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CAFA Law Blog Information, cases and insights regarding the Class Action Fairness Act of 2005

CAFA’s Local Controversy Exception: Claims in Prior Class Actions Need Only Be Similar, Not Identical, To Preclude Application of Exception

Posted in Case Summaries

Brown v Saint-Gobain Performance Plastics Corp., Civ. Action No. 1:16-cv-243, 2016 WL 6996136 (D.N.H. Nov. 30, 2016).

In addressing whether the “local controversy” exception to CAFA jurisdiction was met, a federal district court in New Hampshire, following the precedent of the U.S. Fifth Circuit Court of Appeals, determined that the party asserting that an exception to CAFA jurisdiction applies must prove it under a preponderance of the evidence standard.  In Brown v. Saint-Gobain Performance Plastics Corp., the district court determined that the local controversy exception did not apply because different plaintiffs had filed lawsuits in other states “asserting the same or similar factual allegations against any of the defendants,”  even though it affected different plaintiffs in different states because the allegations arose from the same alleged conduct of the defendant.

In Brown v. Saint-Gobain Performance Plastics Corp., the plaintiffs brought two putative class actions against the defendant, alleging that the defendant intentionally released a certain acid (“PFOA”) from its plants into nearby water supplies, which spread to the private wells and soils on the plaintiffs’ properties, decreasing the value of the plaintiffs’ properties and posing a risk to the plaintiffs’ health. The plaintiffs were seeking damages, as well as medical monitoring.  The defendant  removed both putative class actions under CAFA to the federal court. The plaintiffs responded by seeking remand, arguing that CAFA’s local controversy exception applied and that the putative class actions should be returned to state court.

The district court, relying on Fifth Circuit precedent, determined that the plaintiffs would need to prove by a preponderance of the evidence standard that all the elements of the local controversy exception were met. The defendants conceded that two of the factors had been met because the defendant was a New Hampshire citizen and the plaintiffs’ primary injuries occurred in New Hampshire.

The major issue of contention surrounded the “prior class action” element of the local controversy requirement, which requires that “during the 3–year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons.”  The defendants pointed to several other class actions which plaintiffs had filed in New York and Vermont against the defendant within the prior three years, alleging that the defendant’s plants released the same acid, which decreased the plaintiffs’ property values and exposed them to potential health risks. The plaintiffs challenged that characterization, arguing that those cases did not have the “same or similar factual allegations” because those cases addressed harm caused by the defendant’s plants in other states, not the harm caused by the defendant’s New Hampshire plant.

The district court did not find the plaintiffs’ argument satisfying.  The court found that the prior plaintiffs had asserted “the same or similar factual allegations” because the claims from the current putative class actions and those filed in New York and Vermont “arose from effectively the same conduct by the defendant, albeit conduct affecting different plaintiffs and different localities.”  Because the plaintiffs could not prove that the local controversy exception applied, the district court denied the plaintiffs’ motion to remand and retained jurisdiction over the two putative class actions.