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Allen v. Boeing Co.

United States Court of Appeals, Ninth Circuit

April 27, 2015

JOCELYN ALLEN; LAWRENCE J. ALLEN; VIVIAN LYNN ALLEN; CAREN BARNES; EMERY BLESSING; HORACE BLINER; ROBERT A. BLINER; JASON BOGART; BRENDA BRAMMER; BRETNEY A. BROWNFIELD; DONALD N. CAMPBELL; DEBORAH JEAN CETTOLIN; CAROLE DENISE COGGIN; ROBERT ALLEN COGGIN; ANGELA COMSTOCK; TIMOTHY EUGENE CONNOR; CHRISTINE R. COUNCILMAN; DARYL CRAWFORD; SHAWN CREED-WOOLERY; ANITA DECKER; DANIEL DECKER; KERRI DECKER; SHAWN DECKER; DANIEL ANDREW DOLLOFF; JACOB DOLLOFF; TONI RAE DOLLOFF; JEFFREY DOSCH; KARRIE DOSCH; ALVINE DRAYTON; PATRICIA ANN DUKE; JUANITA DUPONT; DONALD WARREN EDWARDS; TAMMY ELSNER; MICHAEL PATRICK ETHIER; FAY FARRINGTON; LARRY D. FORD, Sr.; KENNETH MARK FOREMAN; SHERRI LEE FOREMAN; MICHAEL GESE; AIMEE GREEN; JOSH GREEN; LEE LYNN HARDY; LISA ANN HARDY; BARRY CURTIS HARMON, II; NICOLE HARMON; DONALD R. HAUPT; KARI LYN HERNANDEZ; RONALD A. HOLT; BRIAN JONES; MIKISHA D. JONES; TATIANA JONES; PHYLLIS KAIN; ROBERT KENNICOTT; ANDREY KINAKH; TONY KINGSADA; MICHELLE KLUSMEYER; SONJA LAPPING; BRITTNEY LYNN LICKEY; ROBIN LINDY; WAYNE LINDY; ASHLEY LISENBY; PAULLET LITTLEFIELD; DEIDRE LORENZ; COURTNEY MACISAAC; PAUL MALAVOTTE; RANDOLPH MALILONG; ANNISSA MANOLOVITZ; LISA MARTIN; MARIE MCASKILL; JILL A. MENTZER; JOHN L. MENTZER; VICKI L. MILLS; KAREN MILLSAP; TERRENCE MILLSAP; KYLIE MOREFIELD; ELIZABETH MORGAN; TARA MOTT; CECILY NEILSEN; ANTHONY B. NOCERA; DIANE C. NOCERA; JESSICA PARKER; RICHARD PARKER; PATRICIA PLATTNER; MIKE RAMIREZ; LUDMILLA REDKA; BRIAN REITZ; KATHLEEN RISMOEN; MATTHEW MONTGOMERY ROBERTS; LURA ELAINE ROBERTSON; JANENE M. ROLLINS; CLAUDE ROUGHT; DAN RUDOLPH; DEBORAH A. RYAN; RICHARD R. RYAN; STEVE SANBORN; MICHAEL C. SCOTT; DAVEENE KIM SEARS; GERALD L. SEARS; DARRON SHOOK; LISA SHOOK; STACIE SIPPO; HAROLD A. SPONBERG; PENNY J. SPONBERG; TRENT B. TESTERMAN; BERNADETTE J. TRANHOLT; ROBIN L. TRANHOLT; JEFFREY A. TREKLA; KAREN R. TREKLA; JESSICA A. VAUGHN; GABRIEL WARREN; MAX WERDEN; TINA WERDEN; STACY WILEY; ANTHONY WILLIAMS; CINDA J. ZITTERICH; RICKY L. ZITTERICH, Plaintiffs - Appellees,
v.
THE BOEING COMPANY, a Delaware Corporation, Defendant - Appellant, And BOEING COMMERCIAL AIRPLANES; LANDAU ASSOCIATES INC, a Washington Corporation; DOES 1-50, inclusive, Defendants

Argued and Submitted April 6, 2015, Seattle, Washington

As Corrected July 2, 2015.

Page 626

Appeal from the United States District Court for the Western District of Washington. D.C. No. 2:14-cv-00596-RSM. Ricardo S. Martinez, District Judge, Presiding.

Michael Sylvain Paisner, of Renton Washington (argued), Jeffrey M. Hanson, Perkins Coie LLP, Seattle, Washington, and Michael F. Williams, Peter A. Farrell, Michael J. Podberesky, and Devein A. DeBacker, Kirkland & Ellis, LLP, of Washington, D.C., for defendant-appellant The Boeing Company.

Robert Finnerty, Thomas V. Giraldi, and David N. Bigelow (argued), Giraldi/Keese of Los Angeles, California, and Thomas Vertetis, Pfau Cochran Vertetis of Tacoma, Washington for the plaintiffs-appellees, Jocelyn Allen, et al.

Before: HAWKINS, RAWLINSON, and CALLAHAN, Circuit Judges.

OPINION

Page 627

CALLAHAN, Circuit Judge.

Jocelyn Allen and others (Plaintiffs) sued The Boeing Company (Boeing) and Landau Associates (Landau) in a Washington state court alleging that for over forty years Boeing released toxins into the groundwater around its facility in Auburn, Washington, and that for over a decade Landau had been negligent in its investigation and remediation of the pollution. Boeing removed the case to the District Court for the Western District of Washington claiming federal jurisdiction based on diversity and the Class Action Fairness Act (CAFA). The district court remanded the case to state court holding that (1) Landau was not fraudulently joined, and thus there was not complete diversity, and (2) Plaintiffs' action came within the local single event exception to CAFA federal jurisdiction, 28 U.S.C. § 1332(d)(11)(B)(ii)(I). Boeing sought and was granted leave to appeal pursuant to 28 U.S.C. § 1453(c). We hold that Plaintiffs' action does not come within the local single event exception to CAFA, and that, therefore, the district court has federal jurisdiction under CAFA. We affirm the district court's determination that Boeing failed to show that Landau was fraudulently joined. We refer Plaintiffs' assertion that their action falls within the local controversy exception to federal jurisdiction under CAFA, 28 U.S.C. § 1332(d)(4)(A), to the district court for consideration in the first instance.

I. Background

From the 1960s to the 1990s, Boeing used solvents that allegedly contained hazardous chemicals in its aircraft parts manufacturing plant in Auburn, Washington. In 1987, the Washington State Department of Ecology (Department of Ecology) initiated requirements for the treatment, storage and handling of hazardous materials. In 2002, Boeing entered into an agreement with the Department of Ecology to investigate and remediate releases of hazardous substances from its manufacturing plant and retained Landau to conduct the investigation and remediation.

In November 2013, Plaintiffs filed an action against Boeing and Landau in King County Superior Court, Washington. Plaintiffs alleged that they " incurred property damages as a result of groundwater contamination by hazardous chemicals at and around" Boeing's Auburn plant " from the 1960s to the present." They further alleged " 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." Based on these allegations, Plaintiffs asserted state law claims of negligence, nuisance, and trespass against Boeing and negligence against Landau.

In April 2014, Boeing removed the action to the District Court for the Western

Page 628

District of Washington. It asserted two independent bases for federal jurisdiction: diversity jurisdiction and CAFA. With respect to diversity jurisdiction, Boeing alleged that Landau had been fraudulently joined to defeat complete diversity.

On September 23, 2014, the district court held that Landau had not been fraudulently joined, but that the action fell within the local single event exception to federal jurisdiction under CAFA, and remanded the case to the state court.

II. The Local Single Event Exception

A. Standard of Review

Boeing filed a petition pursuant to 28 U.S.C. § 1453(c)(1) for leave to appeal, which we subsequently granted. We review the remand order de novo. Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1196 (9th Cir. 2015).

A defendant generally may remove a civil action if a federal district court would have original jurisdiction over the action. 28 U.S.C. § 1441(a). The Supreme Court has clarified that " no antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court." Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554, 190 L.Ed.2d 495 (2014). This clarification reinforces our holding that " the objecting party bears the burden of proof as to the applicability of any express statutory exception under § § 1332(d)(4)(A) and (B)." Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).[1]

B. Federal Jurisdiction

Boeing alleged federal jurisdiction based on diversity, 28 U.S.C. § 1332(a)(1), and on the ground that Plaintiffs' action was a " mass action" pursuant to CAFA, § 1332(d)(11)(B). A " mass action" is defined as " any civil action . . . in which monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiffs' claims involve common questions of law or fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a)." 28 U.S.C. § 1332(d)(11)(B)(i). There is no real question that Plaintiffs' action fits within this definition.

However, § 1332(d)(11)(B)(ii) sets forth certain exceptions to CAFA jurisdiction. In particular, subsection (d)(11)(B)(ii)(I) provides that the term " mass action" does not include a civil action in which " 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." It is the district court's holding that Plaintiffs' action falls within this local single event exception to federal jurisdiction under CAFA that commands our attention.

C. Case law

We addressed the local event exception in Nevada v. Bank of America Corp., 672 F.3d 661 (9th Cir. 2012). In that case, Nevada brought a parens patriae action alleging that " Bank of America misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of

Page 629

[Nevada law]." Id. at 664. In the process of concluding that the parens patriae action was not a " mass action," id. at 672, we stated:

The district court ruled that this action does not qualify as a " mass action" under the " event or occurrence" exclusion in CAFA, which expressly provides that the term " mass action" excludes any civil action in which " 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 . . . ." 28 U.S.C. § 1332(d)(11)(B)(ii)(I). The district court reasoned that it lacked mass action jurisdiction because " the claims all allegedly arise from activity in Nevada and all injuries allegedly resulted in Nevada." This was a misapplication of the " event or occurrence" exclusion.
The " event or occurrence" exclusion applies only where all claims arise from a single event or occurrence. " [C]ourts have consistently construed the 'event or occurrence' language to apply only in cases involving a single event or occurrence, such as an environmental accident, that gives rise to the claims of all plaintiffs." Lafalier v. Cinnabar Serv. Co., Inc., 2010 WL 1486900, at *4 (N.D. Okla. Apr. 13, 2010). Moreover, the legislative history of CAFA supports this interpretation, making clear that the exception was intended to apply " only to a truly local single event with no substantial interstate effects" in order to " allow cases involving environmental torts such as a chemical spill to remain in state court if both the event and the injuries were truly local." S. Rep. No. 109-14, at 41 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 44. The Complaint in this case alleges widespread fraud in thousands of borrower interactions, and thus this action does not come within the " event or occurrence" exclusion.

Id. at 668.

The district court, however, thought that this action against Boeing was more similar to Abraham v. St. Croix Renaissance Group, L.L.L.P., 719 F.3d 270, 58 V.I. 788 (3d Cir. 2013). ER 4. In Abraham, plaintiffs alleged that defendants purchased property knowing that bauxite and piles of red mud on the property had the propensity to disperse in wind, causing injuring plaintiffs and their property. Id. at 273. The defendants removed the case to district court. Id. The plaintiffs argued that removal was improper because their action fell within the local single event exception. Id. The defendants responded that:

the exclusion for " an event or occurrence" did not apply because it requires a single incident and the plaintiffs' complaint alleged that " there were multiple events and occurrences over many years." It emphasized that the exclusion requires that to avoid removal there had to have been just " an event or occurrence" --a " single" event or occurrence.

Id. at 274. The Third Circuit rejected the defendant's perspective and held that the action fell within the local single event exception, explaining:

As the District Court explained, the " word event in our view is not always confined to a discrete happening that occurs over a short time span such as a fire, explosion, hurricane, or chemical spill. For example, one can speak of the Civil War as a defining event in American history, even though it took place over a four-year period and involved many battles." The Court's construction of the word is ...

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