District of New Hampshire Denies Remand Under CAFA’s Local Controversy Exception

by Pierce Atwood LLP
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On November 30th, in Brown v. Saint-Gobain Performance Plastics Corp., United States District Judge Joseph Laplante of the District of New Hampshire denied plaintiffs’ motion to remand two related class action lawsuits based on allegations that defendants had caused a release of toxic chemicals from a manufacturing plant that contaminated nearby wells and water supplies.  One lawsuit was brought on behalf of a putative class of current owners of residential properties with private groundwater wells within two miles of the manufacturing site, and sought damages for the alleged diminished values of their properties. The other lawsuit was brought on behalf of a putative class of current and former residents of such properties, and sought to recover the costs of medical monitoring. The defendants are the company that owns the plant and the individual plant manager. They removed the case to federal court under CAFA, and plaintiffs moved to remand, citing CAFA’s local controversy exception.

The local controversy exception requires district courts to decline CAFA jurisdiction where 1) more than two-thirds of the members of the proposed classes are citizens of the state in which the action was originally filed, 2) at least one defendant is a citizen of the forum state from whom significant relief is sought and whose alleged conduct forms a significant basis for the claims asserted by the proposed class, and 3) the principal alleged injuries occurred in the forum state. For the exception to apply, there also must have been no other class actions filed asserting “the same or similar allegations against any of the defendants on behalf of the same or other persons” during the three year period before the class action in question was filed.

Citing First Circuit precedent, the district court observed that the party seeking remand bears the burden of demonstrating by a preponderance of the evidence that the local controversy exception applies. Plaintiffs were unable to satisfy their burden because five other putative class actions had been filed against the manufacturer in New York and Vermont within the prior three years. Plaintiffs argued that the cases did not involve “similar allegations” because they did not allege harm in New Hampshire, but the court disagreed, holding that the allegations did not need to be identical. The claims in each of the actions, the court found, arose from “effectively the same conduct by [the manufacturer], albeit conduct affecting different plaintiffs and different localities. This renders the factual allegations sufficiently similar to meet this requirement.”

This ruling disposed of the motion for remand, but the court, “for the sake of thoroughness,” considered the remaining requirements of the local controversy exception. The classes in each of the two New Hampshire cases differed, and these differences affected the court’s analysis of certain of the requirements. For example, it found it likely that the class of current property owners satisfied the requirement that more than two-thirds of the members of the proposed class are citizens of New Hampshire, but found that plaintiffs had not satisfied their burden of establishing this element for the medical monitoring class because it included former residents of the subject properties.

The court reached similar conclusions with respect to the local defendant criteria. The local defendant is the plant manager, a citizen of New Hampshire. The claims against the manufacturer dated back to 2000, but the individual defendant did not become plant manager until 2012. The court had no difficulty finding that the plant manager’s alleged conduct was a “substantial basis” for the property damage claims of current property owners, but not for the medical monitoring claims of former residents who moved away before he became plant manager. For the same reasons, the court found that the property damage class sought “significant relief” from both defendants, but that plaintiffs had not established that the medical monitoring class also sought significant relief from him because the class period might have begun before he became plant manager. In reaching this conclusion, the court rejected the argument that the “significant relief” requirement depends on a defendant’s ability to pay. Pointing out that courts are split on that issue, the district judge concluded that the statute unambiguously focuses on whether significant relief is sought from the local defendant, not on whether the defendant has the capacity to satisfy a judgment.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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