Ninth Circuit Limits CAFA’s “Single Local Event” Exception and Broadens Removal of Mass Actions

Cruz-Alvarez_FFeatured Expert Contributor – Civil Justice/Class Actions

Frank Cruz-Alvarez, Shook, Hardy & Bacon, L.L.P. (co-authored with Rachel A. Canfield, an associate with the firm)

On April 27, 2015, the U.S. Court of Appeals for the Ninth Circuit issued a 2-1 decision in Allen v. Boeing, reaffirming the court’s prior interpretation of the Class Action Fairness Act of 2005’s (CAFA’s) “single local event” exception, which it previously reviewed in Nevada v. Bank of America Corp.

CAFA expands federal jurisdiction over certain mass actions that fall within its purview. CAFA defines such actions as any civil action in which “monetary relief claims of 100 or more persons are proposed to be tried jointly on the ground that the plaintiff’s claims involve common questions of law or fact.”1

CAFA, however, enumerates a number of exceptions which exclude an action from enjoying CAFA mass action jurisdiction and require remand to state court. Pursuant to the single local event exception, civil actions in which “all of the claims in the action arise from an event or occurrence in the State in which the action was filed, and that allegedly result in injuries in that State or States contiguous to that State” are excluded from CAFA’s mass action jurisdiction.2 In Allen, the Ninth Circuit was called upon to interpret the breadth of this exception.

Plaintiff Jocelyn Allen and over 100 others brought suit against The Boeing Company (Boeing) and Landau Associates (Landau) in Washington state court.3 Plaintiffs alleged property damage as a result of groundwater contamination due to Boeing’s use, storage, and release of hazardous chemicals from the 1960s through the 1990s at Boeing’s Auburn, Washington facility and that Landau had been negligent for over a decade in its investigation and remediation efforts.

Boeing removed the action to the District Court for the Western District of Washington, asserting that removal was proper because the district court had federal diversity jurisdiction or CAFA mass action jurisdiction. The district court disagreed and sent the case back to state court upon concluding that federal diversity jurisdiction was not satisfied and the Plaintiffs’ action fell within the single local event exception to CAFA. Boeing filed a petition for leave to appeal in the Ninth Circuit, which it granted.

Reviewing the district court’s decision de novo, the Ninth Circuit rejected Plaintiff’s argument that the action fell within CAFA’s federal mass action jurisdiction.

To identify the breadth of the single local event exception and thus its applicability in Allen, the Ninth Circuit discussed its prior decision in Bank of America Corp. and a subsequent decision from the Third Circuit that broadly interpreted this exception.4 Resolution of the issue fell squarely on the court’s interpretation of the exception’s undeniably ambiguous term “event or occurrence.” Specifically, the Ninth Circuit recognized its prior decision in Bank of America Corp., in which it narrowly construed the exception to apply “only where all claims arise from a single event or occurrence.”5 The Ninth Circuit then acknowledged the Third Circuit’s more expansive interpretation of the exception in Abraham v. St. Croix Renaissance Group, L.L.P.,6 in which the Third Circuit opined that “an event or occurrence” is established “where the record demonstrates circumstances that share some commonality and persist over a period of time.”7

Faced with two irreconcilable judicial interpretations and acknowledging the ambiguity as to the meaning of the term “event or occurrence,” the Ninth Circuit rejected Abraham and instead opted to follow Bank of America Corp.’s more narrowly construed interpretation that the single local event exception is limited to “a single happening.”8 The Ninth Circuit reasoned that it was not only bound to follow its prior decision in Bank of America Corp., but even if it were not, it would have declined to follow the Third Circuit’s approach because a review of the statutory language revealed that a broad definition was inconsistent with the overall structure of CAFA, the legislative history demonstrated an intent to limit the exception to a one-time environmental issue as opposed to a continuing course of pollution, and because of the strong preference that interstate class actions be heard in federal courts if removed. The Third Circuit and Ninth Circuit split thus remains in effect.

The court further rejected the definition espoused by the Fifth Circuit in Rainbow Gun Club, Inc. v. Denbury Onshore, L.L.C.9 The Denbury decision defined the term “event or occurrence” as “continuous pattern that led to a single event.”10 Distinguishing Denbury on the facts, the Ninth Circuit contrasted the underlying Denbury acts—which occurred over a period of time, but resulted in a single event, namely the depletion of a well—with those outlined in Plaintiffs’ action in Allen, which asserted injury stemming from Boeing’s alleged leeching of hazardous material over a period of forty years and Landau’s negligent investigation and remediation of the leeching over the course of a decade. Even if the Ninth Circuit applied the Denbury rationale to Allen, the court concluded that Plaintiffs’ action would not fit within that interpretation of the exception. Instead, the Ninth Circuit adhered to Bank of America Corp. and vacated the district court’s order remanding the case to state court.

To be sure, if the Ninth Circuit and other circuit courts follow Allen, the decision will open the door for the removal of more mass actions to federal court. Allen broadens the scope of CAFA mass action jurisdiction by limiting application of the single local event exception. Allen’s reach remains to be seen and resolution of the circuit court split is unclear. The Allen Plaintiffs have yet to seek Supreme Court review.

NOTES

1. 28 U.S.C. § 1332(d)(11)(B)(i).

  1. 784 F.3d 625, 628 (9th Cir. 2015).
  1. Id. at 627.
  1. Id. at 633.
  1. Id. at 629 (emphasis added) (quoting Bank of America Corp., 672 F.3d at 668).
  1. 719 F.3d 270 (3d Cir. 2013).
  1. Allen, 784 F.3d at 630 (quoting Abraham, 719 F.3d at 277-78).
  1. Id. at 631-32.
  1. 760 F.3d 405 (5th Cir. 2014).
  1.  Allen, 784 F.3d at 634.

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