ELR Citation: ELR 20446
No(s). 92-7061 (2d Cir. Dec 29, 1992)

The court holds that a district court properly rejected the "law of the case" doctrine in private landowners' suit against New York's power authority seeking damages and injunctive relief under the Federal Power Act (FPA), and properly determined that it lacked subject matter jurisdiction. The landowners, located along the Niagara River shoreline, brought the suit after the power authority diverted water into power intakes at a hydroelectric facility that caused the river to flow backwards and develop an ice jam. The ice jam, the landowners alleged, caused flooding and ice damage to property. The landowners moved for a preliminary injunction in federal district court to prevent the authority from causing more flooding. Although the judge agreed that FPA §803(c) creates a federal claim and that the district court had jurisdiction to grant injunctive relief, the judge denied such relief because the landowners failed to make the required showing of irreparable harm, a likelihood of success, and a balance of hardships tipping decidedly in their favor. Subsequently, the case was transferred to another judge, who ruled that §803(c) does not create a federal claim and dismissed the complaint.

The court first, sua sponte, addressed whether the second judge's conclusions of law were barred by the "law of the case" doctrine. The court holds that the district court did not err in rejecting the "law of the case" doctrine in this case. In deciding to reconsider the first judge's finding concerning the landowners' §803(c) claim, the second judge emphasized that the finding was made on a motion for a preliminary injunction and the issue of whether §803(c) creates a federal cause of action for damages was not directly before the first judge. Thus, the second judge concluded that the first judge's holding in regard to the federal claim question was merely dictum. The court approves this result, without deciding whether the first judge's holding was holding or dictum, because the decision of both the trial and appellate courts on whether to deny or grant a temporary injunction does not preclude the parties from litigating the merits of the case. Moreover, the "law of the case" doctrine permits a change of position if it appears that the court's original ruling was erroneous.

Turning to the merits, the court holds that the district court did not err in finding that the landowners' cause of action under §803(c) failed to state a claim on which relief could be granted. Neither the language of FPA §803(c) nor its legislative history reveals any congressional intent to create a new private cause of action against Federal Energy Regulatory Commission (FERC) licensees. Additionally, most courts have ruled that §803(c) does not create an independent federal right-of-action. The court next holds that the district court did not err in concluding that it lacked jurisdiction to review the landowners' claims because they failed to exhaust FERC's administrative remedies. Congress established a system and special procedures for dealing with complaints to FERC, which must be exhausted before resorting to judicial review. The court rejects the landowners' argument that they are free from these administrative constraints because they are not seeking to review anything, but only to compel the authority to adhere to its own procedures. FERC has the power and the expertise to decide if the license was violated or if the current operating procedures should be changed.

Finally, the court holds that the district court did not abuse its discretion in deciding not to exercise supplemental jurisdiction over the landowners' state-law negligence claims. Once a district court has determined that the original federal claim should be dismissed, its decision to relinquish jurisdiction over a supplemental state claim will be reversed only for an abuse of discretion. Here, the district court reasonably concluded that the interests of federalism and comity strongly supported dismissal of the state-law claim because through the FPA, Congress was determined not to infringe the traditional jurisdiction of the states in areas of property rights and tort liability.

Counsel for Plaintiffs/Appellants
John P. Bartolomei, Paul A. Grenga
Bartolomei & Grenga
335 Buffalo Ave., Niagara Falls NY 14303
(716) 282-2774

Counsel for Defendant/Appellee
Andrew Feldman, Ann W. Herman
Damon & Morey
1000 Cathedral Pl., 298 Main St., Buffalo NY 14202
(716) 856-5500