lovelandneither participated in the hearing nor submittedobjections or comments regarding the proposedsettlement. However, as a consequence of the consentdecree, new obligations were imposed upon the MSD-

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operated sewer system that have resulted in higherrates for all users, including residents of Loveland,whose sewer system has been operated by the Boardpursuant to the 1985 Agreement. Under the terms ofthe consent decree, the district court “retain[ed]jurisdiction to enforce the terms and conditions andachieve the objectives of this Consent Decree and toresolve disputes arising hereunder as may benecessary or appropriate for the construction,modification, implementation or execution of thisDecree.”

In October 2008, Loveland sent a notice to theBoard indicating its intention to terminate the 1985Agreement, effective December 31, 2009, and toresume its independent operation of the Polk RunSystem. Simultaneously, Loveland filed suit in theClermont County, Ohio, Court of Common Pleasseeking a declaratory judgment, among other things,and eventually asserting a claim for breach of contract.City of Loveland, Ohio v. Bd. of Comm’rs of HamiltonCounty, Ohio, No. 2008 CVH 02199 (C.P. ClermontCounty, Ohio) (the “state court” action). Loveland’sstate court complaint alleged that, between 2003 and2007, the sewer fees charged by the Board grewdramatically, nearly double the State of Ohio average,and would continue to rise because of the fundingnecessary to comply with the obligations imposed bythe consent decree. Loveland also alleged that theincreased rates “disproportionately and unfairlyovercharged customers” in Loveland because the costof improvements required for the Polk Run Segmentwere substantially less than the cost of improvementsneeded for the other sewer systems in the MSD.

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The Board responded by filing the present action inthe United States District Court for the SouthernDistrict of Ohio, seeking a declaratory judgment thatLoveland could not unilaterally terminate the 1985Agreement and thereby acquire control over the MSDPolk Run Segment. Loveland moved to dismiss theBoard’s complaint for lack of subject-matterjurisdiction, arguing that it did not raise a federalquestion and involved only a contract dispute arisingunder Ohio law. Loveland argued that “any issuesrelated to the reasonableness of the termination of the1985 Agreement will be addressed by the State Courtaction,” and the federal suit constituted improper“forum shopping.” The district court denied the motionto dismiss, ruling that it possessed subject-matterjurisdiction under 28 U.S.C. § 1331, holding that“Loveland’s current efforts to modify its relationshipwith MSD is directly related to its concerns about theimplementation of the Consent Decrees” and that theBoard “properly selected this forum to seek declaratoryjudgment . . . .”

Thereafter, the state and federal suits proceeded onparallel tracks. The Board moved to dismiss the statesuit, or alternatively, to stay the state action pendingthe outcome of the federal case. In September 2009,the Ohio Court of Common Pleas granted the Board’smotion to dismiss. The state court ruled that Lovelandfailed to state a claim either for a declaratoryjudgment or for breach of the 1985 Agreement. It alsocommented on the Board’s alternative request for astay, stating:

While the Court is not making a finding on themotion to stay since it is now moot, the Courtwould note that the issues involved in this case

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are exactly the same as those involved in thefederal case. The federal court has clearlyaccepted jurisdiction of Hamilton County’sdeclaratory judgment action since it directlyaffects the Consent Decrees in the previouscase. That declaratory judgment action asks thefederal court to resolve the same issue thatLoveland is asking this Court to resolve, i.e.,whether Loveland can terminate the 1985agreement and regain control over the Polk RunSystem. Since both courts are being asked toresolve the same issue, the Court believes thatjudicial economy and the risk of inconsistentresults mandate that only one court determinethat issue. The Court further believes that thefederal court is in a better position to make thatdetermination since any decision that this Courtwould make would directly affect the ConsentDecrees, over which the federal court hasretained jurisdiction. Therefore, since federalconsent decrees are at issue, it would makesense to have that court also resolve any issuesthat have a direct impact on the implemen-tation of those consent decrees.

* * *

Therefore, while not determining the motion tostay, the Court strongly feels that the federalcourt is currently in a better position todetermine those issues that have a directimpact on the Consent Decrees. Had this Courtnot dismissed the case, it would not haveconsidered the remaining state claims, if any,until the resolution of the current federalaction.

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Loveland appealed the order of dismissal to the OhioCourt of Appeals, where the appeal remains pending.

In the present case, the district court granted theBoard’s motion for judgment on the pleadings onJanuary 14, 2010. The court ruled that “Loveland’sdesire to cancel the 1985 agreement amounts to acollateral attack on the Consent Decree[], to which itnever objected in 2004 when it had the opportunity todo so.” The district court also noted “without questionthat Loveland’s desire to terminate the 1985agreement is rooted in the desire to insulate itsratepayers from rate increases due to remediationcosts that under the Consent Decree[] will be borneacross the MSD system.” However, it held that thedoctrines of laches and equitable estoppel preventedLoveland’s collateral attack on the consent decreebecause Loveland had constructive notice of theconsent decree in 2004 but failed to object or comment,and plaintiffs “have relied upon the assumption thatLoveland ratepayers were part of MSD’s globalsystem” in “craft[ing] the complex, multi-yearinfrastructure improvements that have begun theimplementation of the remedies required by theConsent Decree[].” Accordingly, the district courtgranted the Board’s motion for judgment on thepleadings; declared that Loveland “shall not bepermitted to unilaterally terminate its 1985 agreementwith the Board”; and enjoined Loveland “fromattempting to modify the Consent Decree in thismatter by collateral attack, through termination of the1985 Agreement or otherwise, while Consent Decreeobligations are pending.” Loveland timely appeals.

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II.

On appeal, Loveland challenges the district court’ssubject-matter jurisdiction and its grant of judgmenton the pleadings. First, Loveland argues that thedistrict court lacked subject-matter jurisdiction overthe present action. It contends that the Board’srequest for declaratory relief involves no federalquestion because it is a state-law contract dispute inwhich the Board “is only seeking a determination thatLoveland may not unilaterally terminate the 1985Agreement.” (internal quotation marks omitted). Insupport of this argument, Loveland relies on City ofWarren v. City of Detroit, 495 F.3d 282 (6th Cir. 2007),which it characterizes as “nearly identical to this case.”In City of Warren, Warren filed a complaint in theCircuit Court for the County of Macomb, Michigan,alleging that Detroit, which provided Warren’s water,breached its contractual obligation to charge“reasonable” rates by raising its rates to pay for costsassociated with the obligations it assumed in a consentdecree with the EPA; Warren also alleged that Detroit,in so doing, violated Mich. Comp. Laws § 123.141(2),which required water rates to be based on the actualcost of service as determined under the utility basis ofrate-making. Id. at 284. Warren sought damages forbreach of contract, an injunction to prevent Detroitfrom charging unreasonable rates, and an orderrequiring Detroit to make an accounting of all factorsincluded in establishing the water rates. Id.

Detroit removed the case to the United StatesDistrict Court for the Eastern District of Michigan,arguing that Warren’s action arose under thejudgments and orders entered pursuant to the federalClean Water Act and the federal Clean Air Act in

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United States v. City of Detroit, No. 77-71100, 2000 WL371795 (E.D. Mich. Feb.7, 2000) and that removal wasnecessary to protect the integrity of the orders in thatcase. Id. at 285. Warren moved to remand to statecourt. The district court denied Warren’s motion,reasoning that the case was properly removed tofederal court pursuant to 28 U.S.C. § 1441(b) asarising under federal law because Warren sought reliefthat had an adverse effect upon or was inconsistentwith the federal consent decree. Id. On appeal, thiscourt reversed. The City of Warren panel noted that“[o]nly state-court actions that originally could havebeen filed in federal court may be removed to federalcourt by the defendant,” id. at 286 (quotingCaterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987)),and that Warren’s action could not have beenoriginally filed in federal court because it stated acontract claim and a claim for violation of statestatute, id. We also concluded that having an adverseimpact on a consent decree was not enough toestablish federal question jurisdiction because, underthat logic, “a slip-and-fall case would be removable tofederal court because a damage award would affectDWSD’s finances and consequently its ability tocomply with the consent judgment, a result that wouldabrogate the well-pleaded complaint rule set forth inCaterpillar and Franchise Tax Board.” Id.

The City of Warren panel concluded that there wasno substantial federal question jurisdiction because“Warren’s contract claim alleges that Detroit hasincluded certain costs in the water rates that are notreasonable, as required by the contract” and “Warren’sstatutory claim alleges that Detroit has included costsin the water rates that are not included in the actualcost of service as determined under the utility basis of

11a

rate-making, as required by Michigan statute.” Id. at287. It explained that “[n]either of these claims raisesa question of federal law because the consentjudgments entered in the EPA case lack the power tosupersede Warren’s contractual rights or the Michiganstatute.” Id. at 287. Finally, the court consideredwhether Warren’s claim was “really” one of federallaw, i.e., an attempt “to defeat removal by omitting toplead necessary federal questions in a complaint,” andit concluded that it was not. Id. (quoting Franchise TaxBd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 22(1983)). The reason, the court explained, was thatthere was “no allegation that Warren’s claims areidentical to federal claims, or are completelypreempted by federal law . . .” Id. at 287.

We find City of Warren distinguishable. Here, incontrast to City of Warren, the Board’s complaintneither asks the court to interpret the terms of thecontract nor alleges a violation of a state statute;rather, the Board seeks a determination that Lovelandmay not terminate the 1985 Agreement in its entiretybecause of the consent decree. Moreover, this caseinvolves more than simply the economic consequenceof the consent decree on non-parties; it involves theattempted removal of property, the Polk Run Segment,from the consent decree obligations. Cf. Syngenta CropProtection, Inc. v. Henson, 537 U.S. 28, 33-34 (2002),overruling Bylinski v. City of Allen Park, 169 F.3d1001, 1002-03 (6th Cir.1999) (holding that there wasjurisdiction since suit “pose[d] an imminent threat tothe integrity of the [orders] because it could adverselyaffect the financing mechanism in those orders”)(emphasis added).

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To be sure, Loveland was not a party to the consentdecree. However, it cannot escape the district court’sjurisdiction over its consent decree through artfulpleading and argument. Whether Loveland mayterminate the 1985 Agreement and escape thefinancial impact of the consent decree as a non-partyis an issue to be resolved on the merits rather than bya challenge to the district court’s jurisdiction. UnlikeCity of Warren, which was a removal case for whichfederal question jurisdiction under the well-pleadedcomplaint rule was determined by reference toWarren’s state court complaint, jurisdiction in thiscase is based on the Board’s federal complaint fordeclaratory judgment which requests that the districtcourt enforce its consent decree. Because the districtcourt retains jurisdiction to police its consent decrees,Waste Mgmt. of Ohio, Inc. v. City of Dayton, 132 F.3d1142, 1144-46 (6th Cir. 1997), we hold that the Board’scomplaint presents a federal question.

Furthermore, subject-matter jurisdiction properlylies under the substantial federal question doctrine. InMikulski v. Centerior Energy Corp., 501 F.3d 555, 568(6th Cir. 2007) (en banc) (citing Grable & Sons MetalProds., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314(2005)), this court explained that a federal court hassubject-matter jurisdiction where: “(1) the state-lawclaim . . . necessarily raise[s] a disputed federal issue;(2) the federal interest in the issue [is] substantial; and(3) the exercise of jurisdiction [does] not disturb anycongressionally approved balance of federal and statejudicial responsibilities.” This case satisfies all threecriteria. The first factor is met because, insofar as thisdeclaratory judgment action is the inverse ofLoveland’s state law claim, it necessarily raises adisputed federal issue: whether the federal Clean

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Water Act consent decree requiring upgrades to thePolk Run Segment can be modified by removal of thatportion of the sewer system from the consent decreeobligations. Because the consent decree applies to thePolk Run Segment, it is impossible to resolveLoveland’s request to terminate the 1985 Agreementand the Board’s request for declaratory relief withoutanalyzing and interpreting the consent decree.

The second factor regards the substantiality of thefederal interest. In making this determination, weconsider whether: (1) the case includes a federalagency; (2) the federal question is important; (3) thedecision on the federal question will resolve the case;and (4) the decision will affect other cases. Mikulski,501 F.3d at 570 (citation omitted). Here, there is asubstantial federal interest because (1) federalagencies negotiated the consent decree upgrades to thePolk Run System; (2) the consent decree was and isintended to comply with a federal statute and impactsthousands of ratepayers throughout the Cincinnatimetropolitan area; (3) the resolution of Loveland’sobligations, if any, under the consent decree willresolve the case because whether Loveland mayterminate the 1985 Agreement or terminate or modifyits obligations under the consent decree aredispositive, not incidental, issues; and (4) the decisionon the federal question will have a broad impactbecause, depending on the outcome of this litigation,other entities may seek to circumvent consentagreements entered into between the federalgovernment and cities around the nation to enforce theClean Water Act.

Finally, under the last prong of the substantialfederal question inquiry, we must “inquire into the

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risk of upsetting the intended balance by opening thefederal courts to an undesirable quantity of litigation.”Mikulski, 501 F.3d at 573. In the present case, thedistrict court’s exercise of jurisdiction does not disturbany congressionally approved balance of federal andstate judicial responsibilities. Because federal courtsare already charged with enforcing the Clean WaterAct, and federal consent decrees, by definition, stemfrom a matter already within the court’s jurisdiction,the district court’s exercise of jurisdiction over thismatter would not open the floodgates of litigation thatmight overwhelm the federal courts. Indeed, a contraryholding that the district court lacks jurisdiction couldallow litigants to use the state courts as a vehicle toundermine a federal court’s ability to police its consentdecrees when the state-court action is, in Loveland’swords, “the exact inverse” of the federal court action.Moreover, at this juncture, the state court action hasbeen dismissed, although the judgment has beenappealed. As the state court explained when itdismissed Loveland’s complaint:

“[T]he federal court is in a better position to[decide the issues here] since any decision thatthis Court would make would directly affect theConsent Decrees, over which the federal courthas retained jurisdiction. Therefore, sincefederal consent decrees are at issue, it wouldmake sense to have that court also resolve anyissues that have a direct impact on theimplementation of those consent decrees.”

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1 Loveland also argues that the All Writs Act, 28 U.S.C. § 1651,and the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 &2202, did not confer jurisdiction upon the district court. In view ofour disposition of the case, and because we do not read the districtcourt’s opinion to rely on the All Writs Act or the FederalDeclaratory Judgment Act as a basis for subject-matterjurisdiction, we find it unnecessary to address these issues.

For these reasons, we hold that the district courtproperly exercised subject-matter jurisdiction.1

III.

Next, Loveland argues that the district court erredin granting the Board’s motion for judgment on thepleadings. Loveland asserts that it was not a party tothe consent decree and accordingly is not bound by it.Further, it claims that the doctrines of laches andequitable estoppel are “fact intensive” inquiriesinappropriate for disposition on the pleadings, andsuch defenses are state law affirmative defenses moreproperly asserted in a state action.

We review a district court’s grant of judgment onthe pleadings under Rule 12(c) using the same de novostandard of review applicable to orders of dismissalunder Rule 12(b)(6). Tucker v. Middleburg-LegacyPlace, 539 F.3d 545, 549 (6th Cir. 2008). “For purposesof a motion for judgment on the pleadings, all well-pleaded material allegations of the pleadings of theopposing party must be taken as true, and the motionmay be granted only if the moving party isnevertheless clearly entitled to judgment.” Id. (quotingJPMorgan Chase Bank, N.A. v. Winget, 510 F.3d 577,581 (6th Cir. 2007)). In this circuit, laches is “anegligent and unintentional failure to protect one’s

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rights.” Elvis Presley Enters., Inc. v. Elvisly Yours,Inc., 936 F.2d 889, 894 (6th Cir. 1991). “A partyasserting laches must show: (1) lack of diligence by theparty against whom the defense is asserted, and (2)prejudice to the party asserting it.” Herman Miller,Inc. v. Palazzetti Imports & Exports, Inc., 270 F.3d298, 320 (6th Cir. 2001). Equitable estoppel requires ashowing that there was: “(1) [a] misrepresentation bythe party against whom estoppel is asserted; (2)reasonable reliance on the misrepresentation by theparty asserting estoppel; and (3) [a] detriment to theparty asserting estoppel.” Premo v. United States, 599F.3d 540, 547 (6th Cir. 2010).

In this case, the district court ruled that judgmenton the pleadings was warranted in favor of the Boardbecause the doctrines of laches and equitable estoppelbarred Loveland from challenging the effects of theconsent decree. The court explained that Loveland“has proffered no evidence demonstrating excusabledelay in asserting its claim, beyond attempting toargue it lacked notice, while as a matter of law,publication in the Federal Register constituted notice.”United States v. Bd. of County Comm’rs of HamiltonCounty, Ohio, Nos. 1:02-CV-00107, 1:09-CV-00029,2010 WL 200326, at *5 (S.D. Ohio Jan. 14, 2010)(citations omitted). It also concluded that

“[t]he parties to the Consent Decrees reasonablyrelied on Loveland’s silence as they crafted thecomplex, multiyear infrastructure improve-ments that have begun the implementation ofthe remedies required by the Consent Decrees. . . . [and that] Loveland’s silence . . . misledDefendants into relying on Loveland’sparticipation in the global remedies called for by

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the Consent Decrees, the Court finds Lovelandshould be equitably estopped from withdrawingfrom MSD until after full implementation of theConsent Decrees.”

Id. Accordingly, the district court found that aninjunction was necessary because “inequity wouldresult if Loveland were permitted to enforce its now-stale claim to terminate the 1985 agreement as suchtermination would affect the implementation of theConsent Decrees.” Id. We agree.

Loveland’s contention that it is not bound by theconsent decree, while accurate, is immaterial. For thereasons detailed by the district court, Lovelandforfeited its rights to contest the effects of the consentdecree by unreasonably sitting on its rights. Loveland’sactions of not objecting to the proposed consent decree,declining to participate in the pre-approval hearings,and allowing the expansion of the MSD Polk RunSegment while obtaining its benefits for four years,weigh heavily against Loveland’s claim of relief.Loveland’s additional argument that the district courterred in granting judgment on the pleadings becauselaches and equitable estoppel are usually “factintensive” inquiries, see, e.g., Kourtis v. Cameron, 419F.3d 989 (9th Cir. 2005) (overruled on other grounds);Axcan Scandipharm Inc. v. Ethex Corp., 585 F. Supp.2d 1067 (D. Minn. 2007), is similarly unpersuasive.Here, there was no need for discovery, let alone a trial,because it is undisputed that Loveland hadconstructive notice of the proposed consent decree,waited five years to bring its claim, and prejudiced theBoard by its delay.

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Finally, Loveland asserts that laches and equitableestoppel are affirmative defenses under state law thatthe Board should assert in a state action. Assumingarguendo that laches and equitable estoppel are state-law affirmative defenses, Loveland has failed tosuccessfully challenge the federal judgment at issue.The state court action was dismissed in favor of theBoard. Our review is not of the state court judgment,but of the district court’s judgment. For purposes ofour review, the defenses of laches and equitableestoppel were properly raised by the Board and ruledupon by the district court.

IV.

For these reasons, we affirm the judgment of thedistrict court.

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UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

No. 10-3116

[Filed September 15, 2010] UNITED STATES OF AMERICA, )

Plaintiff, )BOARD OF COMMISSIONERS OF )HAMILTON COUNTY, OHIO, )

Plaintiff - Appellee, )CITY OF CINCINNATI, OHIO, )

Intervenor Plaintiff - Appellee, ))

v. ))

CITY OF LOVELAND, OHIO, )Defendant - Appellant. )

)

Before: GUY and GRIFFIN, Circuit Judges; HOOD,Senior District Judge.

JUDGMENT

On Appeal from the United States District Courtfor the Southern District of Ohio at Cincinnati.

THIS CAUSE was heard on the record from thedistrict court and was argued by counsel.

IN CONSIDERATION WHEREOF, it is ORDEREDthat the judgment of the district court is AFFIRMED.

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ENTERED BY ORDER OF THE COURT

/s/ Leonard Green Leonard Green, Clerk

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APPENDIX B

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF OHIO

WESTERN DIVISION

[Filed January 14, 2010]

NO. 1:02-CV-00107 / NO. 1:09-CV-00029 UNITED STATES OF AMERICA, et al., )

)Plaintiffs, )

)v. )

)BOARD OF COUNTY COMMISSIONERS )OF HAMILTON COUNTY, OHIO, et al., )

)Defendants. )

) BOARD OF COUNTY COMMISSIONERS )OF HAMILTON COUNTY, OHIO, )

)Plaintiff, )

)v. )

)CITY OF LOVELAND, OHIO, et al., )

)Defendants. )

)

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1 The Court entered two decrees: 1) the Consent Decree onCombined Sewer Overflows, Wastewater Treatment Plants andImplementation Capacity Assurance Plan for Sanitary SewerOverflows, and 2) the Interim Partial Consent Decree on Sanitary

OPINION AND ORDER

This matter is before the Court on the Board ofCommissioners of Hamilton County Ohio (the “Board”)and the City of Cincinnati’s (“Cincinnati”) Motion forJudgment on the Pleadings in Case No. 1:09-CV-0029(doc. 373), Defendant City of Loveland’s (“Loveland”)Response in Opposition (doc. 390), and the Plaintiffs’Reply (doc. 392). Also before the Court is the Board’sMotion for a Protective Order Staying DiscoveryPending a Decision on the Board’s Motion forJudgment on the Pleadings and Motion to AmendPretrial Schedule (doc. 386), Cincinnati’s parallelmotion (doc. 387), Loveland’s Response in Oppostion(doc. 391), and the Plaintiffs’ Replies (docs. 393, 394).For the reasons indicated herein, the Court GRANTSPlaintiffs’ Motion for Judgment on the Pleadings andENJOINS Defendant City of Loveland fromattempting to modify the Consent Decree in thismatter by collateral attack, through termination of the1985 Agreement or otherwise, while Consent Decreeobligations are pending. The Court further DENIES asMOOT the Plaintiffs’ Motions for Stay because itsjudgment on the pleadings terminates the Lovelandmatter, NO. 1:09-CV-00029, completely.

I. Background

On June 9, 2004, the Court entered ConsentDecrees1 in United States v. Board, Case No.

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Sewer Overflows. The Court uses the terms “Consent Decree” and“Consent Decrees” interchangeably within this Order.

1:02-CV-00107, (the “sewer” case), which set in placea framework for insuring that Defendants in suchcase, the Board, Cincinnati, and the MetropolitanSewer District of Greater Cincinnati (“MSD”), addresscapacity and pollution problems with their sewersystem, through the implementation of infrastructureimprovements through the year 2022 (docs. 129, 130,131). The entry of the Consent Decrees came after along process, that included notification about theDecrees by the United States through publication inthe The Federal Register, which solicited publiccomment (doc. 129). After the Court reviewed allcomments, it conducted a hearing on the ConsentDecrees, finding them fair, adequate, and incompliance with the Clean Water Act (Id.).

Defendants’ sewer system currently includes thePolk Run Waste Water Treatment Plant and LovelandService Area, which by a 1985 agreement with theBoard was consolidated into the MSD, modernized andenlarged, and which is now known as the “MSD PolkRun Segment” (doc. 343). There is no dispute that theMSD Polk Run Segment is subject to the ConsentDecrees’ mandated improvements and repairs (Id.). OnOctober 29, 2008, the City of Loveland filed aComplaint in the Clermont County Court of CommonPleas, in which it alleged that compliance with theDecrees will result in increased rates for all users (Id.).Loveland sought declaratory judgment sanctioningtermination of the 1985 agreement, as well as thegrant of easements to the extent necessary such thatit could operate the Polk Run Segment (Id.).

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On January 14, 2009, the Board brought suit inthis Court, Case No. 1:09-CV-00029, (the “Loveland”case), seeking declaratory judgment on the issue ofwhether Loveland could secede from the MSD andobtain the Board’s interest in property subject to theConsent Decree. The Court consolidated the Lovelandcase and the sewer case on June 3, 2009, finding thatLoveland was “seeking to gain control over assetsdirectly involved in the Consent Decrees” (doc. 354).On September 28, 2009, the Clermont County Court ofCommon Pleas dismissed Loveland’s state courtaction, holding that Loveland had failed to state aclaim for breach of the 1985 agreement, and thatbecause Loveland’s action directly affected the ConsentDecrees, judicial economy and the risk of inconsistentresults mandated that only one court rule on thematter (doc. 386).

On September 14, 2009, the Board and Cincinnatifiled the instant motion for judgment on the pleadingsin Case No. 1:09-CV-00029, arguing that becauseLoveland failed to object to the Consent Decreesduring the 2004 public comment period, it should beenjoined from attempting to modify the Decrees byremoving its ratepayers from overall Consent Decreeobligations (doc. 373). Loveland has responded (doc.390), and the Board and Cincinnati have replied (doc.392), such that this matter is ripe for the Court’sconsideration.

II. Applicable Legal Standard

The Court may grant a party’s motion for judgmenton the pleadings under Federal Rule 12(c) if itdetermines that the moving party is entitled tojudgment as a matter of law. In arriving at such

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determination, “all well-pleaded material allegationsof the pleadings of the opposing party must be takenas true, and the motion may be granted only if themoving party is nevertheless clearly entitled tojudgment.” Tucker v. Middleburg-Legacy Place, 539F.3d 545, 549 (6th Cir. 2008). In its evaluation, theCourt may consider the “pleadings, which consist ofthe complaint, the answer, and any writteninstruments attached as exhibits.” Felix v. DowChemical Co., No. 2:07-CV-971, 2008 WL 207857, *1(S.D. Ohio Jan. 23, 2008). The Court may also“consider materials in addition to the pleadingswithout converting the motion to one for summaryjudgment if the materials are public records or areotherwise appropriate for the taking of judicial notice.”Id. at *1.

III. Analysis

Movants contend that Loveland’s present attemptto terminate the 1985 agreement between it and theBoard is nothing but a collateral attack on the ConsentDecrees so as to avoid the obligations of such Decrees(doc. 373). Citing Loveland’s state court Complaint,Movants contend Loveland’s stated goal is to avoidrate increases made necessary by the Board’sobligations under the Consent Decrees, by terminatingthe 1985 agreement (Id.). Movants further contendLoveland failed to submit public comments in 2004regarding the Consent Decrees, nor did it participate,file any submissions, or appear at the Court’s May2004 hearing regarding entry of the Consent Decree(Id.). In Movants’ view, there is no question based onLoveland’s state court complaint, and further, basedon its public statements, of its intention to extract aportion of MSD from the Board’s unified efforts to

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comply with the Consent Decrees (Id.). If Lovelandwould be allowed to terminate the 1985 agreement,argue Movants, then there would be less moneyavailable for MSD operations and Consent Decreeprojects, which would likely result in undesiredextensions to completion of such projects (Id.).Therefore, argue movants, the Court should issue anOrder, based on the Consent Decrees, the pleadings inthis matter, and the doctrines of laches and estoppel,declaring that Loveland cannot modify the ConsentDecrees by terminating the 1985 agreement, orotherwise, while the Consent Decrees are pending(Id.).

Movants argue that by its express terms, theConsent Decrees do not allow modification by anon-party, and there is no dispute that Loveland is nota party to such Decrees (Id.). They also contend thatbecause any termination of the 1985 agreement wouldcause a change in “interest in or operating role withresponse to” the MSD Polk Run Segment, the ConsentDecrees would necessarily require modification so asto make Loveland a party subject to Consent Decreerequirements (Id.). Because none of the current partiesto the Consent Decrees are seeking to modify theConsent Decrees in the manner that Loveland seeks,and because Loveland is not a party to such Decrees,Movants argue Loveland should not be able to forceany modification during the pendency of the Decrees(Id.).

Movants argue their position is supported by thedoctrine of laches, as Loveland “sat silently for nearlyfive years,” while the Board and Cincinnati madesubstantial commitments to develop and implementmeasures to ensure compliance with the Decrees (Id.).

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In movants’ view, “a party may not, by silence, createan impression of acquiescence that leads others tomake substantial commitments” (Id. quoting Hadix v.Johnson, 66 F.3d 325 (6th Cir. 1995). Similarly,movants argue that Loveland’s silence during thenotice and public comment period should give rise toequitable estoppel barring Loveland from terminatingthe 1985 agreement (Id. citing Great North SavingsCo. v. Ingarra, 66 Ohio St. 2d 503 (1981), First FederalSav. & Loan Ass’n of Toledo v. Perry’s Landing, Inc.,463 N.E. 2d 636, 647 (Ohio Ct. App. 1983)).

Loveland responds that though it does not disputethat it did not make any formal objection to theConsent Decree, that fact alone should not preclude itfrom terminating the 1985 agreement and resumingcontrol of the sewage plant, which it owns (doc. 390).Loveland argues there is no evidence in the recordcontradicting its assertion that it will do everythingrequired by the Consent Decree, including becoming aparty thereto (Id.).

Loveland argues movants make numerousstatements of purported fact that are unsupported bythe record, including that Loveland seeks to modify theConsent Decree, carve out MSD ratepayers, and thatLoveland received notice of the Consent Decree (Id.).Loveland contends the movants merely conjectureabout what “may” or “might” happen in the future suchthat they are not entitled to judgment as a matter oflaw (Id.).

Loveland states it is not seeking to modify theConsent Decrees, but that it “will voluntarily becomeparty to the Consent Decree. . .and [it] will satisfy anyand all obligations related to the Polk Run Plant and

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the Polk Run System” (Id.). Loveland argues the termsof the Consent Decree allows for a successor-in-interest, a role that it could take in assuming Polk Runobligations (Id.).

Loveland argues movants improperly invoke thedoctrine of laches, as there is no authority supportingmovants’ contention that Loveland may not terminatea private contractual agreement like the 1985agreement due to a failure to comment on the ConsentDecrees (Id.). Loveland argues there is no evidence itwas aware of the Federal Register notice, and in anyevent, such notice provided only a general overview ofthe history leading up to the Decree and contractinformation for any comments (Id.).

Even if the doctrine of laches applies, Lovelandcontends, the Court would have to resolve factualissues regarding the requisite “proof of lack ofdiligence,” on Loveland’s part (Id.). Moreover, arguesLoveland, it should be given the opportunity to explainwhy it did not participate in the public comment periodin 2004 (Id.).

As for equitable estoppel, Loveland similarly arguesthat several issues of fact preclude judgment on thepleadings (Id.). Loveland contends that the issue ofmovants’ reliance on Loveland’s lack of objection is anissue of fact (Id.). Loveland reiterates its position thatthere is no evidence it had notice of the ConsentDecree (Id.). In any event, Loveland argues thecomment period in 2004 should not be considered thetime-frame for notice, as the parties to the ConsentDecree did not file until June 8, 2009, the WetWeather Improvement Plan, which details the projectsto be performed, the schedule, and the costs (Id.).

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Movants reply that Loveland does not dispute anymaterial fact set forth in the Complaint (doc. 392). AsMovants see it, there is no dispute that the Polk RunPlant and Segment are part of the Consent Decree,that Notice of the Consent Decree was provided in theFederal Register, that Loveland submitted nocomments nor participated in the Court’s hearing onthe motion for entry of the Consent Decree, and thatLoveland is now trying to terminate the 1985agreement so as to remove its ratepayers and insulatethem from planned rate increases resulting from theConsent Decrees (Id.). Movants further argue there isno dispute that Loveland is not party to the ConsentDecree, that any change of interest or operating rolewith regard to the Polk Run Plant/Segment would begoverned by the Consent Decree and would requiremodification thereof, and that no party to the ConsentDecree has moved to modify the Consent Decree (Id.).

Movants argue that Loveland attempts tomanufacture factual disputes that are all simplyimmaterial to the question of whether Loveland, whichfailed to object during the Consent Decree commentperiod, can terminate the 1985 agreement and requiremodification of the Consent Decree (Id.). Movantsargue the doctrine of laches is indeed applicable to thiscase, as laches is “the neglect to assert a right or aclaim,” something which Loveland failed to timelyaccomplish in failing to assert its claimed right toterminate the 1985 agreement (Id. quoting Kansas v.Colorado, 514 U.S. 673, 687 (1985)). Movants furtherargue that Loveland’s contention regarding a lack ofevidence that it received notice of the Consent Decreesfalls flat because publication of such notice in theFederal Register constitutes notice as a matter of law(Id. citing 44 U.S.C. § 1507, Wolfson v. United States,

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204 Ct. Cl. 83, 492 F.2d 1386, 1392 (1974)(publicationin the Federal Register provides legal notice of anaction to all who may be affected thereby)). Movantsargue they have performed substantial Consent Decreeduties, over the course of five years, based on theassumption that the Polk Run Plant and Segmentwould be part of MSD, and that the resulting revenueswould be available to help fund the ConsentDecree-required capital improvements (Id.). Movantsargue that allowing Loveland to raise its assertedcontract rights at this point would be extraordinarilyprejudicial (Id.).

Having reviewed this matter, the Court findsmovants’ position well-taken that Loveland’s desire tocancel the 1985 agreement amounts to a collateralattack on the Consent Decrees, to which it neverobjected in 2004 when it had the opportunity to do so.The Court therefore finds the doctrines of laches andof equitable estoppel applicable to this case, for all ofthe reasons articulated by movants. Even the sewercase Plaintiff, the United States, when the Court wasconsidering consolidation of the sewer case with theLoveland matter, stated “the regulators believe thatthe appropriate time for Loveland to have raised theseissues was during the consent decree negotiationprocess, or at least during one of the two public noticeand comment periods for the decrees. Yet Loveland didnot” (doc. 346, fn. 1).

Although Loveland is correct that the ConsentDecree envisioned the possibility of successors-in-interest to the Board, it is not correct that anynon-party could acquire such an interest without theconsent or action of a party to the Decree. Here, no

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party to the Consent Decree seeks the changesproposed by Loveland.

The Court finds without question that Loveland’sdesire to terminate the 1985 agreement is rooted inthe desire to insulate its ratepayers from rateincreases due to remediation costs that under theConsent Decrees will be borne across the MSD system.Loveland’s state court complaint and its publicstatements, of which the Court takes judicial notice,establish as much. Even Loveland’s statement that ithas no intent to modify the Consent Decree ringshollow because although it states it “will satisfy anyand all obligations related to the Polk Run Plant andthe Polk Run System,” its current obligations underthe Consent Decree, which were forseeable in 2004,are larger. The Court finds no genuine dispute thatDefendants in the sewer case have relied upon theassumption that Loveland ratepayers were part ofMSD’s global system. It is further without questionthat as a matter of law, Loveland had notice of theConsent Decrees in 2004, but failed to comment orparticipate at such time. Under these circumstances,the Court finds movants entitled to declaratoryjudgment as a matter of law, barring Loveland fromseeking to terminate the 1985 agreement or in anyother way modifying the Consent Decrees, during theirpendency.

IV. Conclusion

The Court finds that even while taking Loveland’sarguments as true, the movants in this matter areentitled to judgment on their pleadings. Inequitywould result if Loveland were permitted to enforce itsnow-stale claim to terminate the 1985 agreement as

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such termination would affect the implementation ofthe Consent Decrees. Loveland has proffered noevidence demonstrating excusable delay in assertingits claim, beyond attempting to argue it lacked notice,while as a matter of law, publication in the FederalRegister constituted notice. 44 U.S.C. § 1507, Wolfsonv. United States, 204 Ct. Cl. 83, 492 F.2d 1386, 1392(1974). Loveland had notice of the Consent Decrees in2004 and did nothing. The parties to the ConsentDecrees reasonably relied on Loveland’s silence as theycrafted the complex, multiyear infrastructureimprovements that have begun the implementation ofthe remedies required by the Consent Decrees. Assuch, doctrine of laches applies to this matter. Gardnerv. Panama R.R. Co., 342 U.S. 29, 30-31 (1951). For thesame reasons, especially Loveland’s silence thatinnocently misled Defendants into relying onLoveland’s participation in the global remedies calledfor by the Consent Decrees, the Court finds Lovelandshould be equitably estopped from withdrawing fromMSD until after full implementation of the ConsentDecrees. First Federal Sav. & Loan Ass’n of Toledo v.Perry’s Landing, Inc., 463 N.E. 2d 636, 647 (Ohio Ct.App. 1983).

Accordingly, the Court GRANTS the Board ofCommissioners of Hamilton County Ohio and the Cityof Cincinnati’s Motion for Judgment on the Pleadingsin Case No. 1:09-CV-0029 (doc. 373), DECLARES thatthe Defendant City of Loveland shall not be permittedto unilaterally terminate its 1985 agreement with theBoard, and ENJOINS the City of Loveland fromattempting to modify the Consent Decree in thismatter by collateral attack, through termination of the1985 Agreement or otherwise, while Consent Decreeobligations are pending. The Court further DENIES as

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MOOT the Plaintiffs’ Motions for Stay (docs. 386, 387)because its judgment on the pleadings terminates theLoveland matter, NO. 1:09-CV-00029, completely. TheClerk is directed to dismiss Case No. 1:09-CV-0029from the Court’s docket.

SO ORDERED.

Dated: January 13, 2010 s/S. Arthur Spiegel S. Arthur SpiegelUnited StatesSenior District Judge

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AO450 (Rev. 5/85) Judgment in a Civil Case

UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF OHIO

Case Number: 1:09-CV-000029

[Filed January 14, 2010] BOARD OF COUNTY COMMISSIONERS )OF HAMILTON COUNTY, OHIO, )

)Plaintiff )

)V. )

)CITY OF LOVELAND, OHIO, et al., )

)Defendants. )

)

JUDGMENT IN A CIVIL CASE

G Jury Verdict. This action came before the Courtfor a trial by jury. The issues have been tried andthe jury has rendered its verdict.

TG Decision by Court. This action came to trial orhearing before the Court. The issues have beentried or heard and a decision has been rendered.

IT IS ORDERED AND ADJUDGED

...the Court GRANTS the Board of Commissioners ofHamilton County Ohio and the City of Cincinnati’sMotion for Judgment on the Pleadings in Case No.

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1:09-CV-0029 (doc. 373 in Case No. 1:02-cv-00107),DECLARES that the Defendant City of Loveland shallnot be permitted to unilaterally terminate its 1985agreement with the Board, and ENJOINS the City ofLoveland from attempting to modify the ConsentDecree in this matter by collateral attack, throughtermination of the 1985 Agreement or otherwise, whileConsent Decree obligations are pending. The Courtfurther DENIES as MOOT the Plaintiffs’ Motions forStay (docs. 386 and 387 in Case No. 1:02-cv-00107)because its judgment on the pleadings terminates theLoveland matter, NO. 1:09-CV-00029, completely. TheClerk is directed to dismiss Case No. 1:09-CV-0029from the Court’s docket.

1/14/2010 JAMES BONINI, CLERK Date Clerk

s/ Kevin Moser (By) Deputy Clerk

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APPENDIX C

UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

No. 10-3116

[Filed October 27, 2010] UNITED STATES OF AMERICA, )

)Plaintiff, )

)BOARD OF COMMISSIONERS )OF HAMILTON COUNTY, OHIO, )

)Plaintiff-Appellee, )

)CITY OF CINCINNATI, OHIO, )

)Intervenor Plaintiff-Appellee, )

)v. )

)CITY OF LOVELAND, OHIO, )

)Defendant-Appellant. )

)

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* Hon. Joseph M. Hood, Senior United States District Judge forthe Eastern District of Kentucky, sitting by designation.

O R D E R

BEFORE: GUY and GRIFFIN, Circuit Judges; andHOOD, District Judge.*

The court having received a petition for rehearingen banc, which was circulated to all active judges ofthis court, none of whom requested a vote on thesuggestion for rehearing en banc, the petition forrehearing has been referred to the original panel. Thepanel has further reviewed the petition for rehearingand concludes that the issues raised in the petitionwere fully considered upon the original submission anddecision of the case. Accordingly, the petition is denied.

ENTERED BY ORDER OF THE COURT /s/ Leonard Green Leonard Green, Clerk