Opinion ID: 2796638
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Heading: The Local Single Event Exception

Text: Boeing filed a petition pursuant to 28 U.S.C. § 1453(c)(1) for leave to appeal, which we subsequently granted. We review the remand order de novo. Ibarra v. Manheim Invs., Inc., 775 F.3d 1193, 1196 (9th Cir. 2015). A defendant generally may remove a civil action if a federal district court would have original jurisdiction over the action. 28 U.S.C. § 1441(a). The Supreme Court has clarified that “no antiremoval presumption attends cases invoking CAFA, which Congress enacted to facilitate adjudication of certain class actions in federal court.” Dart Cherokee Basin Operating Co. v. Owens, 135 S. Ct. 547, 554 (2014). This clarification reinforces our holding that “the objecting party 6 bears the burden of proof as to the applicability of any express statutory exception under §§ 1332(d)(4)(A) and (B).” Serrano v. 180 Connect, Inc., 478 F.3d 1018, 1024 (9th Cir. 2007).1
Boeing alleged federal jurisdiction based on diversity, 28 U.S.C. § 1332(a)(1), and on the ground that Plaintiffs’ action was a “mass action” pursuant to CAFA, § 1332(d)(11)(B). A “mass action” is defined 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 plaintiffs’ claims involve common questions of law or fact, except that jurisdiction shall exist only over those plaintiffs whose claims in a mass action satisfy the jurisdictional amount requirements under subsection (a).” 28 U.S.C. § 1332(d)(11)(B)(i). There is no real question that Plaintiffs’ action fits within this definition. However, § 1332(d)(11)(B)(ii) sets forth certain exceptions to CAFA jurisdiction. In particular, subsection (d)(11)(B)(ii)(I) provides that the term “mass action” does not include a civil action in which “all of the claims in the action arise 1 Our position is consistent with the perspectives of the Fifth, Seventh, and Eleventh Circuits. See Frazier v. Pioneer Amer. LLC, 455 F.3d 542, 546 (5th Cir. 2006); Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 680 (7th Cir. 2006); and Evans v. Walter Indus., Inc., 449 F.3d 1159, 1164 (11th Cir. 2006). 7 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.” It is the district court’s holding that Plaintiffs’ action falls within this local single event exception to federal jurisdiction under CAFA that commands our attention.
We addressed the local event exception in Nevada v. Bank of America Corp., 672 F.3d 661 (9th Cir. 2012). In that case, Nevada brought a parens patriae action alleging that “Bank of America misled Nevada consumers about the terms and operation of its home mortgage modification and foreclosure processes, in violation of [Nevada law].” Id. at 664. In the process of concluding that the parens patriae action was not a “mass action,” id. at 672, we stated: The district court ruled that this action does not qualify as a “mass action” under the “event or occurrence” exclusion in CAFA, which expressly provides that the term “mass action” excludes any civil action 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 resulted in injuries in that State . . . .” 28 U.S.C. § 1332(d)(11)(B)(ii)(I). The district court reasoned that it lacked mass action jurisdiction because “the claims all allegedly arise from activity in Nevada and all injuries allegedly resulted in Nevada.” This was a misapplication of the “event or occurrence” exclusion. The “event or occurrence” exclusion applies only where all claims arise from a single event or occurrence. “[C]ourts have consistently construed the ‘event or occurrence’ language to apply only in cases involving a single event or occurrence, such as an environmental 8 accident, that gives rise to the claims of all plaintiffs.” Lafalier v. Cinnabar Serv. Co., Inc., 2010 WL 1486900, at  (N.D. Okla. Apr. 13, 2010). Moreover, the legislative history of CAFA supports this interpretation, making clear that the exception was intended to apply “only to a truly local single event with no substantial interstate effects” in order to “allow cases involving environmental torts such as a chemical spill to remain in state court if both the event and the injuries were truly local.” S. Rep. No. 109–14, at 41 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 44. The Complaint in this case alleges widespread fraud in thousands of borrower interactions, and thus this action does not come within the “event or occurrence” exclusion. Id. at 668. The district court, however, thought that this action against Boeing was more similar to Abraham v. St. Croix Renaissance Group, L.L.L.P., 719 F.3d 270 (3d Cir. 2013). ER 4. In Abraham, plaintiffs alleged that defendants purchased property knowing that bauxite and piles of red mud on the property had the propensity to disperse in wind, causing injuring plaintiffs and their property. Id. at 273. The defendants removed the case to district court. Id. The plaintiffs argued that removal was improper because their action fell within the local single event exception. Id. The defendants responded that: the exclusion for “an event or occurrence” did not apply because it requires a single incident and the plaintiffs’ complaint alleged that “there were multiple events and occurrences over many years.” It emphasized that the exclusion requires that to avoid removal there had to have been just “an event or occurrence”—a “single” event or occurrence. 9 Id. at 274. The Third Circuit rejected the defendant’s perspective and held that the action fell within the local single event exception, explaining: As the District Court explained, the “word event in our view is not always confined to a discrete happening that occurs over a short time span such as a fire, explosion, hurricane, or chemical spill. For example, one can speak of the Civil War as a defining event in American history, even though it took place over a four-year period and involved many battles.” The Court’s construction of the word is consistent with the word’s common usage. Important events in history are not always limited to discrete incidents that happened at a specific and precise moment in time. As further support for this construction, we note that the plain text of the exclusion and the statutory scheme do not delimit the words “event or occurrence” to a specific incident with a fixed duration of time. Because the words “event” and “occurrence” do not commonly or necessarily refer in every instance to what transpired at an isolated moment in time, there is no reason for us to conclude that Congress intended to limit the phrase “event or occurrence” in § 1332(d)(11)(B)(ii)(I) in this fashion. Accordingly, where the record demonstrates circumstances that share some commonality and persist over a period of time, these can constitute “an event or occurrence” for purposes of the exclusion in § 1332(d)(11)(B)(ii)(I). In short, treating a continuing set of circumstances collectively as an “event or occurrence” for purposes of the mass-action exclusion is consistent with the ordinary usage of these words, which do not necessarily have a temporal limitation. Giving the words “event” or “occurrence” their ordinary meaning is not at odds with the purpose of the statutory scheme of CAFA. Congress clearly contemplated that some mass actions are better suited to adjudication by the state courts in which they originated. This intent is evident in both the “event or occurrence” exclusion for mass actions, as well as the local-controversy and home-state exceptions in § 1332(d)(4)(A) and (B) for class actions. These provisions assure that aggregate actions 10 with substantial ties to a particular state remain in the courts of that state. 719 F.3d at 277–78 (internal citations omitted).

We must consider whether the district court’s determination that Plaintiffs’ action comes within the local single event exception based on the Third Circuit’s opinion in Abraham, should be, or can be, reconciled with our opinion in Nevada. With due respect to the Third Circuit, we do not agree with its definition of “event or occurrence” as that term is used in CAFA. We find that such a broad definition renders portions of CAFA redundant and is not supported by legislative history. Furthermore, even if “event or occurrence” could be interpreted to cover one continuing activity or tort, Plaintiffs in this case seek relief from at least two distinct activities. Initially, we note that to the extent that the definition of “event or occurrence” in Abraham conflicts with the definition in Nevada, we are bound by our opinion in Nevada. Rodriguez v. AT & T Mobility Services LLC, 728 F.3d 975, 979 (9th Cir. 2013) (holding that “we are bound by prior panel decisions . . . and can only reexamine them when their ‘reasoning or theory’ of that authority is 11 ‘clearly irreconcilable’ with the reasoning or theory of intervening higher authority”). However, even were we free to interpret the phrase as we would, we would not adopt the Third Circuit’s approach. In context, it is clear that the phrase “event or occurrence” was not intended to cover something like the Civil War. The common definition of “event” is “something (especially something important or notable) that happens”2 or “a thing that happens, esp. one of importance.”3 Similarly, the common definition of “occurrence” is “something that happens”4 or “an incident or event.”5 This is not to say that in recounting the history of the United States, the Civil War may not fairly be described as an “event.” But, in the context of determining whether a legal cause of action concerns an “event” or an “occurrence” for purposes of CAFA, the terms most commonly and reasonably 2 Merriam-Webster, http://www.merriam-webster.com/dictionary/event (last visited Apr. 3, 2015). 3 The New Oxford American Dictionary 588 (Elizabeth J. Jewell & Frank Abate, eds., 2001). 4 Merriam-Webster, http://www.merriam-webster.com/dictionary/occurrence (last visited Apr. 3, 2015). 5 The New Oxford American Dictionary 1184 (Elizabeth J. Jewell & Frank Abate, eds., 2001). 12 refer to a singular happening. There is no reason to think that Congress intended anything else. A careful parsing of CAFA reveals no support for a broader reading of the term. Instead, the phrase “event or occurrence” in 28 U.S.C. § (d)(11)(B)(ii)(I) is used to limit the types of mass actions for which there is not federal jurisdiction. A civil action is exempt only if “all of the claims . . . arise from an event or occurrence” and the resulting alleged injuries occurred in a single state or in contiguous states. Id. In other words, the statute requires that the district court review the allegations of a complaint to determine whether all the claims are based on a singular happening. Indeed, giving “event or occurrence” a broader definition is inconsistent with the overall structure of CAFA. CAFA contains a number of detailed 13 exceptions to its grant of federal jurisdiction.6 Principal among these is the local controversy exception, 28 U.S.C. § 1332(d)(4)(A).7 Giving “event or occurrence” 6 See, e.g., 28 U.S.C. § 1332(d)(5)(A) (denying jurisdiction where “the primary defendants are States, State officials, or other governmental entities against whom the district court may be foreclosed from ordering relief”); and § 1332(d)(11)(B)(ii)(III) (excluding from the definition of mass action any case where “all of the claims in the action are asserted on behalf of the general public (and not on behalf of individual claimants or members of a purported class) pursuant to a State statute specifically authorizing such action”). In addition, § 1332(d)(3) provides that a district court “may, in the interest of justice and looking at the totality of the circumstance,” decline to exercise federal jurisdiction under CAFA over certain class actions “in which greater than one-third but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed.” 7 28 U.S.C. § 1332(d)(4)(A) provides: A district court shall decline to exercise jurisdiction under paragraph (2)-- (A)(i) over a class action in which-- (I) greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed; (II) at least 1 defendant is a defendant-- (aa) from whom significant relief is sought by members of the plaintiff class; (bb) whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) who is a citizen of the State in which the action was originally filed; and (III) principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and (ii) during the 3-year period preceding the filing of that class action, no other (continued...) 14 a broad definition tends to obfuscate the boundaries between the exceptions. For example, if the single happening requirement is read out of the local event exception (§ 1332(d)(11)(B)(ii)(I)), then the criteria for the local controversy exception (§ 1332(d)(4)(A)) become redundant (at least where the alleged spill does not cross a state line). There would be no need to consider the local controversy exception’s criteria, such as whether at least two-thirds of the members of a class were citizens of the State or at least one significant defendant is a citizen of the State, if the local single event exception applied to all “circumstances that share some commonality and persist over a period of time.” See Abraham, 719 F.3d at 277. The singular nature of the term is also supported by legislative history. The Senate Committee Report includes the following passage: The Committee finds that mass actions are simply class actions in disguise. They involve a lot of people who want their claims adjudicated together and they often result in the same abuses as class actions. In fact, sometimes the abuses are even worse because the lawyers seek to join claims that have little to do with each other and confuse a jury into awarding millions of dollars to individuals who have suffered no real injury. 7 (...continued) class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons. 15 For these reasons, it is the Committee’s intent that the exceptions to this provision be interpreted strictly by federal courts. The first exception would apply only to a truly local single event with no substantial interstate effects. The purpose of this exception was to allow cases involving environmental torts such as a chemical spill to remain in state court if both the event and the injuries were truly local, even though there are some out-of-state defendants. S. Rep. No. 109-14, at 7 (2005), reprinted in 2005 U.S.C.C.A.N. 3, 44.8 This passage reflects that the Senate sought to exclude from the exception cases where the plaintiffs sought to “join claims that have little to do with each other” and to limit the exception to cases that arise out of “a truly local single event with no substantial interstate effects.” Moreover, the Report states that the exception is to “be interpreted strictly by federal courts.” The concluding quoted sentence does not alter this reading because, rather than expand the exception to apply to all cases involving environmental torts, the Report states that the exception applies to a 8 The suggestion in Tanoh v. Dow Chemical Co., 561 F.3d 945, 954 n.5 (9th Cir. 2009), and other cases, that the Senate Committee Report provided minimal guidance because it was not printed until ten days after CAFA’s passage, was implicitly rebutted by the Supreme Court last year when, in Dart, it cited to the Report. 135 S. Ct. at 554. See also Lowery v. Alabama Power Co., 483 F.3d 1184, 1206 n.50 (11th Cir. 2007) (“While the report was issued ten days following CAFA’s enactment, it was submitted to the Senate on February 3, 2006—while that body was considering the bill.”). 16 “chemical spill” not chemical spills.9 Thus, the legislative history draws the line between a one-time chemical spill and a continuing course of pollution, contamination, or conduct that occurs over a period of years. For example, if an oil refinery has an accident and, as a result, releases toxic materials into the air or water, a suit against the refinery based on the accidental release of contaminants would fall within the exception, but an action against the refinery alleging a continuous course of pollution over a number of years would not. Furthermore, the admonition in the Report that exceptions to CAFA are to be strictly interpreted has been endorsed by the courts. In Dart, the Supreme Court noted that there was no presumption against removal jurisdiction and that CAFA should be read “with a strong preference that interstate class actions should be heard in a federal court if properly removed by any defendant.” 135 S. Ct. at 554 (quoting S. Rep. No. 109-14, at 43). See also Jordan v. Nationstar Mort. LLC, – F.3d – , 2015 WL 1447217, at  5 (9th Cir. Apr. 1, 2015) (noting the Supreme Court’s reference to Congress’s overall intent to strongly favor the exercise of federal diversity jurisdiction over class actions). The Supreme Court’s opinion in Dart reinforces our holding in Serrano, 478 F.3d at 1024, that “the objecting party 9 Reading this sentence to expand the exception to cover all instances where “both the events and injuries were truly local” is precisely the reading we rejected in Nevada, 672 F.3d at 668. 17 bears the burden of proof as to the applicability of any express statutory exception under §§ 1332(d)(4)(A) and (B).” In sum, even accepting that the meaning of “event or occurrence” as used in § 1332(d)(11)(B)(ii)(I) is ambiguous, we are constrained to read it as referring to a single happening because this definition: (1) reflects the most common understanding of the terms; (2) is consistent with, and furthers the purposes of CAFA; (3) conforms to the judicially endorsed admonition in CAFA that exceptions to federal jurisdiction under CAFA are to be strictly construed; and (4) is consistent with, if not compelled by, our opinion in Nevada, 672 F.3d 661. 2. Plaintiffs’ action does not come within even a broad interpretation of event or occurrence. Even if the single local event exception were to be read as covering some allegations of a continuing nature, Plaintiffs’ action would not come within such an expanded definition. The Fifth Circuit adopted such an approach in Rainbow Gun Club, Inc. v. Denbury Onshore, L.L.C., 760 F.3d 405 (5th Cir. 2014). In that case, the plaintiffs brought an action in Louisiana state court alleging that Denbury “breached its duty to act as a reasonable and prudent operator of the well that was drilled under [their] leases.” Id. at 407. In other words, the well had been depleted and was no longer producing. Id. at 413. Denbury removed the case to federal 18 court under CAFA, but the district court remanded it to state court, finding that it came within the local single event exclusion. Id. at 408. On Denbury’s appeal, the Fifth Circuit concluded: “[a]lthough the exclusion certainly applies in cases in which the single event or occurrence happens at a discrete moment in time, the single event or occurrence may also be constituted by a pattern of conduct in which the pattern is consistent in leading to a single focused event that culminates in the basis of the asserted liability.” Id. at 412. The Fifth Circuit’s approach is neither helpful to Plaintiffs nor necessarily contrary to Nevada, 672 F.3d 661. The case before the Fifth Circuit concerned a single “event or occurrence,” the failure of a well, although the precise timing of the failure was not clear. Referring by analogy to the Deepwater Horizon spill, the Fifth Circuit noted that the spill “resulted from a number of individual negligent acts related to each other, all of which came together to culminate in the single event.” Id. at 413. Similarly, although the alleged underlying acts in Rainbow Gun Club may have occurred over a period of time, they resulted in a single happening, the failure of the well, which produced the alleged injuries to the plaintiffs. In contrast, here Plaintiffs do not allege a single event or occurrence resulting from Boeing’s or Landau’s acts. Rather, Boeing is alleged to be responsible for the leeching of hazardous materials over forty years and Landau is 19 alleged to be responsible for negligently failing to remediate the pollution (but not to have caused the pollution) for over a decade. Thus, even under the Fifth Circuit’s approach to the local single event exception, Plaintiffs have not alleged the requisite singular happening. Perhaps, under the Fifth Circuit’s approach, Plaintiffs’ action would fit within the local single event exception if they had sued only Boeing for its alleged pollution, or only Landau for its alleged negligence. However, Plaintiffs’ action asserts claims against two distinct defendants for at least two separate activities. We adhere to our decision in Nevada, 672 F.3d 661, that the local single event exception is limited to a “local single event,” but, in this case, even if we were to accept the Fifth Circuit’s approach that this term could include a continuous pattern that led to a single event, Plaintiffs’ action would not come within that definition because Plaintiffs challenge several distinct actions on the part of Boeing and Landau.