Tuesday, April 28, 2015
Decades-Long Pollution Not ‘Single Event’ Under CAFA—Panel
District Judge Ordered to Reconsider Whether “Mass Action” Belongs in Federal Court
By KENNETH OFGANG, Staff Writer
The alleged continuing contamination of groundwater supplies, and the claimed ongoing failure of an environmental monitoring and remediation company to clean it up, do not fall under the “local single event” exception to the Class Action Fairness Act, the Ninth U.S. Circuit Court of Appeals ruled yesterday.
Acknowledging their disagreement with the Third Circuit, which found that a similar case fell within the exception and could not be removed to federal court, the Ninth Circuit judges said the alleged tort must be a “single happening” for the exception to apply. Since the plaintiffs in the case accused one defendant of polluting for more than 40 years, and the other of having breached its duty to prevent the pollution for over 10 years, the exception is obviously inapplicable, the judges said.
The panel sent the suit by residents of the Auburn, Wash. area against The Boeing Company and Landau Associates, Inc. back to the district judge to determine whether another exception to CAFA might apply.
The plaintiffs filed suit in state court in Seattle in 2013, alleging state tort claims based on “groundwater contamination by hazardous chemicals at and around” Boeing’s Auburn plant “from the 1960s to the present” and that “Boeing and its environmental-remediation contractor, Landau, are liable for negligently investigating, remediating, and cleaning up the contamination and for failing to warn Plaintiffs of the contamination.”
Boeing removed the case to the U.S. District Court for the Western District of Washington under CAFA. The statute generally gives federal courts jurisdiction over class actions involving more than 100 class members, or “mass actions” involving more than 100 plaintiffs, if there is at least partial diversity of citizenship.
The plaintiffs moved to remand the case to state court. Boeing opposed the motion, arguing that complete diversity was not required—based on CAFA—and that even if it was, the requirement was satisfied because Landau was fraudulently joined to defeat federal jurisdiction.
Boeing, although founded in Seattle in 1916, is incorporated in Delaware and headquartered in Chicago. Landau is based in Washington state.
Remand to State Court
District Judge Ricardo Martinez granted the motion to remand. He found that the “local single event” exception—which provides that a suit with more than 100 plaintiffs is not a mass action if “all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly resulted in injuries in that State or in States contiguous to that State”—applied.
He also and that Landau was properly joined because there was at least some possibility of its being found liable under state law.
He did not rule on another argument made by the plaintiffs: that the “local controversy” exception to CAFA also applied.
Judge Consuelo Callahan, writing for the Ninth Circuit yesterday, explained that the Fifth, Seventh, and Eleventh circuits have all taken the position that the exception must be narrowly defined, unlike the Third Circuit in Abraham v. St. Croix Renaissance Group, L.L.L.P., 719 F.3d 270 (3d Cir. 2013).
In Abraham, the plaintiffs alleged that the defendants purchased property knowing that bauxite and piles of red mud on the property had the propensity to disperse in wind, causing injury to plaintiffs and their property. The appeals court said this could qualify as a single local event “[b]ecause the words ‘event’ and ‘occurrence’ do not commonly or necessarily refer in every instance to what transpired at an isolated moment in time,” so that “where the record demonstrates circumstances that share some commonality and persist over a period of time, these can constitute ‘an event or occurrence’” within the meaning of the statutory exception.
Callahan wrote of Abraham:
“We find that such a broad definition renders portions of CAFA redundant and is not supported by legislative history. Furthermore, even if ‘event or occurrence’ could be interpreted to cover one continuing activity or tort, Plaintiffs in this case seek relief from at least two distinct activities.”
The judge went on to say, however, that the district judge was correct about the joinder of Landau. Although the plaintiffs had no direct relationship with Landau, she said, a trier of fact might find that they were third-party beneficiaries of the company’s contract with Boeing, so Boeing failed to meet its “heavy burden” on the issue of fraudulent joinder.
Since the panel ruling leaves unresolved the question of whether the local controversy exception—which provides for remand to state court if more than two-thirds of the plaintiffs are citizens of the state in which the action is filed and at least one defendant “from whom significant relief is sought” and “whose alleged conduct forms a significant basis for the claims asserted” is a citizen of the same state—applies, the case must be remanded to district court for a ruling on that issue, Callahan said.
Judge Johnnie Rawlinson and Senior Judge Michael Daly Hawkins joined the opinion.
The case is Allen v. Boeing Company, 15-35162.
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