I. Background

From the 1960s to the 1990s, Boeing used solvents that allegedly contained

hazardous chemicals in its aircraft parts manufacturing plant in Auburn,

Washington. In 1987, the Washington State Department of Ecology (Department

of Ecology) initiated requirements for the treatment, storage and handling of

hazardous materials. In 2002, Boeing entered into an agreement with the

Department of Ecology to investigate and remediate releases of hazardous

substances from its manufacturing plant and retained Landau to conduct the

investigation and remediation.

In November 2013, Plaintiffs filed an action against Boeing and Landau in

King County Superior Court, Washington. Plaintiffs alleged that they “incurred

property damages as a result of groundwater contamination by hazardous

chemicals at and around” Boeing’s Auburn plant “from the 1960s to the present.”

They further alleged “that Boeing and its environmental-remediation contractor,

Landau, are liable for negligently investigating, remediating, and cleaning up the

contamination and for failing to warn Plaintiffs of the contamination.” Based on

these allegations, Plaintiffs asserted state law claims of negligence, nuisance, and

trespass against Boeing and negligence against Landau.

5 In April 2014, Boeing removed the action to the District Court for the

Western District of Washington. It asserted two independent bases for federal

jurisdiction: diversity jurisdiction and CAFA. With respect to diversity

jurisdiction, Boeing alleged that Landau had been fraudulently joined to defeat

complete diversity.

On September 23, 2014, the district court held that Landau had not been

fraudulently joined, but that the action fell within the local single event exception

to federal jurisdiction under CAFA, and remanded the case to the state court.

II. The Local Single Event Exception

A. Standard of Review

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

B. Federal Jurisdiction

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.

C. Case law

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 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).

D. Analysis

1. The exception is limited to a single happening.

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.

III. Fraudulent Joinder

As discussed below, unless another CAFA exception applies, our

determination that the Plaintiffs’ action does not come within the local single event

exception establishes federal jurisdiction under CAFA, and thus negates the need

for Boeing to establish complete diversity based on Landau’s alleged fraudulent

20 joinder. Nonetheless, we address Boeing’s allegation of fraudulent joinder because

it is relevant to another possibly applicable CAFA exception, the local controversy

exception, which we refer to the district court. See supra.

A. Standard of Review

In Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009), we

indicated that a denial of a motion to remand to state court is reviewed de novo.

We noted that a joinder is fraudulent when a plaintiff’s failure to state a cause of

action against the resident defendant is obvious according to the applicable state

law. Id. at 1043. Agreeing with the Fifth Circuit, we held that:

“. . . a summary inquiry is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff’s recovery against the in-state defendant” and reasoned that “the inability to make the requisite decision in a summary manner itself points to an inability of the removing party to carry its burden.” [Smallwood v. Illinois Central R. R. Co., 385 F.3d 568] at 573–74 [(5th Cir. 2004) (en banc)]. The court further stated that “[t]he party seeking removal bears a heavy burden of proving that the joinder of the in-state party was improper.” Id. at 574.

Id. at 1044. We also agreed with the Eleventh Circuit, that “if there is a possibility

that a state court would find that the complaint states a cause of action against any

of the resident defendants, the federal court must find that the joinder was proper

and remand the case to the state court.” Hunter, 582 F.3d at 1046 (quoting Tillman

v. R.J. Reynolds Tobacco, 340 F.3d 1277, 1279 (11th Cir. 2003) (per curiam)).

21 B. The contentions

Boeing argues that Plaintiffs’ complaint contains only conclusory allegations

that do not suffice to satisfy the requirements of Federal Rule of Civil Procedure

12(b)(6). Although the complaint alleged that Landau failed to act reasonably in

investigating, evaluating, remediating, eliminating, and cleaning-up the hazardous

substances, and failed to warn Plaintiffs about the presence of hazardous

substances, Boeing claims that the complaint contains “not a single allegation tying

any duty owed by Landau to any of these 116 Plaintiffs.” Boeing argues that: (1)

Plaintiffs were not parties to the contract between Boeing and Landau; (2) the

parties to the contract did not intend to create an obligation to third parties: and (3)

the parties, in fact, expressly disclaimed that there were any third party

beneficiaries. Boeing further asserts that Plaintiffs’ claims fail because “Landau

was acting under the direction” of the Department of Ecology, “a government

agency that oversaw and supervised each step of Landau’s work.”

Plaintiffs respond that under Washington state law engineering firms owe a

duty to third parties, even without privity, that Plaintiffs have alleged that Landau

owed them a duty of care, and that they are “third party beneficiaries of

Defendants’ contract despite their attempts to disclaim such benefits.” 664, 670 (Wash. App. 2005), found that, under Washington state law, a third party

beneficiary contract exists when the contracting parties “at the time they enter into

the contract, intend that the promisor will assume a direct obligation to the claimed

beneficiary.” The district court further held, again relying on Warner, that the “test

of intent is an objective one—whether performance under the contract necessarily

and directly benefits the third party.” The district court recognized that there was

no indication that Boeing and Landau “intended to benefit residents near and

around the Auburn plant.” However the district court concluded:

it is clear that Landau’s performance of its obligations under the contract would “necessarily and directly benefit” the Plaintiffs in this action. Indeed, part of its obligations included remediation services and engineering services. Plaintiffs allege that the remediation services were performed negligently. Therefore, the Court finds that it is conceivable based on Plaintiffs’ Amended Complaint that Landau voluntarily undertook remediation services to benefit the Plaintiffs and performed those services negligently.

C. Analysis

Boeing has not met its heavy burden of showing that there is no possibility

that Washington law might impose liability on Landau. It seems clear that some, if

not most, of the remediation efforts undertaken by Landau were intended to benefit

Plaintiffs and their property. Thus, even accepting Boeing’s representations that its

23 contract expressly disclaimed any intent to create third party beneficiaries, and that

neither Boeing nor Landau had any intent to create third party beneficiaries, a court

could reasonably conclude that the contract did just that. We, like the district

court, do not pass on the merits of any such conceivable claim. We hold only that

Boeing has not presented discrete and indisputable facts that would preclude

Plaintiffs from recovering against Landau. See Hunter, 582 F.3d at 1044.

IV. The Local Controversy Exception

After Boeing removed this action to the district court, Plaintiffs filed their

motion to remand, arguing that there was complete diversity, the case was not a

mass action under CAFA because it came within the local single event exception to

federal jurisdiction under CAFA, 28 U.S.C. § 1332(d)(11)(B)(ii)(I), and that the

case satisfied the local controversy exception, id. § 1332(d)(4)(A). Boeing

responded to all three arguments in its opposition to remand, but the district court’s

order remanding the case addressed only fraudulent joinder and the local single

event exception. Accordingly, Boeing’s petition for leave to appeal pursuant to 28

U.S.C. § 1453(1), which we granted, addressed only the district court’s rulings on

fraudulent joinder and the local single event exception. Nonetheless, both sides

addressed the local controversy exception in their briefs and at oral argument. Express Lines, Inc., 631 F.3d 1010 (9th Cir. 2011), states that a plaintiff seeking

remand under this exception has the burden of showing that it applies and that we

review issues of statutory interpretation de novo. Id. at 1013–14. Coleman further

holds “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.” Id. at 1015. Unlike subsection

(cc) which requires that the court determine whether a defendant “is a citizen of the

State,” subsections (aa) and (bb) require only that “significant relief is sought”

from the defendant and that the defendants’ “alleged conduct forms a significant

basis for the claims.” 28 U.S.C. § 1332(d)(4)(A)(i)(II)(aa)-(cc). Coleman offers

three reasons for courts not looking beyond the complaint in determining whether a

case satisfies the requirements of subsections (aa) and (bb): (1) “the plain language

of these subsections indicates, through the use of the words ‘sought’ and ‘alleged,’

that the district court is to look to the complaint rather than to extrinsic evidence”;

(2) “though district courts sometimes consider evidence in making some subject

matter jurisdiction determinations, they do not always do so”; and (3) “factual

determinations under subsections (aa) and (bb) are likely to be more expensive and

time consuming than factual determinations of citizenship and amount-in-

25 controversy.” 631 F.3d at 1016. Coleman concludes that “nothing in CAFA . . .

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.

Although Coleman directs us to look only to the complaint in determining

whether Plaintiffs have met the criteria set forth in § 1332(d)(4)(A)(i)(II)(aa) and

(bb), we decline to make this determination in the first instance. As noted, the

issue was not addressed by the district court. Furthermore, the time restraints for

deciding a CAFA appeal, see 28 U.S.C. § 1453(c)(2), make it more difficult for

the parties to fully brief, and the court to consider, issues that were not fully

fleshed out in the district court.

More importantly, whether Plaintiffs’ case meets these criteria for the local

controversy exception raises questions under Washington law that merit more

briefing and consideration than is feasible under § 1453(c)(2), and might even

require that Plaintiffs amend their complaint. In Coleman, we recognized “the

difficulties that can be created by different pleading requirements in state and

federal courts.” 631 F.3d at 1020. Accordingly, it is possible that if a case “is

removed from state to federal court under CAFA the complaint, as originally

drafted, will not answer the questions that need to be answered before the federal

26 court can determine whether the suit comes within the local controversy

exception.” Id. at 1020–21. Coleman concluded that in such a circumstance, “the

district court may, in its discretion, require or permit the plaintiff to file an

amended complaint that addresses any relevant CAFA criteria.” Id. at 1021.

As previously indicated, Boeing argues that Plaintiffs’ complaint is too

conclusory to meet the requirements of Fed. R. Civ. P. 12(b)(6), and does not

specify how Landau’s undertakings were to benefit Plaintiffs. It also argues that

Plaintiffs are not third-party beneficiaries to the contract. Plaintiffs respond that

their complaint is adequate under Washington law and that certain obligations and

responsibilities arise as a matter of Washington law. Both Boeing and the district

court cite Burg v. Shannon & Wilson, Inc., 43 P.3d 526 (Wash. App. 2002), but

Boeing concluded that Plaintiffs cannot assert a viable cause of action, while the

district court concluded that they might be able to assert a claim for negligence.

Thus, the adequacy of Plaintiffs’ complaint under Washington law is not clear.

Moreover, whether Plaintiffs seek “significant relief” from Landau and

whether Landau’s conduct “forms a significant basis” for their claims are not

simple issues. They appear to fall between the two examples in the legislative

history that are noted in Coleman. Clearly, Landau’s involvement is greater than

the car dealership in the first example, but its involvement is also much less than

27 that of the Florida funeral home in the second example. See Coleman, 631 F.3d at

1018. Landau’s “alleged conduct” is distinct from Boeing’s alleged pollution. The

consequences of Landau’s alleged conduct may also be separate from the alleged

harm from Boeing’s actions. In addition, even if the alleged harm from Boeing’s

activities is far greater than the alleged harm from Landau’s activities, it is not

clear that the relief sought from Landau is not “significant.” Coleman indicates

that courts should not inquire into “the factual swamp of assessing the financial

viability of a defendant,” id. at 1017 (quoting Coffey v. Freeport McMoran Copper

& Gold, 581 F.3d 1240, 1245 (10th Cir. 2009)), but Coleman does not address

whether “significant relief” is an independent factor or is related to the relief

sought from other defendants.

In sum, although Coleman directs our attention to the complaint in deciding

whether Plaintiffs have satisfied the criteria for the local controversy exception to

federal jurisdiction under CAFA, on the record and briefing before us, we decline

to attempt to determine in the first instance whether Plaintiffs’ case fits within the

exception. Accordingly, we leave this issue for the district court to consider.10

V. Conclusion

10 At oral argument, Boeing agreed that a remand was an available option.

28 Because Plaintiffs’ action does not come within the local single event

exception to federal jurisdiction under CAFA, the district court’s order remanding

this case to state court is vacated. The district court’s denial of Boeing’s allegation

of fraudulent joinder is affirmed, and accordingly, there is not complete diversity.

Finally, Plaintiffs’ assertion that their action comes within the local controversy

exception to federal jurisdiction under CAFA is referred to the district court for

initial consideration.

VACATED AND REMANDED. Each side shall bear its own costs.

29 Counsel

Michael Sylvain Paisner, of Renton Washington (argued), Jeffrey M.

Hanson, Perkins Coie LLP, Seattle, Washington, and Michael F. Williams, Peter

A. Farrell, Michael J. Podberesky, and Devein A. DeBacker, Kirkland & Ellis,

LLP, of Washington, D.C., for defendant-appellant The Boeing Company.

Robert Finnerty, Thomas V. Giraldi, and David N. Bigelow (argued),

Giraldi/Keese of Los Angeles, California, and Thomas Vertetis, Pfau Cochran

Vertetis of Tacoma, Washington for the plaintiffs-appellees, Jocelyn Allen, et al.

30

FILED

APR 27 2015

MOLLY C. DWYER, CLERK

Allen v. The Boeing Company, Case No. 15-35162 U.S. COURT OF APPEALS

Rawlinson, Circuit Judge, dissenting in part:

I respectfully dissent from that portion of the majority opinion reversing the

remand of this case to state court. The facts of this case fall somewhere between

our decision in Nevada v. Bank of America, 672 F.3d 661 (9th Cir. 2012), and the

Third Circuit’s decision in Abraham v. St. Croix Renaissance Group, L.L.L.P., 719

F.3d 270 (3d Cir. 2013). Ultimately, I conclude that the analysis in Abraham is

more persuasive on the particular issue we are called upon to decide.

I am persuaded to this view by the particular facts of the respective cases. In

the Nevada case, the state’s Attorney General filed an action against Bank of

America, alleging that the bank “misled Nevada consumers about the terms and

operation of its home mortgage modification and foreclosure processes . . .”

Nevada, 672 F.3d at 664. Bank of America removed the action to federal court

under the Class Action Fairness Act (the Act). The district court denied the state’s

motion to remand, and this court granted the state’s request for leave to appeal.

See id. at 665. We identified the pivotal issue as whether the action qualified as a

mass action. Specifically, we considered whether the “event or occurrence”

exclusion in the Act precluded federal jurisdiction. See id. at 668; see also 28

1 U.S.C. § 1332(d)(11)(B)(ii)(I) (excluding from the Act’s definition of “mass

action” a “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”). We explained that the

“event or concurrence exclusion applies only where all claims arise from a single

event or occurrence . . .” Nevada, 672 F.3d at 668 (internal quotation marks

omitted) (emphasis in the original). We noted that this standard was not met

because the action filed by the Attorney General “allege[d] widespread fraud in

thousands of borrower interactions . . .” Id.

In contrast to Nevada, the facts in Abraham more closely mirror the facts of

this case. The defendant purchased a former alumina refinery. The plaintiffs

alleged in their complaint that the refinery released hazardous materials that were

dispersed and disseminated by wind and erosion. See 719 F.3d at 272-73.

Plaintiffs also alleged that the defendant failed to abate the dispersal and

dissemination of the hazardous substances. See id. at 273.

The parties disagreed about whether the “event or occurrence” exclusion

applied. The plaintiffs argued that their action came within the exclusion “because

every operative incident occurred [locally] and caused injury and damages to the

plaintiffs’ persons and property [locally].” Id. at 274 (alteration and internal

quotation marks omitted). According to the plaintiffs, their claims arose “from an

2 event or occurrence [locally] that happened at a single location, the alumina

refinery. . . .” Id. (internal quotation marks omitted).

The defendant countered that the “event or occurrence” exclusion was

inapplicable “because it requires a single incident and the plaintiffs’ complaint

alleged that there were multiple events and occurrences over many years. . . .” Id.

(internal quotation marks omitted). On appeal, the Third Circuit reasoned that

“[i]n common parlance, neither the term event nor occurrence is used solely to

refer to a specific incident that can be definitively limited to an ascertainable

period of minutes, hours or days.” Id. at 277 (footnote reference and internal

quotation marks omitted). The Third Circuit noted that the words “event” and

“occurrence” do not “necessarily” embody a “temporal limitation.” Id.

The Third Circuit concluded that the complaint’s allegations asserted

“circumstances that persisted over a fixed period of time—specifically, from 2002,

when [defendant] acquired the former alumina refinery, to [2013].” Id. at 279.

The Third Circuit delineated the allegations in the complaint as including the

hazardous substances embedded in the mud, the plaintiffs’ exposure to those

hazardous substances, and the failure of the defendant to remediate. See id. The

Third Circuit adopted the district court’s characterization of plaintiffs’ allegations

as involving “the continuous release of toxic substances from a single facility

3 located in the Virgin Islands . . .” Id. (internal quotation marks omitted). The

Third Circuit agreed that “these circumstances” met the “event or occurrence”

exclusion in the Act, and affirmed the district court’s remand of the action to state

court. Id. at 279-80.

There is a clear parallel between the allegations made by the plaintiffs in the

Abraham case and the allegations made by the plaintiffs in this case. Although I

would not necessarily go so far as to label the Civil War a single event under the

Act, the approach taken by the Third Circuit is otherwise reasonable. The

plaintiffs in this case made allegations similar to those made in Abraham. In their

Amended Complaint, they alleged that they and their properties were affected by

the release of toxic chemicals and other hazardous substances emanating from the

operations of defendant Boeing. Plaintiffs also alleged that Boeing and its agent

Landau Associates failed to adequately remediate the hazardous substances. All of

the affected residents and properties were located in Algona, Washington and made

identical claims against Boeing and Landau Associates.

Plaintiffs identified two plumes of volatile organic chemicals originating

from the same Boeing plant as the source of their injuries. The district court

described the allegations as follows:

As in Abraham, Plaintiffs’ Amended Complaint alleges

4 circumstances that persisted over a fixed period of time—specifically, from the late 1960s and/or mid- 1970s, when Boeing bought and used certain property as an airplane manufacturing site, through the present. These circumstances included: 1) Boeing’s use of certain chemical solvents as degreasing agents for their metal parts, which allegedly leeched into the surrounding groundwater, then soil and air; 2) the Plaintiffs’ alleged continual exposure to the chemical solvents as the chemicals escaped the groundwater into the soil and into the air; and 3) the alleged failures of Boeing and its subcontractor to properly remediate the hazard and/or inform neighboring owners of the hazard. . . . Simply put, [Plaintiffs] allege that the condition of the site during the period of Boeing’s use and ownership provided a source for the ongoing emission of chemical solvents into the site’s groundwater (then soil and air) which were subsequently dispersed onto the Plaintiffs’ persons and property, and which have not been properly remediated . . . .

District Court Order, p. 6 (citations omitted).

I agree with the district court this case is more like Abraham than Nevada.

It is understandable why we held that the “event or occurrence” exclusion

did not apply in Nevada. The allegations in the complaint alleged fraud in

thousands of individual lending transactions. See Nevada, 672 F.3d at 668. Each

loan is necessarily dependent on highly individualized circumstances, including

creditworthiness and income. See, e.g., Enriquez v. Countrywide Home Loans, 814

F. Supp. 2d 1042, 1051-52 (D. Haw. 2011) (referencing plaintiff’s credit rating and

5 debt to income ratio in relation to her loan qualification process).

In addition to the obvious individualized circumstances at issue in Nevada,

two other matters are noteworthy. The first is that the State of Nevada did not even

contend that the “event or occurrence” exclusion applied in the district court or on

appeal. Nevada, 672 F.3d at 668 n.2. The second is that we expressly referenced

“environmental torts such as a chemical spill” as occurrences to which the

exception was “clear[ly] . . . intended to apply.” Id. at 668. These considerations

persuade me that Nevada does not support the outcome reached by the majority.

A recent decision from the Fifth Circuit similarly distinguished our

“ambiguous decision” in Nevada. Rainbow Gun Club, Inc. v. Denbury Onshore,

L.L.C., 760 F.3d 405, 412 (5th Cir. 2014). As discussed above, the Fifth Circuit

also highlighted our citation in Nevada to an “environmental tort” as an “example

that satisfies [the “event or occurrence”] language” and our holding that the single

event exclusion “cannot apply to . . . thousands of separate transactions.” Id.

(citation omitted). The reasoning of the Third Circuit in Abraham, the reasoning of

the Fifth Circuit in Rainbow Gun Club, and the disparate facts of Nevada lead me

to dissent. I would affirm the district court decision remanding this case to state

court.

6