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

Post-Removal Amendments Do Not Oust CAFA Jurisdiction

Posted in Case Summaries

Romano v. Northrop Grumman Corporation, et al., No. 16-5760 (E.D.N.Y. Dec. 15, 2017).

In this action, while denying the plaintiffs’ motion to remand, a district court in New York found that amending a complaint after removal to eliminate class allegations does not deprive a court of jurisdiction under CAFA.

The plaintiffs brought a putative class action in Nassau County Supreme Court on behalf of current and former residents and property owners of Bethpage, New York, asserting various state law causes of action against the defendants, Northrop Grumman Corporation and Northrop Grumman Systems Corporation (collectively “Northrop”), for injuries and damages allegedly suffered as a result of the release of hazardous substances from its former site, formerly known as the Grumman-Aerospace-Bethpage Facility Site (“the Site”), as well as land donated by Grumman Corporation to the Town of Oyster Bay and currently known as Bethpage Community Park (the “Park”).

Among other grounds, Northrop removed the action to federal court pursuant to CAFA. The plaintiffs filed an amended complaint adding the Town of Oyster Bay as a defendant, and subsequently, moved to remand.  The District Court denied the motion.

The plaintiffs argued that the local controversy exceptions to CAFA applied to the instant action. The defendants argued that CAFA jurisdiction is determined at the time the original complaint is filed, that the plaintiffs could not circumvent CAFA by belatedly relying on the local-controversy exception, and that the Town was not a “significant” defendant for purposes of the local controversy exception.

At the outset, the District Court noted that the Second Circuit has held that amending a complaint after removal to eliminate class allegations does not deprive a court of jurisdiction under CAFA. The District Court further noted that the vast majority of courts who have addressed the issue have held that if removal was proper, post-removal amendments do not destroy subject matter jurisdiction under CAFA.

The plaintiffs relied on Benko v. Quality Loan Serv. Corp., 789 F.3d 111 (9th Cir. 2015) in support of its argument.  (Editor’s Note: See the CAFA Law Blog analysis of Benko posted on March 29, 2017).

The District Court noted that in Benko, the court held that “[w]here a defendant removes a case to federal court under CAFA, and the plaintiffs amend the complaint to explain the nature of the action for purposes of our jurisdictional analysis, we may consider the amended complaint to determine whether remand to the state court is appropriate.”  The District Court thus found that Benko was limited to consideration of an amendment which “explain[s] the nature of the action,” a circumstance which was absent in the instant case.  The District Court further found that the limited nature of Benko’s holding was reinforced by the Ninth Circuit in Broadway Grill, Inc. v. VISA Inc., 856 F.3d 1274, 1279 (9th Cir. 2017).  (Editor’s Note: See the CAFA Law Blog analysis of Broadway Grill posted on August 14, 2017).

Finally, the District Court found that precluding an amended complaint filed after removal from triggering one of CAFA’s mandatory exceptions to jurisdiction was particularly appropriate in this case. The District Court found that as enunciated in the amended complaint, the basis for the claim against the Town was (1) its ownership and operation of the Park, which contained the “Former Grumman Settling Ponds” and (2) the New York State Department of Environmental Conservation orders requiring the Town to remediate the Park, despite which volatile organic compounds (“VOCs”) had seeped into the groundwater.  The District Court, however, found that the Park was identified in the original complaint as having been donated to the Town, and containing the “Former Grumman Setting Ponds” which were used to dispose of various wastes generated by industrial operations at the Site, including chromium, PCBs and VOCs resulting in the release of PCBs into the surrounding soil within the Park.  The District Court opined that against this backdrop, the amendment of the complaint, after removal of the action, to add the Town as a defendant gave rise to a strong suggestion of forum shopping.  The District Court thus ruled that it appeared that the sole reason for adding the Town was to assert the local controversy exception.

Accordingly, the District Court denied the plaintiffs’ motion to remand.

-Melissa M. Grand