Lowery v. Honeywell International, No. 06-AR-1370-S, (N.D. Ala. October 24, 2006).

Wow! Aren’t you glad you don’t have to read this whole case. That’s why we’re here. We do the work and serve it up to you hot and fresh.  The Northern District of Alabama handed down a lengthy opinion discussing a mass action filed before CAFA’s effective date that was removed by a defendant that was added in the third amended complaint. The court remanded the case back to state court with its twenty-nine page opinion.

United States District Judge William M. Acker, Jr. handed down a Memorandum Opinion for the Northern District of Alabama regarding a mass action removed to federal court. Nine plaintiffs, owners of property in Jefferson County, Alabama, filed their action in Alabama state court on January 24, 2003 seeking damages under Alabama law for discharge of pollutants into the air of Jefferson County. The original complaint sought damages of $1,250,000 for each of the nine plaintiffs.

On October 31, 2005 (was the filing on Halloween coincidental?), the plaintiffs totaling 533 filed an Amended Complaint, but instead of seeking the $1,250,00 each, they sought “compensatory and punitive damages to be determined by a jury in excess of the jurisdictional minimum of this court.” On March 16, 2006, the plaintiffs filed a Second Amended Complaint naming 417 plaintiffs. Finally, on June 20, 2006, the plaintiffs filed a Third Amended Complaint naming 419 plaintiffs and adding Alabama Power and Filler Products Company, Inc. as defendants. (While this was not on Christmas, it must have felt that way to the defendants). On July 17, 2006, Alabama Power removed the case to the Northern District of Alabama pursuant to CAFA’s mass action provision and the plaintiffs moved to remand. Later, all the other defendants joined Alabama Power’s notice of removal, but denied they were required to do so because the entire case was removed by Alabama Power’s notice of removal.

Judge Acker began his opinion by asking if the case was successfully removed by all or any of the defendants? To answer this question he examined the significance of the date of commencement. Following the Fifth Circuit opinion in Braud v. Transport Service Co. of Illinios, the Judge held that the action commenced in state court when the complaint was filed, but as to the new defendants, Alabama Power and Filler Products, the action was commenced when the plaintiffs filed the Third Amended Complaint on June 20, 2006. The court held that only Alabama Power and Filler Products could remove pursuant to CAFA. (Editors’ Note:  See the CAFA Law Blog analysis of Braud posted on May 24, 2006).

The other defendants, however, argued that CAFA removal by one defendant added after CAFA’s enactment removes the entire action. The court rejected this argument in several ways. First, the court looked at the definition of a “mass action” noting that each plaintiff must satisfy the jurisdictional amount requirement of $75,000 as well as commencing after February 18, 2005, the effective date of CAFA. Second, the court followed the Ninth Circuit opinion in Abrego and dismissed the discussion of expansion of federal court jurisdiction stated in the Senate Judiciary Report of CAFA. The court described the legislative history as a belated Committee Report with limited persuasive value. Finally, the court refused to apply the Fifth Circuit’s opinion in Braud that removed the entire “class action” to the instant “mass action.”   (Editor’s Note: See the CAFA Law Blog analysis of Abrego posted on May 25, 2006. Also, the court briefly examined the case of Moniz v. Bayer A.G., 2006 WL 2356008 (D. Mass., Aug. 14, 2006) though it was not argued by the parties, but found it inapplicable because it dealt with a class action instead of a mass action.) 

After determining that only the two new defendants could remove, the court examined whether the removal requirements were met. The court again emphasized that in mass actions the jurisdictional amount of $75,000 had to be met as to each defendant. The court put the burden of proving the jurisdictional amount was met on the defendants stating that “nothing in CAFA changes this rule.” The court relied on the recent Eleventh Circuit opinion in Evans v. Walter Industries noting that the party seeking remand had the burden of proof as to exceptions under CAFA only. The word “except” as used in the “mass action” section of CAFA was not an exception Evans referred to. (Editors’ Note:  For our view on the burden of proof issue, see the CAFA Law Blog analysis of Evans posted on May 25, 2006 and the critique of Evans posted on May 26, 2006. See also the law review article by CAFA Law Blog Editors Hunter Twiford, Anthony Rollo and John Rouse entitled “CAFA’s New ‘Minimal Diversity’ Standard For Interstate Class Actions Creates A Presumption That Jurisdiction Exists, With The Burden Of Proof Assigned To The Party Opposing Jurisdiction.”). 

Next, the Court examined whether the removing defendants had met the burden of showing $75,000 in controversy for individual plaintiffs and/or $5 million in controversy in total. Alabama Power maintained the position that the Plaintiffs had to prove the absence of the $75,000 amount in controversy, but took the fallback position that if it bears the burden of establishing $75,000 as to only one plaintiff. The court emphasized for a fourth time that “jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount under subsection (a). The court held that Alabama Power had not shown that any of the plaintiffs had claims worth more than $75,000 nor any proof that the total claims would be worth more than $5 million. 

Finally, the court discussed what Judge Acker called alternative serious jurisdictional deficiencies. First, under 1332 (d)(11)(B)(ii)(I), mass actions do not include actions which arise from an event in the state in which the action was filed and that resulted in injuries in that state. Second, a mass action must meet the general requirements of a class action as defined under 1332(d)(2)-(10). Third, remand is mandatory if greater than two-thirds of the plaintiffs are citizens of that state, if at least one defendants from whom significant relief is sought is a citizen of that state, and if the principal injuries relate to conduct that occurred in that state.   The court held that just because the plaintiffs had not attempted to meet their burden on these local controversy facts does not mean they do not facially appear. 

The court held that because this mass action was commenced against the original defendants before the enactment of CAFA those defendants could not avail themselves of CAFA. Also, Alabama Power and Filler Products, who were added after CAFA’s enactment, failed to establish that the court had subject matter jurisdiction over any plaintiff, much less all the plaintiffs. The court remanded the case back to Alabama State Court.