Jocelyn Allen v. Boeing Company

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.