Coffey v. Freeport McMoran Copper & Gold

• Decision Date: 04 September 2009
• Docket Number: No. 09-6106.,09-6106.
• Citation: 581 F.3d 1240
• Parties: Bob COFFEY; Loretta Corn; Larry Jones; Mary Ellen Jones; John Doe, and all those similarly situated, Plaintiffs-Appellees, v. FREEPORT McMORAN COPPER & GOLD; Blackwell Zinc Company, Inc.; Phelps Dodge Corporation; Cyprus Amax Minerals Company, Defendants-Appellants, and Amax, Inc., f/k/a American Metal Company; Blackwell Industrial Authority; BNSF Railway Company, f/k/a Burlington Northern Santa Fe Railway Company, Defendants.
• Court: U.S. Court of Appeals — Tenth Circuit

581 F.3d 1240

Bob COFFEY; Loretta Corn; Larry Jones; Mary Ellen Jones; John Doe, and all those similarly situated, Plaintiffs-Appellees, v. FREEPORT McMORAN COPPER & GOLD; Blackwell Zinc Company, Inc.; Phelps Dodge Corporation; Cyprus Amax Minerals Company, Defendants-Appellants, and Amax, Inc., f/k/a American Metal Company; Blackwell Industrial Authority; BNSF Railway Company, f/k/a Burlington Northern Santa Fe Railway Company, Defendants.

No. 09-6106.

United States Court of Appeals, Tenth Circuit.

September 4, 2009.

Marie R. Yeates, Vinson & Elkins, LLP, Houston, TX (Morgan L. Copeland, Jr.; Lewis C. Sutherland, Vinson & Elkins, LLP, Houston, TX; Sandra G. Rodriguez, Vinson & Elkins, LLP, Austin, TX; Reid E. Robison, McAfee & Taft, Oklahoma City, OK; Kevin E. O'Malley, Gallagher & Kennedy, P.A., Phoenix, AZ, with her on the briefs), for Defendants-Appellants.

Nelson J. Roach, (Keith L. Langston with him on the brief), of Nix, Patterson & Roach, LLP, Dangerfield, TX, for Plaintiffs-Appellees.

Before TACHA, ANDERSON, and MURPHY, Circuit Judges.

PER CURIAM.

Plaintiffs-Appellees Bob Coffey, Loretta Corn, Larry Jones, and Mary Ellen Jones filed a class action in state court in Oklahoma on behalf of themselves and all other similarly situated persons asserting state law claims based on the defendants' alleged contamination of their property through operation of the Blackwell Zinc Smelter in Blackwell, Oklahoma. Freeport McMoRan Copper & Gold, Phelps Dodge Corporation, Cyprus Amax Minerals Company, and Blackwell Zinc Company, Inc. (collectively the "Freeport Defendants"¹) removed the case to federal court, asserting federal jurisdiction based on the Class Action Fairness Act ("CAFA") and the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA").²

Plaintiffs filed a motion to remand, arguing that there was no basis for federal jurisdiction. The district court granted the motion, concluding that plaintiffs had demonstrated that their case fell within the "local controversy exception" to CAFA, and did not raise a federal question under CERCLA. The Freeport Defendants appeal from that decision.³ We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1453(c)(1).

We affirm the district court's decision granting the motion to remand because we agree that plaintiffs' case falls within the "local controversy exception" to CAFA. We decline to exercise our appellate jurisdiction to consider the issue of whether plaintiffs' case raises a federal question under CERCLA.

I. Background

Defendant Blackwell Zinc Company, Inc. ("BZC") owned and operated a smelter used to refine zinc and cadmium-ore concentrates in Blackwell, Oklahoma, from 1922 until 1974. In 1974, BZC dismantled the facility and donated the land to the Blackwell Industrial Authority ("BIA"). The BIA developed the property as an industrial park.

In 1992, the Environmental Protection Agency ("EPA") indicated that the City of Blackwell might be designated a Superfund site and placed on the National Priorities List if investigation and remediation efforts did not begin. That year, BZC, BIA, and the City of Blackwell entered into a Consent Agreement and Final Order with the Oklahoma State Department of Health to remediate the environmental contamination at the old Blackwell Zinc smelter site. In 1994, the Oklahoma Department of Environmental Quality (ODEQ) and the EPA entered into a Memorandum of Understanding to ensure a prompt CERCLA-quality cleanup of the site under the direction of ODEQ.

In 1996, soil remediation efforts began. In 2001, ODEQ issued a Final Remedial Action Completion Report, which documented that the soil remediation remedy had been completed. In 2007, defendant Phelps Dodge, on behalf of BZC, initiated a supplemental voluntary soil cleanup effort for those homeowners who may not have participated in the earlier soil cleanup. Phelps Dodge also indicated that it was going to construct and operate a facility to treat groundwater affected by the former smelter's operations.

In 2008, plaintiffs filed this putative class action in state court in Oklahoma, asserting nuisance, trespass, strict liability and unjust enrichment claims. Plaintiffs sought injunctive relief for additional environmental remediation and medical monitoring as well as money damages for diminution in property value. Plaintiffs included in their putative class definition all Oklahoma citizens currently domiciled in the State of Oklahoma who own private real property in Blackwell, or within a five-mile radius of the smelter site, and all Oklahoma citizens who reside or at any time resided on real property located in Blackwell or within a five-mile radius of the smelter site.

II. CAFA

CAFA was enacted to respond to perceived abusive practices by plaintiffs and their attorneys in litigating major class actions with interstate features in state courts. CAFA allows federal jurisdiction over class actions involving at least 100 members and over $5 million in controversy when minimal diversity is met (between at least one defendant and one plaintiff-class member). It is undisputed that those standards are met here.

Congress did create an exception to CAFA, however, for those cases consisting of primarily local, intrastate matters, which it characterized as the "Local Controversy Exception," S.Rep. No. 109-14, at 39 (2005). A district court must decline to exercise jurisdiction if the plaintiffs can satisfy the requirements for this exception, see 28 U.S.C. § 1332(d)(4)(A). As the Senate Report explains, "[t]his provision 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." Id.

This case presents a classic example of what Congress intended to cover when it created this exception. It is a "truly local controversy—a controversy that uniquely affects a particular locality to the exclusion of all others." Id. The plaintiffs are all Oklahoma citizens who were affected by a purely local incident—the contamination from the former Blackwell Zinc smelter. They are suing the former owner of the smelter, BZC, and the legal entities that have owned BZC since the closing of the smelter and have acted on its behalf in an attempt to remediate the environmental impacts from the smelter.⁴

There are three main requirements for plaintiffs to meet in order to satisfy the "local controversy exception." The Freeport Defendants did not contest that plaintiffs met two of the three requirements— all of the members of the plaintiff class are Oklahoma citizens, and the principal injuries occurred in Oklahoma, see 28 U.S.C. § 1332(d)(4)(A)(i)(I), (III). The provision in dispute relates to the requirement that there be at least "one real local defendant," S.Rep. No. 109-14, at 40. In order to satisfy this "local defendant" requirement, plaintiffs must show that:

(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[.]

28 U.S.C. § 1332(d)(4)(A)(i).

Plaintiffs argued that BZC satisfied this "local defendant" requirement, and the district court agreed. The Freeport Defendants do not dispute that BZC's conduct formed a significant basis for the claims asserted by the proposed plaintiff class, but they argue that plaintiffs failed to show that BZC is a defendant from whom significant relief is sought or that BZC is a citizen of Oklahoma.

Significant Relief

In their motion for remand, plaintiffs argued that BZC was a defendant "from whom significant relief is sought by members of the plaintiff class" because all class members had claims against BZC—as opposed to a mere subset of class members; all class members were seeking to hold BZC jointly and severally liable for all of plaintiffs' damages; and, given the fact that BZC was the operator of the smelter from 1922-1974, it was reasonably likely that BZC would be held at least equally responsible for plaintiffs' damages, if not more so.

In response, the Freeport Defendants argued that the language "from whom significant relief is sought" requires consideration of a defendant's ability to pay a judgment, relying on Robinson v. Cheetah Transportation, No. 06-0005, 2006 WL 468820 (W.D.La. Feb. 27, 2006) (unpublished magistrate judge's decision). In Robinson, the court held that

whether a putative class seeks significant relief from an in-state defendant includes not only an assessment of how many members of the class were harmed by the defendant's actions, but also a comparison of the relief sought between all defendants and each defendant's ability to pay a potential judgment.

Id. at *3 (emphasis added). The Freeport Defendants asserted that BZC has no assets to satisfy any potential judgment and that therefore BZC could not be considered a defendant from whom significant relief is sought. Plaintiffs replied that the plain language of the statute does not require an assessment of a defendant's ability to pay a judgment, but, even if it did, BZC would be able to satisfy a judgment through its insurance coverage.

The district court observed that "[c]ourts generally have required that the local defendant's conduct be significant when compared to the alleged conduct of the other defendants and that `the relief sought against that defendant is a significant portion of the entire relief sought by the class.'" Aplt. App. at 1514 (quoting Evans v. Walter Indus., Inc., 449 F.3d 1159, 1167 (11th Cir.2006)). The district court then distinguished the facts of the Robinson case, and considered defendants' argument that the phrase "from whom significant relief is sought" should be construed as "from whom significant...