Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca4-06-01986/USCOURTS-ca4-06-01986-0/pdf.json

Parties Involved:
Benjamin Aiken
Appellee
Mike Ford
Appellee
Michael B. Lanier
Appellant
Norfolk Southern Corporation
Appellee
Norfolk Southern Railway Company
Appellee
James Thornton
Appellee

Document Text:

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 06-1986

MICHAEL B. LANIER,

Plaintiff - Appellant,

versus

NORFOLK SOUTHERN CORPORATION; NORFOLK SOUTHERN

RAILWAY COMPANY; BENJAMIN AIKEN; MIKE FORD;

JAMES THORNTON,

Defendants - Appellees.

Appeal from the United States District Court for the District of

South Carolina, at Aiken. Margaret B. Seymour, District Judge.

(1:05-cv-03476-MBS)

Argued: September 26, 2007 Decided: December 5, 2007

Before MOTZ and KING, Circuit Judges, and Robert J. CONRAD, Jr.,

Chief United States District Judge for the Western District of

North Carolina, sitting by designation.

Affirmed by unpublished per curiam opinion.

ARGUED: Douglas M. Schmidt, New Orleans, Louisiana, for Appellant.

W. Howard Boyd, Jr., GALLIVAN, WHITE & BOYD, P.A., Greenville,

South Carolina, for Appellees. ON BRIEF: Daniel B. White, Ronald

G. Tate, Jr., Jennifer E. Johnsen, Thomas E. Vanderbloemen,

GALLIVAN, WHITE & BOYD, P.A., Greenville, South Carolina, for

Appellees Norfolk Southern Corporation and Norfolk Southern Railway

Company; Gray T. Culbreath, COLLINS & LACY, P.C., Columbia, South

Carolina, for Appellee Benjamin Aiken; Monteith Powell Todd,

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SOWELL, GRAY, STEPP & LAFFITTE, L.L.C., Columbia, South Carolina,

for Appellee Mike Ford; J. Arthur Davison, FULCHER HAGLER, L.L.P.,

Augusta, Georgia, for Appellee James Thornton.

Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:

Michael B. Lanier appeals the district court’s order

dismissing his case and asserts that the district court incorrectly

found that no duty was owed to him under South Carolina tort law.

Lanier also argues for the first time on appeal that jurisdiction

under the Class Action Fairness Act (“CAFA”) was improper. We find

that jurisdiction was proper under CAFA and affirm the district

court’s order.

I.

On January 5, 2005, three employees of Norfolk Southern

Corporation and Norfolk Southern Railway Company (collectively

referred to as “Norfolk”) took a local train to the Avondale Mills,

Inc. (“Avondale”) facility in Graniteville, South Carolina, to

deliver and pick up railroad cars. In order to deliver and pick up

railroad cars to and from Avondale, the Norfolk employees had to

open a rail switch located on the main railroad line to a side rail

that leads directly into the Avondale facility. While performing

these tasks, the employees realized that they could not finish

their work at Avondale without violating the 12-hour work rule

mandated by federal law. As a result, the employees parked the

train at the Avondale facility until they could resume their work

the following morning. Because the train was too long to fit

inside the Avondale facility, the employees placed a locomotive and

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a couple of railroad cars on the side rail in close proximity to

the main railroad.

In the early hours of January 6, 2005, another train owned and

operated by Norfolk was traveling toward Graniteville on the main

railroad line. This train consisted of 3 locomotives and 48

railroad cars, some of which contained chlorine. Because the

employees failed to realign the main switch to its proper position,

the train was diverted from the main line to the side rail

colliding with the other railroad cars left on the side rail the

night before. 

The impact of the collision caused some of the railroad cars

containing chlorine to rupture and chlorine gas to be released.

The chlorine gas damaged Avondale’s plant and prevented Avondale

from maintaining its production level. Avondale laid off some

employees and eventually decided to close its facilities

permanently. On December 8, 2005, Lanier, an employee of Avondale,

filed a class action complaint for damages against Norfolk in the

South Carolina Court of Common Pleas. Lanier’s putative class

consisted of former Avondale employees who were laid off or

discharged from their employment subsequent to the train

derailment. Lanier contended that Norfolk’s negligence resulted in

the derailment, the release of chlorine gas, and the disruption of

Avondale’s production capacity causing employee layoffs. 

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Norfolk filed a notice of removal on December 13, 2005.

Norfolk argued that removal was proper under CAFA, 28 U.S.C.A. §

1453(b) (West 2006), among other grounds. Norfolk asserted that

the allegations of injuries and damages in Lanier’s complaint met

the $5 million amount in controversy threshold and satisfied the

minimal diversity requirement. Lanier moved to remand on January

11, 2006, but failed to respond to Norfolk’s argument that the

court had jurisdiction under CAFA in his motion. 

On July 5, 2006, the district court ordered that Lanier’s

motion to remand be denied and Norfolk’s motion to dismiss be

granted. The district court concluded that Lanier’s proposed class

met the jurisdictional requirements of CAFA and thus removal was

proper. The district court thereafter concluded that Lanier’s

complaint failed to state a claim upon which relief could be

granted because Norfolk owed no legal duty to Lanier and the

putative class members.

On July 17, 2006, Lanier filed a motion for new trial, or in

the alternative, for relief from the court’s order. The district

court denied the motion and continued to find that Norfolk did not

owe Lanier and the purported class any duty of care. Lanier

thereafter timely filed his notice of appeal.

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II.

As with all questions implicating subject matter jurisdiction

of federal courts, we review the denial of a motion to remand to

state court de novo. Lontz v. Tharp, 413 F.3d 435, 439 (4th Cir.

2005). CAFA amended Title 28’s provisions on diversity of

citizenship and removal for certain class action cases. Section

1332(d) provides that 

district courts shall have original jurisdiction of any

civil action in which the matter in controversy exceeds

the sum or value of $5,000,000, exclusive of interest and

costs, and is a class action in which . . . any member

of a class of plaintiffs is a citizen of a State

different from any defendant. 

28 U.S.C.A. § 1332(d)(2)(A) (West 2006). For the district court to

have original jurisdiction over a class action under CAFA, the

proponent of removal must show minimal diversity, and it must be

clear from the face of the complaint that the amount in controversy

exceeds $5 million. See Wiggins v. North Am. Equitable Life Assur.

Co., 644 F.2d 1014, 1016-17 (4th Cir. 1981) (ordinarily determining

the jurisdictional amount from the plaintiff’s complaint but also

recognizing that “if it appears to a legal certainty that the

plaintiff cannot recover the jurisdictional amount, the case will

be dismissed for want of jurisdiction . . . . However, the legal

impossibility of recovery must be so certain as virtually to

negative the plaintiff’s good faith in asserting the claim”

(quoting McDonald v. Patton, 240 F.2d 424, 426 (4th Cir. 1957));

see also Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448-

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1Since Avondale closed the factory, the purported class could

expand to over 2,000 employees. If that were the case, each

plaintiff would need to recover a little over $2,000 per person to

exceed the $5 million requirement. We find that Norfolk has met

its burden of showing the amount in controversy will exceed $5

million.

2For the first time on appeal, Lanier argues that the local

controversy exception under 28 U.S.C.A. § 1332(d)(4) applies.

Section 1332(d)(4) states that a district court “shall decline to

exercise jurisdiction” over a class action if greater than 2/3 of

the class are from the state in which the action was filed; at

least one defendant from whom significant relief is sought is from

that same state; the principal injuries resulted from conduct

within the same state; and that no other class actions have been

filed asserting the same thing. 28 U.S.C.A. § 1332(d)(4) (West

2006). This court will generally not consider issues raised for

7

49 (7th Cir. 2005) (discussing the amount in controversy under CAFA

and explaining that “[t]he question is not what damages the

plaintiff will recover, but what amount is ‘in controversy’ between

the parties . . . . Once the proponent of jurisdiction has set out

the amount in controversy, only a ‘legal certainty’ that the

judgment will be less forecloses federal jurisdiction”).

The district court concluded that the amount in controversy

was satisfied and minimal diversity between Lanier and Norfolk was

present. Because Lanier’s complaint indicated that the purported

class consisted of at least 350 people seeking damages, it would

take a minimum of $15,000 per person to exceed the $5 million

amount in controversy.1

 Our review of the record shows that

minimal diversity is present between the parties and there is

nothing in the record that would support a finding to a legal

certainty that the judgment would be less than $5 million.2 Thus,

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the first time on appeal. Muth v. United States, 1 F.3d 246, 250

(4th Cir. 1993). “Exceptions to this general rule are made only in

very limited circumstances, such as where refusal to consider the

newly-raised issue would be plain error or would result in a

fundamental miscarriage of justice.” Id. As Lanier did not raise

this argument to the district court and provides no facts

warranting a finding of exceptional circumstances, we do not

consider this argument. Id. 

8

we conclude that jurisdiction exists under CAFA, and the district

court correctly denied Lanier’s motion to remand.

III.

The standard of review of a Rule 12(b)(6) dismissal is de

novo. Schatz v. Rosenberg, 943 F.2d 485, 489 (4th Cir. 1991).

This Court will construe factual allegations in the nonmoving

party’s favor and will treat them as true, id., but is “not so

bound with respect to [the complaint’s] legal conclusions.” Dist.

28, United Mine Workers, Inc. v. Wellmore Coal Corp., 609 F.2d

1083, 1085-86 (4th Cir. 1979). The plaintiff’s “[f]actual

allegations must be enough to raise a right to relief above the

speculative level.” Bell Atlantic Corp. v. Twombly, 127 S. Ct.

1955, 1965 (2007). “[O]nce a claim has been stated adequately, it

may be supported by showing any set of facts consistent with the

allegations in the complaint.” Id. at 1969. A complaint attacked

by a Rule 12(b)(6) motion to dismiss will survive if it contains

“enough facts to state a claim to relief that is plausible on its

face.” Id. at 1974. 

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3Lanier asserts that the long-standing supply contract between

Norfolk and Avondale creates a duty to the employees. However,

Lanier failed to allege this contractual relationship in his

9

In construing South Carolina tort law, the district court held

that Norfolk owed no duty to Lanier or the putative class members

for lost wages and thus Lanier failed to state a claim upon which

relief could be granted. Lanier asserts, however, that the

district court failed to consider the fact that Norfolk’s longstanding supply contract with Avondale created a duty of care from

Norfolk to Avondale and thus derivatively to Avondale’s employees.

Lanier also contends that Norfolk owed a duty to Avondale’s

employees because a factory closing creating loss for Avondale

employees was a foreseeable consequence of negligently carrying

ultrahazardous materials.

Under South Carolina law, “[a] cause of action for negligence

requires: (1) the existence of a duty on the part of the defendant

to protect the plaintiff; (2) the failure of the defendant to

discharge the duty; (3) injury to the plaintiff resulting from the

defendant’s failure to perform.” South Carolina State Ports Auth.

v. Booz-Allen & Hamilton, Inc., 346 S.E.2d 324, 325 (S.C. 1986).

“The key inquiry is what duty, if any, is owed by the tortfeasor to

the third party.” Barker v. Sauls, 345 S.E.2d 244, 244 (S.C.

1986). In order for a duty to exist, the parties must have a

relationship recognized by law. This duty may be derived from the

tortfeasor’s contractual relationship with another.3 See id. 

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complaint. Our standard of review on a 12(b)(6) motion is to “test

the sufficiency of a complaint.” Edwards v. City of Goldsboro, 178

F.3d 231, 243 (4th Cir. 1999). As this fact was not included in

the complaint, we will not consider this argument on appeal.

4

See also Robins Dry Dock & Repair Co. v. Flint, 275 U.S. 303

(1927) (holding no right to recover for economic loss resulting

from defendant’s injury to a third party with whom plaintiff has

contractual business relationship); Booz-Allen, 346 S.E.2d at 324

(holding no duty was owed to pilots and longshoremen whose work

suffered as a result of a consultant’s opinion that the Charleston

port would not have as much traffic as Savannah); Edens & Avant

Inv. Props., Inc. v. Amerada Hess Corp., 456 S.E.2d 406 (S.C. Ct.

App. 1995) (holding no liability in negligence for plaintiff’s outof-pocket “development costs” allegedly lost as a result of

defendant’s pollution injury to property which plaintiff had option

to purchase); Willis, 314 S.E.2d at 919 (holding no liability for

the loss of eight days of work due to a train derailment). 

10

While the employees’ job losses were arguably foreseeable,

tort law does not stretch so far as to impose liability on Norfolk

for the losses of those with whom it has no direct relationship.

Booz-Allen, 346 S.E.2d at 325 (“Foreseeability of injury, in the

absence of a duty to prevent that injury, is an insufficient basis

on which to rest liability. Foreseeability itself does not give

rise to a duty.” (citations omitted)). To avoid disproportionate

liability, South Carolina courts have cut off recovery for

plaintiffs who suffer economic loss, but have no direct physical

injury and no direct relationship with the defendant. See Hubbard

& Felix, The South Carolina Law of Torts 49 (3d ed. 2004)

(“[P]ersons who suffer indirect economic loss from loss of

employment as a result of injury to the enterprise where they work

cannot usually recover for such loss.”).4 We hold that South

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Carolina courts would find the nature of Lanier’s indirect economic

loss too remote for recovery in tort. See Booz-Allen, 346 S.E.2d

at 326 (“The concept of duty in tort liability must not be extended

beyond reasonable limits.”); Willis v. Georgia N. Ry. Co., 314

S.E.2d 919, 919 (Ga. Ct. App. 1984) (holding in a similar train

derailment case that the “damages sought by appellants have

consistently been held too remote in nature for recovery”). We

conclude that Lanier has failed to plead enough facts to state a

claim that is plausible on its face. Accordingly, we find that the

court properly granted Norfolk’s Rule 12(b)(6) motion to dismiss

for failure to state a claim.

IV.

For the foregoing reasons, we affirm the decision of the

district court.

AFFIRMED

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