The Ninth Circuit found that the plaintiffs’ complaint sufficiently alleged that the plaintiffs sought significant relief from the local defendant. The plaintiffs therefore satisfied the requirements CAFA’s local controversy exception to divest the federal court of its jurisdiction. The Ninth Circuit affirmed the District Court’s order remanding the action.
The plaintiffs in this case were more than 108 individuals. The plaintiffs brought an action in Washington state court alleging that for several decades the defendant Boeing Company (“Boeing”) released toxins into the groundwater around its facility in Auburn, Washington, and that for over a decade the defendant Landau Associates (“Landau”) had been negligent in its investigation, remediation and containment of the hazardous substances.
The plaintiffs sought damages for the foreseeable injuries, including the difference between the current value of their properties and such value if the harm had not been done, the cost of remediation actions, costs of repair or restoration, the value of the use of the continuous trespass, injuries to persons, medical costs, medical monitoring, attorneys’ fees and expenses as allowed, and consequential damages flowing from the contamination as a proximate result of Landau’s conduct.
In April 2014, Boeing, the out-of-state defendant, removed the action asserting jurisdiction based on diversity and the CAFA. The District Court found no complete diversity of citizenship and remanded the case to the state court on the ground that the action came within CAFA’s single-event exception. The Ninth Circuit affirmed the District Court order and rejected Boeing’s argument of fraudulent joinder of Landau. The Court, however, vacated and remanded the action finding that the case did not come within CAFA’s single-event exception. The District Court once again remanded the action to the state court finding that the plaintiffs’ action came within the local controversy exception.
The District Court noted that Boeing did not dispute that more than two-thirds of the plaintiffs and Landau were Washington citizens. Boeing also did not dispute that the plaintiffs’ principal injuries were incurred in Washington, and no similar class action has been filed against Boeing and Landau in the last three years. Boeing appealed again, contending that the plaintiffs did not seek “significant relief” from Landau and that Landau’s conduct did not form a “significant basis” for the plaintiffs’ claims.
The Ninth Circuit noted that the plaintiffs had claimed that the movement of the volatile organic chemicals off Boeing’s property caused them harm, and that Landau undertook in 2002 to investigate, remediate and clean up the hazardous materials moving off Boeing’s property and failed to take reasonable steps to do so. The Court found that the fact that Boeing created the pollution did not in itself render insignificant the damages caused by Landau’s alleged failure to investigate and remediate the spreading pollution.
Although the plaintiffs had not quantified their alleged damages, the Ninth Circuit found that the damages appeared to be the same whether caused by Boeing or Landau. The plaintiffs’ allegations sufficiently established the significant relief they were seeking from Landau, the in-state defendant. Boeing then asserted that the plaintiffs had not alleged that Landau’s conduct formed a “significant basis” for their claims because they have not distinguished Landau’s act from Boeing’s acts, and thus, failed to establish that Landau’s conduct was important relative to Boeing’s.
The Ninth Circuit, however, found that the plaintiffs’ allegation that they had been harmed by Landau’s independent failure for over ten years to properly investigate and remediate the spreading toxic chemical plumes formed a sufficient “significant basis” for their claim. Therefore, Boeing’s challenge to the viability of the plaintiffs’ claims against Landau was not convincing.
The Ninth Circuit concluded that the plaintiffs had adequately pled a negligence claims against Landau, as the obvious intended third-party beneficiaries of the Boeing-Landau contract, and their allegations were sufficient to invoke the local controversy exception. Accordingly, the Ninth Circuit affirmed the District Court’s remand of the action to the state court.