Samuel Adams et al v International_Paper_Company_et_al, 2017 WL 1828908 (S.D. Ala. May 5, 2017).

In this action, while remanding the case to the Circuit Court of Mobile County, Alabama (the “Circuit Court”), the United States District Court, Southern District of Alabama (the “District Court”) found that because the defendants were alleged to have participated in a single event or occurrence in different ways, it did not necessitate a conclusion that there were actually multiple events or occurrences.

The plaintiffs, 248 individuals who owned or occupied residential property located in the Africatown Community in Mobile County, Alabama, brought an action in the Circuit Court alleging defendants had released Dioxins, Furans, and related chemicals, as well as other hazardous and harmful chemicals and pollutants, from defendant International Paper Company’s (“International Paper”) property into the air, soil, surface water, and/or groundwater of plaintiffs’ properties and/or residences.

International Paper removed the action to the District Court pursuant to the Class Action Fairness Act (“CAFA”). Eight days after removal to the District Court, the plaintiffs filed a notice of dismissal as to defendant Bay Area Contracting, thereafter filed a First Amended Complaint, substituting in defendant, H.O. Weaver & Sons, Inc. (“H.O. Weaver”).  The District Court allowed plaintiffs’ First Amended Complaint to stand as filed.  The plaintiffs’ alleged H.O. Weaver was liable because it engaged in an active disturbance of International Paper’s property through its concrete and/or asphalt reclamation activities and other conduct, thereby allowing these toxins to migrate to and remain in the waterways, air, soil, surface water, and/or ground water.

International Paper argued the instant action fell within CAFA’s purview because it was a “mass action” within the meaning of the statute. The District Court noted that under the “local event or occurrence” exception, CAFA excludes from the definition of “mass action” any civil action in which “all of the claims 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.”

International Paper argued 28 U.S.C. § 1332(d)(11)(B)(ii)(I) was confined to mean “a truly singular happening,” as opposed to “an action for continuing pollution over decades.” International Paper relied on Allen v. Boeing Co., 784 F.3d 625 (9th Cir. 2015), in which the Ninth Circuit determined that the phrase “event or occurrence” in § 1332(d)(11)(B)(ii)(I) is properly read “as referring to a single happening.”  (Editor’s Note:  See the CAFA Law Blog analysis of Allen, posted on February 7, 2017).  The District Court, however, found that reading the statutory language as applying only to a singular moment in time was not persuasive because the words ‘event’ and ‘occurrence’ did not commonly or necessarily refer in every instance to what transpired at an isolated moment in time, and so no assumption that Congress intended such a restrictive meaning was warranted.

Further, the District Court found Congress clearly contemplated some mass actions were better suited for adjudication by the state courts in which they originated, such that aggregate actions with substantial ties to a particular state remained in the courts of that state. Additionally, the District Court found the legislative history confirmed the purpose of the exception was to allow cases involving environmental torts such as chemical spills to remain in state court if both the event and the injuries were truly local, even though there were some out-of-state defendants.  The District Court noted the plaintiffs had alleged in their First Amended Complaint environmental torts occurring at a truly local level in terms of both the wrongful conduct and the resulting injuries.  The District Court therefore declined to adopt the Ninth Circuit’s reading of § 1332(d)(11)(B)(ii)(I) in Allen.

International Paper further contented the First Amended Complaint’s allegations of tortious conduct by two defendants were fundamentally incompatible with the “local event or occurrence” exception to “mass action” status for CAFA purposes. The District Court, however, found the First Amended Complaint alleged a single course of conduct, the continuous release of toxic pollutants from the International Paper site into the Africatown Community over an extended period of time.  The District Court opined that because the defendants were alleged to have participated in that single event or occurrence in different ways, it did not necessitate a conclusion that there were actually multiple events or occurrences.  The District Court thus held the instant case did not qualify as a “mass action” for CAFA purposes.

Alternatively, the District Court found that even if the instant action did not qualify for the “local event or occurrence” exception, it would remain beyond CAFA’s effective reach due to its “local controversy” exclusion. The District Court found the First Amended Complaint reflected that more than two-thirds of the named plaintiffs were citizens of Alabama, where the action was originally filed.  The alleged property damage and personal injuries for which the plaintiffs sought relief from International Paper and the H.O. Weaver appeared to have occurred exclusively in the State of Alabama, and the plaintiffs had affirmatively pleaded that no other class actions or mass actions had been filed asserting the same or similar factual allegations against either the defendant on behalf of the plaintiffs or anyone else.

International Paper argued the local controversy exclusion’s second requirement that at least one defendant is a defendant from whom significant relief is sought and whose alleged conduct forms a significant basis for the claims asserted was not satisfied. International Paper relied exclusively on its previously-addressed fraudulent joinder argument that H.O. Weaver had no real connection to the controversy.  The District Court, however, while allowing the First Amended Complaint had considered and rejected the contention, and had determined H.O. Weaver was not fraudulently joined.  The District Court found the First Amended Complaint reflected the plaintiffs did, in fact, seek significant relief from H.O. Weaver based on its alleged conduct in actively disturbing the International Paper site and causing the ongoing dispersal of toxic substances into the air, and such conduct formed a significant basis for the plaintiffs’ claims.

Thus, the District Court held the plaintiffs had met their burden of showing that declination of jurisdiction was appropriate under the “local controversy” exception to CAFA, and accordingly, granted the plaintiffs’ motion to remand.

Yaron Shaham