Court Opinion

ID: 3200861
Source: CourtListenerOpinion
Date Created: 2016-05-05 17:01:09.395983+00
Date Added: 2024-06-11T09:36:35.028591
License: Public Domain

FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

JOCELYN ALLEN; LAWRENCE J.        No. 16-35175
ALLEN; VIVIAN LYNN ALLEN;
CAREN BARNES; EMERY BLESSING;        D.C. No.
HORACE BLINER; ROBERT A.          2:14-cv-00596-
BLINER; JASON BOGART; BRENDA           RSM
BRAMMER; BRETNEY A.
BROWNFIELD; DONALD N.
CAMPBELL; DEBORAH JEAN              OPINION
CETTOLIN; CAROLE DENISE COGGIN;
ROBERT ALLEN COGGIN; ANGELA
COMSTOCK; TIMOTHY EUGENE
CONNOR; CHRISTINE R.
COUNCILMAN; DARYL CRAWFORD;
SHAWN CREED-WOOLERY; ANITA
DECKER; DANIEL DECKER; KERRI
DECKER; SHAWN DECKER; DANIEL
ANDREW DOLLOFF; JACOB DOLLOFF;
TONI RAE DOLLOFF; JEFFREY
DOSCH; KARRIE DOSCH; ALVINE
DRAYTON; PATRICIA ANN DUKE;
JUANITA DUPONT; DONALD WARREN
EDWARDS; TAMMY ELSNER;
MICHAEL PATRICK ETHIER; FAY
FARRINGTON; LARRY D. FORD, SR.;
KENNETH MARK FOREMAN; SHERRI
LEE FOREMAN; MICHAEL GESE;
AIMEE GREEN; JOSH GREEN; LEE
LYNN HARDY; LISA ANN HARDY;
BARRY CURTIS HARMON, II; NICOLE
2              ALLEN V. BOEING CO.

HARMON; DONALD R. HAUPT; KARI
LYN HERNANDEZ; RONALD A. HOLT;
BRIAN JONES; MIKISHA D. JONES;
TATIANA JONES; PHYLLIS KAIN;
ROBERT KENNICOTT; ANDREY
KINAKH; TONY KINGSADA;
MICHELLE KLUSMEYER; SONJA
LAPPING; BRITTNEY LYNN LICKEY;
ROBIN LINDY; WAYNE LINDY;
ASHLEY LISENBY; PAULLET
LITTLEFIELD; DEIDRE LORENZ;
COURTNEY MACISAAC; PAUL
MALAVOTTE; RANDOLPH
MALILONG; ANNISSA MANOLOVITZ;
LISA MARTIN; MARIE MCASKILL;
JILL A. MENTZER; JOHN L.
MENTZER; VICKI L. MILLS; KAREN
MILLSAP; TERRENCE MILLSAP;
KYLIE MOREFIELD; ELIZABETH
MORGAN; TARA MOTT; CECILY
NEILSEN; ANTHONY B. NOCERA;
DIANE C. NOCERA; JESSICA PARKER;
RICHARD PARKER; PATRICIA
PLATTNER; MIKE RAMIREZ;
LUDMILLA REDKA; BRIAN REITZ;
KATHLEEN RISMOEN; MATTHEW
MONTGOMERY ROBERTS; LURA
ELAINE ROBERTSON; JANENE M.
ROLLINS; CLAUDE ROUGHT; DAN
RUDOLPH; DEBORAH A. RYAN;
RICHARD R. RYAN; STEVE SANBORN;
MICHAEL C. SCOTT; DAVEENE KIM
SEARS; GERALD L. SEARS; DARRON
                  ALLEN V. BOEING CO.                    3

SHOOK; LISA SHOOK; STACIE SIPPO;
HAROLD A. SPONBERG; PENNY J.
SPONBERG; TRENT B. TESTERMAN;
BERNADETTE J. TRANHOLT; ROBIN
L. TRANHOLT; JEFFREY A. TREKLA;
KAREN R. TREKLA; JESSICA A.
VAUGHN; GABRIEL WARREN; MAX
WERDEN; TINA WERDEN; STACY
WILEY; ANTHONY WILLIAMS; CINDA
J. ZITTERICH; RICKY L. ZITTERICH,
                 Plaintiffs-Appellees,

                  v.

BOEING COMPANY, a Delaware
Corporation,
             Defendant-Appellant,

                 and

BOEING COMMERCIAL AIRPLANES, a
division of Boeing Company;
LANDAU ASSOCIATES INC., a
Washington Corporation,
                        Defendants.

     Appeal from the United States District Court
        for the Western District of Washington
  Ricardo S. Martinez, Chief District Judge, Presiding

                  Argued and Submitted
           April 5, 2016—Seattle, Washington
4                      ALLEN V. BOEING CO.

                         Filed May 5, 2016

        Before: Ronald Lee Gilman,* Johnnie B. Rawlinson,
            and Consuelo M. Callahan, Circuit Judges.

                    Opinion by Judge Callahan

                           SUMMARY**

             Class Action Fairness Act / Jurisdiction

    The panel affirmed the district court’s order remanding
to state court, pursuant to the Class Action Fairness Act’s
(“CAFA”) local controversy exception, a case in which
plaintiffs alleged that The Boeing Company released toxins
into the groundwater around its facility in Auburn,
Washington and that Landau Associates was negligent in
the investigation and remediation of the pollution.

   The panel held that the plaintiffs, who are 108 individuals
who have property near the Boeing facility, adequately pled
both that they were seeking “significant relief” from Landau,
and that Landau’s alleged conduct formed a “significant
basis” for their claims, as required by CAFA’s local
controversy exception, 28 U.S.C. § 1332(d)(4)(A)(i).

    *
  The Honorable Ronald Lee Gilman, Senior Circuit Judge for the U.S.
Court of Appeals for the Sixth Circuit, sitting by designation.
  **
     This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                   ALLEN V. BOEING CO.                      5

                        COUNSEL

Michael Sylvain Paisner (argued), The Boeing Company,
Renton, Washington; Jeffrey M. Hanson, Perkins Coie LLP,
Seattle, Washington; Kevin T. Van Wart, P.C., and Bradley
H. Weidenhammer, Kirkland & Ellis, Chicago, Illinois, for
Defendant-Appellant.

James S. Rogers and Elizabeth J. Donaldson, Law Offices of
James S. Rogers, Seattle, Washington; Thomas V. Girardi,
David N. Bigelow (argued), and Robert W. Finnerty,
Girardi/Keese, Los Angeles, California, for Plaintiffs-
Appellees.

                         OPINION

CALLAHAN, Circuit Judge:

    Jocelyn Allen and others (Plaintiffs) sued The Boeing
Company (Boeing) and Landau Associates (Landau) in
Washington state court, alleging that for several decades
Boeing released toxins into the groundwater around its
facility in Auburn, Washington, and that for over a decade
Landau had been negligent in its investigation and
remediation of the resulting pollution. Boeing removed the
case to the United States District Court for the Western
District of Washington, claiming federal jurisdiction based on
diversity and the Class Action Fairness Act (CAFA). See
28 U.S.C. § 1332(d). The district court remanded the case
to state court, finding that there was not complete
diversity and that Plaintiffs’ action came within the single-
event exception to CAFA federal jurisdiction, 28 U.S.C.
§ 1332(d)(11)(B)(ii)(I). Boeing appealed. We affirmed the
6                   ALLEN V. BOEING CO.

district court’s rejection of Boeing’s allegation of fraudulent
joinder (which would have allowed for diversity jurisdiction),
but vacated and remanded, finding that the case did not come
within CAFA’s single-event exception. Allen v. Boeing, 784
F.3d 625, 627 (9th Cir. 2015). We noted that Plaintiffs had
also sought remand to the state court pursuant to the local
controversy exception, 28 U.S.C. § 1332(d)(4)(A)(i), but
because the district court had failed to address this exception,
we referred the issue to the district court to consider in the
first instance. Id. at 637. On remand, the district court held
that Plaintiffs’ case came within the local controversy
exception and again remanded the case to state court.

    Boeing appeals, arguing that Plaintiffs have not
demonstrated that they seek “significant relief” from Landau,
the in-state defendant, and that Landau’s conduct does not
form “a significant basis of the claims asserted,” as required
by 28 U.S.C. § 1332(d)(4)(A)(i). We affirm the district
court’s remand of this case to the state court, holding that
Plaintiffs have adequately pled both that they are seeking
“significant relief” from Landau and that Landau’s alleged
conduct forms a “significant basis” for their claims.

                               I.

    Because we look to the complaint to determine whether
the Plaintiffs’ action comes within the local controversy
exception (see infra), we set forth at some length the
allegations contained in Plaintiffs’ First Amended Complaint
(“FAC”).

    From the 1960s to the 1990s, Boeing used solvents, which
allegedly contained hazardous chemicals, in its aircraft-parts
manufacturing plant in Auburn, Washington. In 1987, the
                    ALLEN V. BOEING CO.                        7

Washington State Department of Ecology initiated
requirements for the treatment, storage, and handling of
hazardous materials.

    Plaintiffs are over 108 individuals who allege that for
several decades Boeing used materials, chemicals, and
solvents that it “knew to be hazardous to human health and
harmful to the environment, including the soil and
groundwater.” Among the solvents allegedly used as
degreasing agents for metal parts were tricholoroethylene
(“TCE”), tricholorethane (“TCA”), and tetrachloroethylene,
also known as percholorlethylene (“PCE”), and possibly
dicholorethene. In 2002, Boeing agreed with the State of
Washington “to complete a remedial investigation, feasibility
study, draft a cleanup action plan, perform cleanup actions,
and clean up as necessary to remediate releases of hazardous
substances associated with the Boeing Auburn Plant.” The
agreement provided that Boeing “must identify the probable
source of any release of hazardous substances, chemical
constituents, horizontal and vertical extent of any releases of
hazardous substances, the rate and direction of migration of
the hazardous substances,” as well as “track and document
the contamination concentrations and potential migration.”
In 2002, Boeing also contracted with Landau “for the
investigation and remediation of the Boeing Auburn Plant.”
Plaintiffs allege that around that time Boeing and Landau
identified a plume of volatile organic chemicals (“VOCs”),
“including TCE and PCE and their degradation products
including vinyl chloride (‘VC’) in the groundwater” at the
Plant, identified a building on the Plant as the likely source of
the plume, and noted that the plume had moved off the
Plant’s property and was continuing to move in the shallow
groundwater in a north and/or northwest direction. The FAC
further asserts that Boeing and Landau “knew at that time that
8                     ALLEN V. BOEING CO.

the movement of these hazardous substances posed a threat
to the health and rights of nearby property owners and
residents and their properties,” and that both defendants failed
to take reasonable actions to investigate and remediate the
plume or to warn “nearby property owners and residents of
the presence and movement of hazardous substances.”

    The FAC further alleges that in 2009 Boeing and Landau
identified a second plume of pollutants, including TCE and
PCE, that was moving off Boeing’s property in the
groundwater. Plaintiffs reiterate that Boeing and Landau
failed to investigate and remediate the pollution and failed to
warn the property owners and residents.

    In 2013, Boeing and Landau performed samplings in the
area of Plaintiffs’ homes and informed the residents of the
presence of hazardous substances on their properties. The
FAC alleges that VOCs have been detected in air samples
taken from crawl spaces and homes. It alleges that these
VOCs are harmful to humans.1

    In November 2013, Plaintiffs filed an action against
Boeing and Landau in King County Superior Court, asserting
state law claims of negligence, nuisance, and trespass against
Boeing and negligence against Landau. Plaintiffs allege that
Landau owed them a cognizable duty to exercise reasonable
care and that it failed to exercise reasonable care in its

    1
    The FAC alleges that “TCE at even low level exposures cause[s]
immune system effects such as immunosuppression or autoimmune
disease including increased hypersensitivity, an increased chance of
cancer from long-exposure, and defects in human and fetal development.”
In addition, the FAC asserts that the VOCs break down into VC, which is
a known carcinogen, and is “known to cause nerve damage and affect
immune reactions.”
                       ALLEN V. BOEING CO.                              9

investigation, remediation, and containment of the hazardous
substances. Plaintiffs seek damages from Boeing and Landau
for their foreseeable injuries, including “the difference
between the current value of their properties and such value
if the harm had not been done, the cost of remediation
actions, costs of repair or restoration, the value of the use of
the continuous trespass, injuries to persons, medical costs,
medical monitoring, attorneys’ fees and expenses as allowed
by law, and consequential damages flowing from the
contamination which are the natural and proximate result of
[Landau’s] conduct.”

    In April 2014, Boeing, the out-of-state defendant,
removed the action to the United States District Court for the
Western District of Washington, asserting two independent
bases for federal jurisdiction: diversity and CAFA. The
district court ruled that Landau, the in-state defendant, had
not been fraudulently joined. This meant that there was not
complete diversity of citizenship for jurisdictional purposes.
At the same time, the district court remanded the case to the
state court on the ground that the action came within CAFA’s
single-event exception. Boeing appealed. We issued an
opinion affirming the district court’s rejection of Boeing’s
assertion of fraudulent joinder, but held that Plaintiffs’ claims
did not fall within the single-event exception.2 Allen,
784 F.3d at 627.

    In our prior opinion, we noted that Plaintiffs, in addition
to asserting that their claims came within the single-event
exception to CAFA jurisdiction, maintained that the action
also came within the local controversy exception. Id. at 635.

  2
    Judge Rawlinson dissented from the “portion of the majority opinion
reversing the remand of this case to state court.” Allen, 784 F.3d at 637.
10                  ALLEN V. BOEING CO.

We recognized that our opinion in Coleman v. Estes Express
Lines, Inc., 631 F.3d 1010 (9th Cir. 2011), set forth the
standard for determining whether a complaint came within
the local controversy exception. Allen, 784 F.3d at 636–37.
However, we declined to determine in the first instance
whether Plaintiffs’ case fits within that exception. Id. at 637.

    On remand, the district court established a briefing
schedule for Plaintiffs’ renewed motion to remand to state
court pursuant to the local controversy exception. Boeing
argued that the exception does not apply because:
(1) Landau’s conduct was insignificant compared to Boeing’s
alleged conduct; (2) the relief sought from Landau is
insignificant compared to the relief sought from Boeing; and
(3) Plaintiffs had failed to establish that Landau owed them
a duty.

    The district court granted the motion to remand to state
court. Citing Dart Cherokee Basin Operating Co., LLC v.
Owens, 135 S. Ct. 547, 554 (2014), the court noted that there
was no presumption against removal for CAFA cases. It
further noted that the general criteria for a CAFA suit were
present: the parties were minimally diverse, the putative class
consisted of at least 100 members, and the aggregate amount
in controversy exceeded $5 million. The district court noted
that Boeing did not dispute that: (1) more than two-thirds of
the Plaintiffs were Washington citizens; (2) Landau is a
citizen of Washington; (3) Plaintiffs’ principal injuries were
incurred in Washington; and (4) no similar class action has
been filed against Boeing and Landau in the last three years.

   The district court found this case to be analogous to
Benko v. Quality Loan Service Corp., 789 F.3d 1111 (9th Cir.
2015).    The court determined that Plaintiffs’ FAC
                      ALLEN V. BOEING CO.                            11

“demonstrates that Landau’s conduct forms a significant basis
for their claims.” It noted that Landau was one of only two
defendants, that the complaint alleged that Boeing and
Landau knew in 2002 of the plume of VOCs moving off
Boeing’s property, and that Boeing and Landau allegedly
failed to take reasonable actions to investigate and remediate
the pollution. The district court concluded that the
complaint’s allegations were asserted against both defendants
equally and that the complaint sought relief against Landau
on behalf of all of the Plaintiffs. The district court
commented that “[a]s compared to the other two claims
against Boeing, for Nuisance and Trespass, particularly in
light of the above factual allegations, the Court finds that the
negligence claim against Landau forms a significant basis for
the relief sought by Plaintiffs.” It further found that, “looking
at the claims as a whole, negligence claims account for 50%
of the claims asserted by Plaintiffs.”

    The district court found that the asserted damages were
sufficient to show that Plaintiffs sought “significant relief”
from Landau. The district court rejected Boeing’s objection
that Plaintiffs had failed to allege joint-and-several liability
because “Plaintiffs have pleaded separate negligen[ce] claims
against Boeing and Landau and seek to hold each Defendant
responsible for its own negligence and for any monetary
amounts resulting therefrom.” The district court’s discussion
of the local controversy exception concluded with the
observation that this is the type of class action with a “truly
local focus” that the local controversy exception was
designed to encompass.3

  3
    Citing our recognition in Benko of the role of the local controversy
exception, 789 F.3d at 1119, the district court commented:
12                   ALLEN V. BOEING CO.

    Finally, the district court noted that because it had
previously found that Landau had not been fraudulently
joined, and that decision had been affirmed by the Ninth
Circuit, “there is no alternative basis for jurisdiction.”

                                II.

    We review de novo a district court’s order to remand a
case before it to state court. Corber v. Xanodyne Pharm.,
Inc., 771 F.3d 1218, 1222 (9th Cir. 2014) (en banc). The
local controversy exception to CAFA jurisdiction is a narrow
exception, and Plaintiffs bear the burden of showing its
application. Benko, 789 F.3d at 1116. However, if the
exception applies, the district court must remand the case to
state court. Serrano v. 180 Connect, Inc., 478 F.3d 1018,
1022 (9th Cir. 2007); see also 28 U.S.C. § 1332(d)(4).

   On appeal, Boeing asserts that Plaintiffs’ action does
not meet the criteria set forth in 28 U.S.C.

       Here, a class of exclusively Washington Plaintiffs has
       filed suit against two Defendants, one of which is
       Washington domiciled. The alleged misconduct took
       place exclusively in the State of Washington, and
       Plaintiffs allege that the Washington Defendant was
       equally responsible for the negligence alleged by the
       entire class and which constitutes 50% of the class
       claims.     Plaintiffs also seek equal relief from
       Defendants for their alleged negligence. Under these
       circumstances, the Court finds that Plaintiffs have met
       their burden to show that this case qualifies for the
       “local controversy exception.”
                         ALLEN V. BOEING CO.                            13

§ 1332(d)(4)(A)(i)(II)(aa) and (bb).4 Boeing contends that

 4
     28 U.S.C. § 1332(d)(4) states:

          (4) 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 class action
                   has been filed asserting the same or similar
                   factual allegations against any of the
14                  ALLEN V. BOEING CO.

Plaintiffs do not seek “significant relief” from Landau, as
required by subsection (aa), and that Landau’s conduct does
not form a “significant basis” for Plaintiffs’ claims, as
required by subsection (bb).

    In reviewing Boeing’s claims, we are guided by our prior
opinions in Coleman and Benko. As we noted in Allen,
784 F.3d at 636, Coleman directs us to look only to the
complaint to determine whether these criteria are met.
Coleman, 631 F.3d at 1015 (“We hold that CAFA’s language
unambiguously directs the district court to look only to the
complaint in deciding whether the criteria set forth in
§ 1332(d)(4)(A)(i)(II)(aa) and (bb) are satisfied.”).

   Limiting the court’s inquiry to the complaint inherently
cabins the amount of detail required to satisfy the local
controversy exception. In Coleman, we agreed with the
Tenth Circuit’s statement in Coffey v. Freeport McMoran
Copper & Gold, 581 F.3d 1240, 1245 (10th Cir. 2009), that

       [t]he statutory language is unambiguous, and
       a “defendant from whom significant relief is
       sought” does not mean a “defendant from
       whom significant relief may be obtained.”
       There is nothing in the language of the statute
       that indicates Congress intended district
       courts to wade into the factual swamp of

               defendants on behalf of the same or other
               persons; or

           (B) two-thirds or more 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.
                   ALLEN V. BOEING CO.                    15

       assessing the financial viability of a defendant
       as part of this preliminary consideration[.]

Coleman, 631 F.3d at 1015. We further reasoned that
“factual determinations under subsections (aa) and (bb) are
likely to be more expensive and time-consuming than factual
determinations of citizenship and amount-in-controversy,”
and that “Congress was particularly concerned that subject
matter jurisdiction determinations be made quickly under
CAFA.” Id. at 1016. We noted that “[i]f a determination
whether ‘significant relief is sought’ against the local
defendant under subsection (aa) requires a factual
determination about the respective ability of the various
defendants to satisfy a judgment, that determination has the
potential to be expensive and time-consuming.” Id. We
concluded:

       A factual determination whether the “alleged
       conduct” of the local defendant “forms a
       significant basis for the claims asserted” by
       plaintiffs under subsection (bb) is particularly
       likely to be expensive and time-consuming.
       Such a determination necessarily implicates
       the merits of the case. We see nothing in
       CAFA that indicates a congressional intention
       to turn a jurisdictional determination
       concerning the local defendant’s “alleged
       conduct” into a mini-trial on the merits of the
       plaintiff’s claims.

Id. at 1017.

   In Benko, we applied Coleman’s approach to the local
controversy exception. Benko held that, in determining
16                     ALLEN V. BOEING CO.

whether a plaintiff has claimed “significant relief” from an in-
state defendant, we look to the remedies requested in the
complaint. See Benko, 789 F.3d at 1119. We noted that
(a) the plaintiffs claimed “general damages of $10,000 from
Meridian” (the only in-state defendant) as well as punitive
damages; (b) “the total damages recoverable from Meridian
are between $5,000,000 and $8,000,000”; and (c) plaintiffs
sought “equitable relief, which would significantly increase
the overall value of the judgment against Meridian.” Id. We
concluded that “[t]he amounts sought are sufficient to show
that the Plaintiffs claim ‘significant relief’ from a local
defendant.” Id.

    Benko also evaluated whether the plaintiffs alleged that
the conduct of the in-state defendant formed a “significant
basis” for their claims by comparing “the allegations against
Meridian to the allegations made against the other
Defendants.”5 Id. at 1118. We noted that (a) “Meridian is
one of just six Defendants referred to in the [Second
Amended Complaint]”; and (b) “Meridian’s activities
constituted between 15 to 20% of the total debt collection
activities of all the Defendants.”6 Id. at 1118–19. We

  5
    We noted that this “comparative approach” was consistent with the
reasoning of the Third Circuit in Kaufman v. Allstate N.J. Ins. Co,
561 F.3d 144, 156 (3d Cir. 2009), and the Fifth Circuit’s reasoning in
Opelousas Gen. Hosp. Auth. v. FairPay Sols., Inc., 655 F.3d 358, 363 (5th
Cir. 2011). Benko, 789 F.3d at 1118.
 6
   Benko distinguished the Eleventh Circuit’s opinion in Evans v. Walter
Industries, Inc., 449 F.3d 1159, 1167 (11th Cir. 2006), where that court
held that the “significant basis” provision was not satisfied because the
plaintiffs had not shown that “a significant number or percentage of
putative class members may have claims against [a local defendant].”
Benko, 789 F.3d at 1119 (quoting Evans, 449 F.3d at 1167).
                   ALLEN V. BOEING CO.                       17

therefore concluded that several plaintiffs “have colorable
claims against Meridian.” Id. at 1119.

    In Benko, we buttressed our analysis by referring to the
statement in the Senate Judiciary Committee’s Report that the
local controversy exception

       is intended to respond to concerns that class
       actions with a truly local focus should not be
       moved to federal court under this legislation
       because state courts have a strong interest in
       adjudicating such disputes. . . . [A] federal
       court should bear in mind that the purpose of
       each of these criteria is to identify a truly local
       controversy—a controversy that uniquely
       affects a particular locality to the exclusion of
       all others.

Benko, 789 F.3d at 1119 (quoting S. Rep. No. 109–14, 39,
2005 U.S. Code Cong. & Admin. News 3, 38).

   A. Significant Relief

    Applying the guidance provided by Benko to the case at
bar, we agree with the district court that Plaintiffs have
adequately alleged that they are seeking significant relief
from Landau. Boeing contends that Plaintiffs have failed to
specify the relief they seek from Landau or provide a basis
for comparing that relief to the relief they seek from Boeing.
These arguments are not persuasive.

    It is true that Boeing’s activities over several decades
created the hazardous plumes. However, it does not follow
that Boeing’s liability (if any) for creating the pollutants
18                  ALLEN V. BOEING CO.

necessarily dwarfs Plaintiffs’ claims against Landau. The gist
of Plaintiffs’ claims is that the movement of the volatile
organic chemicals off Boeing’s property caused them harm,
not that the existence of the chemicals at the Plant harmed
them. Plaintiffs allege that Landau undertook in 2002 to
investigate, remediate, and clean up the hazardous materials
moving off Boeing’s property and failed to take reasonable
steps to do so. If Landau is shown to have failed, for more
than a decade, to remediate the spreading toxic chemical
plumes, its liability could be as great as Boeing’s. Thus, the
fact that Boeing created the pollution does not in itself render
insignificant the damages caused by Landau’s alleged failure
to investigate and remediate the spreading pollution.

    Boeing’s assertions that Plaintiffs have failed to plead
their claims with sufficient specificity are similarly not
persuasive. The local controversy exception does not require
that plaintiffs specify the division of damages between
defendants. In Coleman, the plaintiffs alleged that both the
in-state defendant and the out-of-state defendant violated
California law and sought damages equally from both of
them. Coleman, 631 F.3d at 1013, 1020. This was sufficient
to satisfy subsection (aa)’s requirement that plaintiffs seek
“significant relief” from the in-state defendant. Id. at 1020.
In Benko, we held that claims for general damages, punitive
damages as a result of deceptive trade practices and fraud,
and equitable relief were “sufficient to show that the
Plaintiffs claim ‘significant relief’ from a local defendant.”
789 F.3d at 1119.

    Taking the allegations in the FAC at face value, as
required by Coleman, Plaintiffs have sufficiently alleged that
they have suffered, and continue to suffer, serious harm to
their property and possibly to themselves from Landau’s
                        ALLEN V. BOEING CO.                              19

failure to remediate the pollution. Plaintiffs have not
quantified their alleged damages, but they have specified the
damages that they seek from each defendant.7 These
damages appear to be the same whether caused by Boeing or
Landau. Plaintiffs may not know, and perhaps cannot know
at this time, how much of their damages is the result of
Boeing’s actions and how much is the result of Landau’s
actions or inactions. Nonetheless, the FAC sufficiently
alleges that Plaintiffs are seeking significant relief against
Landau, thus satisfying this component of the local
controversy exception.8

  7
    In the FAC, Plaintiffs seek “the difference between the current value
of their properties and such value if the harm had not been done, the cost
of remediation actions, costs of repair or restoration, the value of the use
of the continuous trespass, injuries to persons, medical costs, medical
monitoring, attorneys’ fees and expenses as allowed by law, and
consequential damages flowing from the contamination which are the
natural and proximate result of [Landau’s] conduct.”
  8
    Boeing also asserts that Plaintiffs cannot successfully invoke the local
controversy exception because their FAC fails to state a claim of relief
that is plausible on its face. But Boeing inappropriately blurs the
distinction between a jurisdictional inquiry and a merits determination
under Federal Rule of Civil Procedure 12(b)(6). See Williston Basin
Interstate Pipeline Co. v. An Exclusive Gas Storage Leasehold &
Easement in the Cloverly Subterranean Geological Formation, 524 F.3d
1090, 1096 (9th Cir. 2008). Because our analysis concerning the
applicability of the local controversy exception is jurisdictional in nature,
we must refrain from addressing the merits of any claim against Landau
unless we first conclude that subject-matter jurisdiction exists. Bell v.
Hood, 327 U.S. 678, 682 (1946) (“[I]t is well settled that the failure to
state a proper cause of action on which relief could be granted is a
question of law and . . . it must be decided after and not before the court
has assumed jurisdiction over the controversy.”). Accordingly, for
purposes of assessing the applicability of the local controversy exception,
we can ignore a claim against Landau only if that claim is “immaterial,
20                      ALLEN V. BOEING CO.

    The case cited by Boeing in support of its “significant
relief” argument, Opelousas General Hospital Authority v.
FairPlay Solutions, Inc., 655 F.3d 358 (5th Cir. 2011), does
not require differentiation of damages between defendants.
As noted by Boeing, Opelousas does contain language critical
of the complaint’s failure to distinguish the conduct of the in-
state defendant from the other defendants’ conduct.
However, Opelousas did not address the “significant relief”
requirement of subsection (aa), but considered only the
“significant basis” requirement of subsection (bb). Id. at 361
(“Because failure of either element will require reversal, we
elect to focus on the second element—whether the alleged
conduct of Louisiana defendant LEMIC forms a significant
basis for the claims asserted by the proposed plaintiff class.”).
Opelousas does not suggest that more specific allegations of
“significant relief” are required than are set forth in the FAC.

    Similarly, Evans v. Walter Industries, Inc., 449 F.3d 1159
(11th Cir. 2006), does not support Boeing’s argument that

insubstantial, or frivolous on its face.” Williston Basin, 524 F.3d at 1096
(citing Bell, 327 U.S. at 682–83).

     But even if we were to address Boeing’s assertions on its own terms,
we would still reject it. The allegations in the FAC concerning Boeing
and Landau and their relationship to the alleged harms suffered by
Plaintiffs raise their “right to relief above the speculative level.” Bell Atl.
Corp v. Twombly, 550 U.S. 544, 555 (2007). The Supreme Court noted
that Federal Rule of Civil Procedure 8(a)(2) requires only “a short and
plain statement of the claim showing that the pleader is entitled to relief,
in order to give the defendant fair notice of what the . . . claim is and the
grounds upon which it rests.” Id. “A claim has facial plausibility when
the plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The Plaintiffs’
complaint meets this standard.
                    ALLEN V. BOEING CO.                      21

subsection (aa) requires more specific allegations concerning
“significant relief.” In Evans, the Eleventh Circuit held that
the plaintiffs’ claims did not come within the local
controversy exception because (1) the plaintiffs had not
carried their burden of demonstrating that more than two-
thirds of the plaintiff class were Alabama citizens, and (2) the
plaintiffs had not carried their burden of alleging that the in-
state defendant was a “significant defendant.” Id. at 1166–67.
The court noted that the complaint did not explain the
“significance of the relief” sought from the in-state defendant.
Id. at 1167. Here, in contrast, Plaintiffs’ FAC clearly asserts
that all Plaintiffs are seeking relief from Landau for allegedly
failing for over ten years to investigate and remedy volatile
organic chemicals that were spreading in groundwater.

    Following Coleman and Benko, we agree with the district
court that Plaintiffs’ allegations are sufficient to meet the
requirement of subsection (aa) that they seek “significant
relief” from Landau, the in-state defendant.

   B. Significant Basis

    CAFA’s local controversy exception also requires that the
alleged conduct by the in-state defendant “forms a significant
basis for the claims” asserted by the class. 28 U.S.C.
§ 1332(d)(4)(A)(i)(II)(bb). Boeing offers two arguments in
support of its contention that Plaintiffs have not alleged that
Landau’s conduct forms a “significant basis” for their claims.
First, Boeing argues that Landau’s involvement, and thus its
exposure to liability, is insignificant in comparison to
Boeing’s involvement and exposure. Second, Boeing
questions whether Plaintiffs can state a viable claim against
Landau under Washington law. Neither argument is
persuasive.
22                  ALLEN V. BOEING CO.

     1. Plaintiffs allege sufficient facts to support a
        determination that Landau’s conduct forms a
        “significant basis” for their claims.

    As previously noted, Boeing’s first argument is based on
a faulty premise. Boeing contends that because it used the
hazardous chemicals that created the toxic plumes for nearly
forty years before Landau had any involvement, Landau’s
conduct cannot be important relative to Boeing’s. However,
the gravamen of Plaintiffs’ claims is not that Boeing used
volatile organic chemicals, but that the chemicals have spread
beyond Boeing’s property. Plaintiffs assert separate claims
against Boeing and Landau for their alleged failures to
investigate, remediate and clean-up the chemical plumes.
Should Plaintiffs prove their claims against Landau, its
liability may be as great as Boeing’s.

    Boeing further asserts that Plaintiffs have not alleged that
Landau’s conduct forms a “significant basis” for their claims,
as required by subsection (bb), because they have not
distinguished Landau’s acts from Boeing’s acts. Boeing
argues that Landau is at most an isolated player and that
Plaintiffs have failed to establish that Landau’s conduct was
important relative to Boeing’s.

     In Benko we adopted a comparative approach for
determining whether plaintiffs asserted that the conduct of an
in-state defendant forms a “significant basis” for their claims.
789 F.3d at 1118 (holding that “[t]o determine if the “basis
for the claims” against [the in-state defendant] is important or
fairly large in amount or quantity, we compare the allegations
against [the in-state defendant] to the allegations made
against the other Defendants.”). In Benko, the in-state
defendant was one of six defendants and was responsible for
                   ALLEN V. BOEING CO.                      23

only 15 to 20 percent of the activities of all defendants.
780 F.3d at 1118–19. Nonetheless, we concluded that the
plaintiffs had “colorable claims” against the in-state
defendant. Id. at 1119. Here, in contrast, Landau is one of
only two defendants and all of the Plaintiffs have asserted
claims against Landau. Following Benko, Plaintiffs have
adequately alleged claims against Landau that are “important
or fairly large in amount or quantity” relative to the claims
against Boeing. Id. at 1118.

    Moreover, our reasons for rejecting Boeing’s similar
arguments in regard to subsection (aa) are equally applicable
when applied to subsection (bb). Plaintiffs allege that they
have been harmed by Landau’s independent failure for over
ten years to properly investigate and remediate the spreading
toxic chemical plumes. We do not read the statute, our
decisions, or the decisions of our sister circuits as requiring
anything more.

   2. Plaintiffs have sufficiently alleged a cause of action
      under Washington law.

    Boeing reiterates the argument it made in its prior appeal
in support of its claim of fraudulent joinder: that Plaintiffs
have failed to state a viable claim for negligence against
Landau under Washington law. It argues that (a) negligence
requires the existence of a duty owed to the complaining
party; (b) knowledge of potential future harm does not
impose a duty to prevent it; and (c) a voluntarily undertaken
duty arises only if the plaintiff detrimentally and reasonably
relied on the defendant’s affirmative act or the act increased
the plaintiff’s risk of harm. Boeing cites Burg v. Shannon &
Wilson, Inc., 110 Wash. App. 798 (2002), to support its
argument.
24                  ALLEN V. BOEING CO.

    Boeing recognizes that in Allen, 784 F.3d at 634–35, we
rejected its fraudulent joinder argument. It asserts, however,
that “evaluating whether a claim survives a fraudulent joinder
argument (as to which defendant bears the burden, and doubts
are resolved in favor of remand) is not the same as evaluating
a claim for purposes of applying the local controversy
exception (as to which plaintiff bears the burden, and doubts
are resolved against remand).” Although the burden of
persuasion may shift from the defendant to the plaintiffs, the
focus of the court’s inquiry remains constant: whether
Landau’s conduct forms a significant basis for Plaintiffs’
claim against the in-state defendant. See Coleman, 631 F.3d
at 1015. Our prior rejection of Boeing’s fraudulent joinder
argument does not bar Boeing from asserting that Landau’s
conduct was not a significant basis for Plaintiffs’ claims, but
Boeing’s arguments remain unpersuasive.

    Initially, we reject Boeing’s assertion that our language in
Allen, 784 F.3d at 636, was a command or an invitation for
Plaintiffs to amend their complaint. We declined to consider
the local controversy exception because (a) it had not been
considered by the district court, and (b) Boeing’s arguments
raised intricate questions of Washington law. We quoted
language from Coleman that the district court “may, in its
discretion, require or permit the plaintiff to file an amended
complaint,” id. (quoting Coleman, 631 F.3d at 1021), but
specifically left the issue “for the district court to consider,”
id. at 637. The fact that the district court did not require an
amendment raises no presumption of error from Plaintiffs’
failure to amend their complaint.

   Boeing’s challenge to the viability of Plaintiffs’ claims
against Landau is not convincing. First, Boeing fails to
appreciate that in assessing the “significant basis” prong
                    ALLEN V. BOEING CO.                       25

under subsection (bb), we are limited to looking at the
pleadings. Coleman, 631 F.3d at 1017. This inherently limits
the amount of specificity required for a showing that an
action falls within the local controversy exception.

    More importantly, Boeing does not address the core
reasoning for our rejection of its fraudulent joinder argument.
In Allen, citing Warner v. Design & Build Homes, Inc.,
128 Wash. App. 34, 43 (2005), we concluded that the contract
between Boeing and Landau could reasonably be construed
as intending to benefit Plaintiffs. Allen, 784 F.3d at 635.

     In Warner, the court held that the plaintiffs, who had
purchased a home “as is,” were not third-party beneficiaries
of the implied warranty of habitability or workmanlike
performance. However, the court explained that in
determining whether there are third-party beneficiaries, “[t]he
test of intent is an objective one: Whether performance under
the contract necessarily and directly benefits the third party.”
128 Wash. App. at 43; see also Postlewait Constr., Inc. v.
Great Am. Ins. Cos., 106 Wash. 2d 96, 99 (1986) (en banc)
(stating that “the test of intent is an objective one; the key is
not whether the contracting parties had an altruistic motive or
desire to benefit the third party, but rather, ‘whether
performance under the contract would necessarily and
directly benefit’ that party. The contracting parties’ intent is
determined by construing the terms of the contract as a
whole, in light of the circumstances under which it is
made.”).

   Boeing’s brief contains no mention of Warner or
Postlewait or the test they articulate, and nothing else in
Boeing’s brief undermines our determination that Plaintiffs
may be able to state a cause of action against Landau. The
26                  ALLEN V. BOEING CO.

case cited by Boeing, Burg, 110 Wash. App. 798, is clearly
distinguishable. In Burg, the court held that homeowners
whose houses were severely damaged in landslides had no
standing as third-party beneficiaries to sue the engineering
firm that had provided the city with an analysis of the
stability of certain real property. Id. at 800, 808. The
engineering firm was “hired by the City to make
recommendations about increasing the land’s stability.” Id.
at 801. Here, the FAC alleges that Landau did not contract to
make only recommendations, but to investigate, remediate
and clean up the toxic chemical plumes.

    Boeing cites language in Key Development Investment,
LLC v. Port of Tacoma, 173 Wash. App. 1, 29 (2013), stating
“[i]t is insufficient that performance of a contract may benefit
a third party, rather the contract must have been entered for
that party’s benefit or the benefit must be a direct result of
performance within the parties’ contemplation.” But
Plaintiffs plead facts sufficient to demonstrate that their
properties were intended to and will directly benefit from the
performance of the contract. Indeed, plaintiffs and their
property appear to be the primary beneficiaries of Landau’s
and Boeing’s undertaking to investigate and remediate the
pollution.

    In sum, for jurisdictional purposes, Plaintiffs have
adequately pled a negligence claim against Landau, as the
obvious intended third-party beneficiaries of the Boeing-
Landau contract. We therefore agree with the district court
that Plaintiffs have adequately alleged that Landau’s conduct
forms a “significant basis” for their claims, thus meeting the
requirement of subsection (bb) and qualifying for the local
controversy exception.
                    ALLEN V. BOEING CO.                       27

                       CONCLUSION

    As the district court noted, this action “involves a
potential class action with a truly local focus that particularly
affects a local area of the State of Washington to the
exclusion of all others.” Indeed, this appears to be the precise
type of case for which the local controversy exception was
intended. See Senate Judiciary Committee Report, S. Rep.
No. 109–14, 39, 2005 U.S. Code Cong. & Admin. News 3,
38. Boeing’s arguments that it has greater exposure and that
Plaintiffs have not sufficiently articulated their claims against
Landau, would appear to be equally applicable to any case
where a larger out-of-state defendant is sued along with a
smaller in-state defendant and the defendants are alleged to
have overlapping responsibilities. Boeing’s approach would
unreasonably curtail the local controversy exception. Our
opinions in Benko and Coleman weigh heavily against
Boeing’s approach because they require that the local
controversy exception be evaluated only on the complaint and
foreclose inquiry into a defendant’s financial viability. See
Coleman, 631 F.3d at 1017. Landau is one of only two
defendants and all Plaintiffs assert claims against Landau for
its allegedly negligent investigation and remediation of the
toxic chemical plumes. These allegations are sufficient to
invoke the local controversy exception.

    Even assuming that Boeing’s second arrow—that
Plaintiffs’ cannot state a negligence claim against Landau
under Washington law—might eventually find its mark, no
such prediction can be made at this time. At this point, we
only evaluate jurisdiction, not the merits. Moreover, we
agree with the Tenth Circuit that the local controversy
exception does not require that plaintiffs show that they will
28                  ALLEN V. BOEING CO.

actually recover substantial damages from the in-state
defendant. See Coffey, 581 F.3d at 1244–45.

    We agree with the district court that Plaintiffs’ complaint
forms a sufficient basis to invoke the local controversy
exception. The district court’s remand of this case to the state
court pursuant to CAFA’s local controversy exception is
therefore AFFIRMED.